Introduction To Six Sigma

Purpose of six sigma :

To make customer happier and increase

profits

Origin of Six Sigma

1987 Motorola Develops Six Sigma
Raised Quality Standards

Other Companies Adopt Six Sigma

GE
Promotions, Profit Sharing (Stock Options), etc.
directly tied to Six Sigma training.

Dow Chemical, DuPont, Honeywell, Whirlpool

Time Line

Allied Signal
Motorola

1985

1987

Dr Mikel J Harry wrote a

Paper relating early failures to
quality

General Electric

1992

1995

Johnson & Johnson,

Ford, Nissan,
Honeywell

2002

Current Leadership
Challenges

Delighting Customers.
Reducing Cycle Times.
Keeping up with Technology Advances.
Retaining People.
Reducing Costs.
Responding More Quickly.
Structuring for Flexibility.
Growing Overseas Markets.

Six Sigma Benefits?

Generated sustained success
Project selection tied to organizational
strategy
Customer focused
Profits
Project outcomes / benefits tied to
financial reporting system.
Full-time Black Belts in a rigorous,
project-oriented method.
Recognition and reward system
established to provide motivation.

Management involvement?
Executives and upper management drive
the effort through:

Understanding Six Sigma

Significant financial commitments
Actively selecting projects tied to strategy
Setting up formal review process
Selecting Champions
Determining strategic measures

Management Involvement?
Key issues for Leadership:
How will leadership organize to support Six
Sigma ? (6 council, Director 6 , etc)
Transition rate to achieve 6 .
Level of resource commitment.
Centralized or decentralized approach.
Integration with current initiatives e.g. QMS
How will the progress be monitored?

What can it do?

Motorola:
5-Fold growth in Sales
Profits climbing by 20% pa
Cumulative savings of $14 billion over 11
years

General Electric:
$2 billion savings in just 3 years
The no.1 company in the USA

Bechtel Corporation:
$200 million savings with investment of $30
million

GE Six Sigma
Economics
(in millions)

6 Sigma Project Progress

2500
2000
1500
Cost
1000

Benefit

500
0
1996

1998

2000
2002

Source: 1998 GE Annual Report, Jack Welch Letter to Share Owners and Employees - progress based upon
total corporation cost/benefits attributable to Six Sigma.

Overview of Six
Sigma
6 SIGMA AS A
PHILOSOPHY

CHANGE
THE
WORLD
TRANSFORM THE
ORGANIZATION

6 SIGMA AS
A PROCESS

6 SIGMA AS A
STATISTICAL TOOL

GROWTH

COSTS OUT
PAIN, URGENCY, SURVIVAL

Overview of Six
Sigma
It is a Process
To achieve this level of
performance you need to:
Define, Measure, Analyse,
Improve and Control

It is a Philosophy
Anything less than
ideal is an opportunity
for improvement
Defects costs money
Understanding
processes and
It is Statistics
improving them is the
6 Sigma processes will
most efficient way to
produce less than 3.4
achieve lasting results
defects per million
opportunities

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

Critical Elements

Genuine Focus on the Customer

Data and Fact Driven Management
Process Focus
Proactive management
Boundary-less Collaboration
Drive for Perfection; Tolerance for failure

Data Driven
Decision

Y=

Y
Dependent
Output
Effect
Symptom
Monitor

f(X)

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

The focus of Six sigma is to identify and control Xs

Two Processes
DMAIC
Existing Processes

Define
Measure
Analyze
Improve
Control

DMADV
New Processes
DFSS

Define
Measure
Analyze
Design
Verify

Key Concepts

COPQ (Cost of Poor

Quality)
- Inspection
- Warranty
- Scrap
- Rework
- Rejects

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

Traditional Quality Costs:

- Tangible
- Easy to Measure

Lost Opportunities

Hidden Costs:
- Intangible
- Difficult to Measure

The Hidden Factory

Average COPQ approximately 15% of Sales

Cost of Quality % Sales

COPQ v/s Sigma

Level

Sigma Level

CTQ (Critical-ToQuality)

CTQ characteristics for the process, service or process

Measure of What is important to Customer
6 Sigma projects are designed to improve CTQ
Examples:
Waiting time in clinic
Spelling mistakes in letter
% of valves leaking in operation

Defective and Defect

A nonconforming unit is a defective unit
Defect is nonconformance on one of many
possible quality characteristics of a unit that
causes customer dissatisfaction.
A defect does not necessarily make the unit
defective
Examples:
Scratch on water bottle
(However if customer wants a scratch free bottle, then
this will be defective bottle)

Defect Opportunity
Circumstances in which CTQ can fail to
meet.
Number of defect opportunities relate to
complexity of unit.
Complex units Greater opportunities of
defect than simple units
Examples:
A units has 5 parts, and in each part there are 3
opportunities of defects Total defect opportunities
are 5 x 3 = 15

DPO (Defect Per

Opportunity)

Number of defects divided by number of

defect opportunities
Examples:
In previous case (15 defect opportunities), if 10 units
have 2 defects.
Defects per unit = 2 / 10 = 0.2
DPO = 2 / (15 x 10) = 0.0133333

DPMO (Defect Per Million

Opportunities)

DPO multiplies by one million

Examples:

In previous case (15 defect opportunities), if 10 units

have 2 defects.
Defects per unit = 2 / 10 = 0.2
DPO = 2 / (15 x 10) = 0.0133333
DPMO = 0.013333333 x 1,000,000 = 13,333

Six Sigma performance is 3.4 DPMO

13,333 DPMO is 3.7 Sigma

Yield
Proportion of units within specification
divided by the total number of units.
Examples:
If 10 units have 2 defectives
Yield = (10 2) x 100 /10 = 80 %

Rolled Through Yield (RTY)

Y1 x Y2 x Y3 x . x Yn
E.g 0.90 x 0.99 x 0.76 x 0.80 = 0.54

Forms of Waste

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

What are the forms of

waste?

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

1. Waste of correction
Repairing a defect wastes time and
resources (Hidden factory)
Hidden
Factory
Rework

Rework
Failure
Investigation
Operation
1

Test

Failure
Investigation
Operation
2

Test

Product

2. Waste of
Overproduction

Producing more than necessary or

producing at faster rate than required
Excess labor, space, money, handling

3. Waste of processing
Processing that does not provide value to
the product

Excess level of approvals

Tying memos that could be handwritten
Cosmetic painting on internals of equipment
Paint thickness more than specific values

4. Waste of conveyance
Unnecessary movement of material from
one place to other to be minimized
because It adds to process time
Goods might get damaged

Convey material and information ONLY

when and where it is needed.

5. Waste of inventory
Any excess inventory is drain on an
organization.
Impact on cash flow
Increased overheads
Covers Quality and process issues

Examples
Spares, brochures, stationary,

6. Waste of Motion
Any movement of people, equipment,
information that does not contribute value
to product or service

7. Waste of Waiting
Idle time between operations
Period of inactivity in a downstream
process because an upstream activity
does not deliver on time.
Downstream resources are then often
used in activities that do not add value, or
worst result in overproduction.

Some more sources of

Waste

Waste of untapped human potential.

Waste of inappropriate systems
Wasted energy and water
Wasted materials
Waste of customer time
Waste of defecting customers

What is Sigma?

Have you ever

Shot a rifle?
Played darts?

What is the point of these sports?

What makes them hard?

Have you ever

Shot a rifle?
Played darts?
Jack

Jill

Who is the better shooter?

Variability
Deviation = distance between
observations and the mean (or
average)
Observations

averages

Deviations

10

10 - 8.4 = 1.6

9 - 8.4 = 0.6

8 - 8.4 = -0.4

8 - 8.4 = -0.4

7 - 8.4 = -1.4

8.4

0.0

8
7
10
8
9
Jack

Jill

Variability
Deviation = distance between
observations and the mean (or
average)

Observations

averages

Deviations
7

7 - 6.6 = 0.4

7 - 6.6 = 0.4

7 - 6.6 = 0.4

6 - 6.6 = -0.6

6 - 6.6 = -0.6

6.6

0.0

Jack

7
6
7
7
6

Jill

Variability
Variance = average distance
between observations and the
mean squared
Deviations

Squared Deviations

10

10 - 8.4 = 1.6

2.56

9 8.4 = 0.6

0.36

8 8.4 = -0.4

0.16

8 8 8.4 = -0.4

0.16

7 8.4 = -1.4

1.96

8.4

0.0

1.0

Observations

averages

8
7
10
8
9

Variance

Jack

Jill

Variability
Variance = average distance
between observations and the
mean squared
Observations

averages

Deviations

Squared Deviations

7 - 6.6 = 0.4

0.16

7 - 6.6 = 0.4

0.16

7 - 6.6 = 0.4

0.16

6 6 6.6 = -0.6

0.36

6 6.6 = -0.6

0.36

6.6

0.0

0.24

Jack

7
6
7
7
6

Variance

Jill

Variability
Standard deviation =
square root of
variance
Average
Jack
Jill

8.4
6.6

Variance
1.0
0.24

Jack

Standard
Deviation
1.0
0.4898979
Jill

But what good is a standard deviation

Variability
The world tends to
be bell-shaped

Even very rare

outcomes are
possible

Fewer
Most
in the
outcomes
tails occur in the
(lower)
middle

Fewer Even very rare

in the
outcomes are
tails
possible
(upper)

Variability
Here is why:

Even outcomes that are equally

likely (like dice), when you add
them up, become bell shaped

Normal bell shaped

curve
Normal distributions are divide up
into 3 standard deviations on
each side of the mean
Once your that, you
know a lot about
what is going on

And that is what a standard deviation

is good for

Causes of
Variability

Common Causes:
Random variation within predictable range (usual)
No pattern
Inherent in process
Adjusting the process increases its variation

Special Causes
Non-random variation (unusual)
May exhibit a pattern
Assignable, explainable, controllable
Adjusting the process decreases its variation

Limits

Process and Control limits:

Statistical
Process limits are used for individual items
Control limits are used with averages
Limits = 3
Define usual (common causes) & unusual (special
causes)
Specification limits:
Engineered
Limits = target tolerance
Define acceptable & unacceptable

Usual v/s Unusual,

Acceptable v/s Defective
Another View
Off-Target

LSL

Large Variation

LSL

USL

USL

On-Target
Center
Process

Reduce
Spread
LSL

USL

The statistical view of a problem

LSL
LSL==Lower
Lowerspec
speclimit
limit
USL
USL==Upper
Upperspec
speclimit
limit

More about limits

Poor quality:
defects are
common (Cpk<1)
Good quality:
defects are
rare (Cpk>1)

target

target

Cpk measures Process Capability

If process limits and control limits are at the same location, Cpk = 1. Cpk 2 is exceptional.

Process capability
Good quality: defects are rare (Cpk>1)
Poor quality: defects are common (Cpk<1)

Cpk = min

=
USL x
= 24 20 =.667
3
3(2)
=
x - LSL
= 20 15 =.833
3
3(2)

=
=
3 = (UPL x, or x LPL)

14

15

20

24

26

A Six Sigma Process

Predictably twice as good as what the customer wants

LSL

6
1

USL

10

11

12

3 v/s 6
6 Sigma curve

LSL

USL
3 Sigma curve

10

11 12 13

14

15

16

Process shift
allowed
1.5 SD

1.5 SD
LSL

USL
SD = 1

10

11 12 13

14

15

16

Six Sigma
Measurement
Sigma

7
6
5
4

3.4

On one condition :
Calculate the defects
and estimate the
opportunities in the
same way...

233
6210
66810

DPMO

Six Sigma
Measurement
1.5s
2.0s
2.5s
3.0s
3.5s
4.0s
4.5s
5.0s
5.5s
6.0s

Defects
per million
500,000
308,300
158,650
67,000
22,700
6,220
1,350
233
32
3.4

500,000
# of Defect per Million

Sigma
numbers

600,000

400,000
300,000
200,000
100,000
0
1.5

2.5

3.5
# of Sigmas

4.5

5.5

Components of Six Sigma

Components
Two components of Six Sigma

1. Process Power
2. People Power

Process Power

P-D-C-A
Act

Act on what
was learned

Check

Check the results

Plan
Plan the change

Do
Implement the
change on a small
scale.

Approach
Practical
Problem

Statistical
Problem
Statistical
Solution
Practical
Solution

DMAIC - simplified
Define
What is important?

Measure
How are we doing?

Analyze
What is wrong?

Improve
Fix whats wrong

Control
Ensure gains are maintained
to guarantee performance

DMAIC approach
D
Define
M
Measure
A
Analyze

Identify and state the practical problem

Validate the practical problem by collecting data

Convert the practical problem to a statistical one,

define statistical goal and identify potential statistical
solution

I
Improve

Confirm and test the statistical solution

C
Control

Convert the statistical solution to a practical solution

Define
D
Define
M
Measure

VoC - Who wants the project and why ?

The scope of project / improvement (SMART

Objective)

A
Analyze

Key team members / resources for the project

I
Improve

Critical milestones and stakeholder review

C
Control

Budget allocation

Measure
D
Define

Ensure measurement system reliability

- Is tool used to measure the output variable flawed ?

M
Measure
A
Analyze
I
Improve
C
Control

Prepare data collection plan

-

How many data points do you need to collect ?

How many days do you need to collect data for ?
What is the sampling strategy ?
Who will collect data and how will data get stored ?
What could the potential drivers of variation be ?

Collect data

Analyze
D
Define
M
Measure

How well or poorly processes are working

compared with
- Best possible (Benchmarking)
- Competitors

A
Analyze

Shows you maximum possible result

I
Improve

Dont focus on symptoms, find the root cause

C
Control

Improve
D
Define
M
Measure
A
Analyze
I
Improve
C
Control

Present recommendations to process owner.

Pilot run
- Formulate Pilot run.
- Test improved process (run pilot).
- Analyze pilot and results.
Develop implementation plan.
- Prepare final presentation.
- Present final recommendation to Management
Team.

Control
D
Define

Dont be too hasty to declare victory.

M
Measure
A
Analyze
I
Improve
C
Control

How will you maintain to gains made?

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

Omitting a step in
DMAIC?
Step
Consequences if the step is omitted
1. Define
2. Measure
3. Analyze
4. Improve
5. Control

Tools for DMAIC

Define

Measure

What is wrong?

Data & Process

capability

Benchmark
Baseline
Contract /
Charter
Kano Model
Voice of the
Customer
Quality Function
Deployment
Process Flow Map
Project
Management
Management by
Fact 4 Whats

7 Basic Tools
Defect Metrics
Data Collection,
Forms, Plan,
Logistics
Sampling
Techniques

Analyze

Improve

Cause & Effect

Diagrams
Failure Models &
Effect Analysis
Decision & Risk
Analysis
Statistical
Inference
Control Charts
Capability
Reliability
Analysis
Root Cause
Analysis
5 Whys
Systems
Thinking

Design of
Experiments
Modelling
Tolerancing
Robust Design
Process Map

When and where

are the defects

How to get
to six sigma

Control

Display
key measures

Statistical Controls
Control Charts
Time Series
Methods
Non Statistical
Controls
Procedure
adherence
Performance
Mgmt
Preventive activities
Poke yoke

Components
Two components of Six Sigma
1. Process Power

2. People Power
Tell me, I forget. Show me , I remember. Involve me, I understand.

6 Training

Champions

Master
Black
Belt

Mentor, trainer, and coach of Black Belts and

in the organization.

Black Belts

Leader of teams implementing the six s

methodology on projects.

Delivers successful focused projects u

the six sigma methodology and tools.

Green Belts

Team Members /
Yellow Belts

Participates on and supports

the project teams, typically
in the context of his or her
existing responsibilities.

Six Sigma
Organization

Master
Black
Belt

Champion
Black
Belt
Green
Belt

Black
Belt

Green
Belt

Green
Belt

Black
Belt
Green
Belt

Green
Belt

Yellow
Belt

Yellow
Belt

Yellow
Belt

Yellow
Belt

6 Training
Position in Six Sigma
Organisation

Expected Role
Post Training

Typical Training
Executive overview
2/3 Days

Senior
Executives

Champions
Training - I
2 days

Champions /
Process owners

Provide Leadership

Champions
Training II
3 days

Process Mgmt. &

Project
champion

(Total 5 days)

Black-Belt

Week
1

Week
2

Week
3

Week
4

Black-Belt

Training /
Facilitation
skills
Project-work

Master Black-Belt
-As Trainer
-Coach teams
-Facilitate
improvement projects

- Part

Green Belt

1 Week Green-Belt Training

Employees
(Yellow-Belt)

1 / 2 Days core training on

Six-Sigma

Project work

of project teams
- Sometime lead the
teams
- General

process
control &
improvement
- Project Team
Member

Champion
Plans improvement projects
Charters or champions chartering
process
Identifies, sponsors and directs Six Sigma
projects
Holds regular project reviews in
accordance with project charters
Includes Six Sigma requirements in
expense and capital budgets

Champion
Identifies and removes organizational and
cultural barriers to Six Sigma success.
Rewards and recognizes team and
individual accomplishments (formally and
informally)
Communicates leadership vision
Monitors and reports Six Sigma progress
Validates Six Sigma project results
Nominates highly qualified Black Belt
and/or Green Belt candidates

Master Black Belt

Roles

Responsibilities

- Enterprise Six Sigma expert

- Highly proficient in using Six Sigma
- Permanent full-time change methodology to achieve tangible business
results.
agent
- Certified Black Belt with - Technical expert beyond Black Belt level
additional specialized skills or on one or more aspects of process
experience especially useful in improvement (e.g., advanced statistical
project
management,
deployment of Six Sigma analysis,
communications, program administration,
across the enterprise
teaching, project coaching)
- Identifies high-leverage opportunities for
applying the Six Sigma approach across
the enterprise
- Basic Black Belt training
- Green Belt training
- Coach / Mentor Black Belts

Black Belt
Roles

Responsibilities

- Six Sigma technical expert

- Leads
business
process
improvement projects where Six
- Temporary, full-time change
Sigma approach is indicated.
agent (will return to other duties
after completing a two to three - Successfully completes high-impact
year tour of duty as a Black Belt)
projects that result in tangible benefits
to the enterprise
- Demonstrated mastery of Black Belt
body of knowledge
- Demonstrated proficiency at achieving
results through the application of the
Six Sigma approach
- Coach / Mentor Green Belts
- Recommends
Green
Belts
for
Certification

Green Belt
Roles

Responsibilities

- Six Sigma Project originator

- Recommends Six Sigma projects
- Part-time Six Sigma change - Participates on Six Sigma project
agent. Continues to perform
teams
normal duties while participating - Leads Six Sigma teams in local
on Six Sigma project teams
improvement projects
- Six Sigma champion in local
area

Yellow Belt
Roles

Responsibilities

- Learns and applies Six Sigma - Actively participates in team tasks

tools to projects
- Communicates well with other team
members
- Demonstrates basic improvement tool
knowledge
- Accepts and executes assignments as
determined by team

Financial Analyst
Validates the baseline status for each
project.
Validates the sustained results / savings
after completion of the project.
Compiles overall investment vs. benefits
on Six Sigma for management reporting.
Will usually be the part of Senior
Leadership Team.

Thought of the day

We don't know what we don't know

We can't act on what we don't know
We won't know until we search
We won't search for what we don't
question
We don't question what we don't measure
Hence, We just don't know

Project Selection

The first step to implement Six Sigma

Sources of Projects
External Sources:
Voice of Customer
What are we falling short of meeting customer
needs?
What are the new needs of customers?

Voice of Market
What are market trends, and are we ready to
adapt?

Voice of Competitors
What are we behind our competitors?

Sources of Projects
Internal Sources:
Voice of Process
Where are the defects, repairs, reworks?
What are the major delays?
What are the major wastes?

Voice of Employee
What concerns or ideas have employees or
managers raised?
What are we behind our competitors?

Project Selection

As a team List down at least 20 improvement

projects related to your work areas .

A Problem Statement should be SMART:

Specific - It does not solve world hunger
Measurable - It has a way to measure success
Achievable - It is possible to be successful
Relevant - It has an impact that can be
quantified
Timely - It is near term not off in the future

Harvesting the Fruit of Six

Sigma
Sweet Fruit
Design for Repeatability
Process Enhancement

Bulk of Fruit
Process Characterization
and Optimization
-----------------------------------Low Hanging Fruit
Seven Basic Tools

-----------------------------------Ground Fruit
Logic and Intuition

Types of Savings
Hard Savings:
Cost Reduction
Energy Saving
Raw Material saving
Reduced Rejection, Waste, Repair

Revenue Enhancement
Increased production
Yield Improvement
Quality Improvement

Types of Savings
Hard Savings:
Cash flow improvement
Reduced cash tied up in inventory
Reduced late receivables, early payables
Reduced cycle time

Cost and Capital avoidance

Optimizing the current system / resources
Reduced maintenance costs

Types of Savings
Soft Savings:
Customer Satisfaction / Loyalty
Employee Satisfaction

Cost of implementing
Direct Payroll
Full time (Black Belts, Master Black Belts)

Indirect Payroll
Time by executives, team members, data
collection

Training and Consulting

Black Belt course, Overview for Mgmt etc.

Improvement Implementation Costs

Installing new solution, IT driven solutions etc.

What Qualifies as a
Six Sigma Project
Three basic qualifications:
-There is a gap between current and desired /
needed performance.
The cause of problem is not clearly
understood.
The solution is not pre-determined, nor is
the optimal solution apparent.
How many projects out of 20 now
qualify as Six sigma projects?

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