Introduction to Six Sigma

1. QualityGurus.com
Introduction to Six SigmaIntroduction to Six Sigma
Purpose of six sigma :
To make customer happier and increase profits

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Origin of Six SigmaOrigin 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

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Time LineTime Line
20021995199219871985
Dr Mikel J Harry wrote a paper relating early failures to quality
Motorola
Allied Signal
General Electric
Johnson & Johnson,
Ford, Nissan,
Honeywell

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Pilot’s Six Sigma PerformancePilot’s Six Sigma Performance
Width of landing strip
1/2 Width
of landing
strip
If pilot always lands
within 1/2 the landing strip width, we
say that he has Six Sigma capability.

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Current Leadership ChallengesCurrent 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.

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Six Sigma— Benefits?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.

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What can it do?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

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GE Six Sigma EconomicsGE Six Sigma Economics
1996 1998 2000
2002
0
500
1000
1500
2000
2500
1996
Cost
Benefit
(in millions)
Source: GE Annual Report, Jack Welch Letter to Share Owners and Employees - progress based upon total
corporation cost/benefits attributable to Six Sigma.

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Overview of Six SigmaOverview of Six Sigma
PAIN, URGENCY, SURVIVAL
COSTS OUT
GROWTH
TRANSFORM THE
ORGANIZATION
CHANGE
THE
WORLD
6 SIGMA AS A
STATISTICAL
TOOL
6 SIGMA AS A
PHILOSOPHY
6 SIGMA AS
A PROCESS

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Overview of Six SigmaOverview of Six Sigma
It is a Philosophy
– Anything less than ideal is an
opportunity for improvement
– Defects costs money
– Understanding processes and
improving them is the most
efficient way to achieve lasting
results
It is a Process
– To achieve this level of
performance you need to:
Define, Measure, Analyse,
Improve and Control
It is Statistics
– 6 Sigma processes will produce
less than 3.4 defects per million
opportunities

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Management involvement?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

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

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PhilosophyPhilosophy
• Know What’s Important to the Customer (CTQ)
• Reduce Defects (DPMO)
• Centre Around Target (Mean)
• Reduce Variation (Standard Deviation)

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Critical ElementsCritical Elements
• Genuine Focus on the Customer
• Data and Fact Driven Management
• Process Focus
• Proactive management
• Boundary-less Collaboration
• Drive for Perfection; Tolerance for failure

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Data Driven DecisionData Driven Decision
Y X1 . . . Xn
Dependent Independent
Output Input-Process
Effect Cause
Symptom Problem
Monitor Control
f(X)f(X)Y=Y=

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Two ProcessesTwo Processes
• DefineDefine
• MeasureMeasure
• AnalyzeAnalyze
• ImproveImprove
• ControlControl
• DefineDefine
• MeasureMeasure
• AnalyzeAnalyze
• DesignDesign
• VerifyVerify
DMAICDMAIC DMADVDMADV
• Existing ProcessesExisting Processes
• New ProcessesNew Processes
• DFSSDFSS

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Key ConceptsKey Concepts

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COPQ (Cost of Poor Quality)COPQ (Cost of Poor Quality)
- Lost Opportunities
- The Hidden Factory
- More Setups
- Expediting Costs
- Lost Sales
- Late Delivery
- Lost Customer Loyalty
- Excess Inventory
- Long Cycle Times
- Costly Engineering Changes Average COPQ approximately 15%
of Sales
Hidden Costs:
- Intangible
- Difficult to Measure
Traditional Quality Costs:
- Tangible
- Easy to Measure
- Inspection
- Warranty
- Scrap
- Rework
- Rejects

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COPQ vs. Sigma LevelCOPQ vs. Sigma Level
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2 3 4 5 6
CostofQuality%Sales
Sigma Level

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ProcessProcess
• A Process is a group of steps, tasks, or activities, which
take inputs (People, Material, Information …..) and in
some way change them to produce an output (Service,
Product……)
XsXs YsYsStep-1Step-1 Step-2Step-2 Step-3Step-3
InputInput ProcessProcess OutputOutput

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CTQ (Critical-To-Quality)CTQ (Critical-To-Quality)
• 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

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Defective and DefectDefective 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)

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Defect OpportunityDefect 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

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DPO (Defect Per Opportunity)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

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DPMO (Defect Per Million Opportunities)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

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What is Sigma?What is Sigma?

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Have you ever…Have you ever…
• Shot a rifle?
• Played darts?
What is the point of these sports?
What makes them hard?

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Have you ever…Have you ever…
• Shot a rifle?
• Played darts?
Who is the better shooter?
Jack
Jill

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Variability - JackVariability - Jack
• Deviation = distance between observations and
the mean (or average)
Jill
Jack
8
7
10
8
9
Observations Deviations
10 10 - 8.4 = 1.6
9 9 - 8.4 = 0.6
8 8 - 8.4 = -0.4
8 8 - 8.4 = -0.4
7 7 - 8.4 = -1.4
averages 8.4 0.0

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Variability - JackVariability - Jack
• Variance = average distance between
observations and the mean squared
Jill
Jack
8
7
10
8
9
Observations Deviations
10 10 - 8.4 = 1.6
9 9 - 8.4 = 0.6
8 8 - 8.4 = -0.4
8 8 - 8.4 = -0.4
7 7 - 8.4 = -1.4
averages 8.4 0.0
Squared Deviations
2.56
0.36
0.16
0.16
1.96
1.0

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Variability - JillVariability - Jill
• Deviation = distance between observations and
the mean (or average)
Jill
7
6
7
7
6
Jack
Observations Deviations
7 7 - 6.6 = 0.4
7 7 - 6.6 = 0.4
7 7 - 6.6 = 0.4
6 6 - 6.6 = -0.6
6 6 - 6.6 = -0.6
averages 6.6 0.0

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Variability - JillVariability - Jill
• Variance = average distance between
observations and the mean squared
Jill
7
6
7
7
6
Jack
Observations Deviations
7 7 - 6.6 = 0.4
7 7 - 6.6 = 0.4
7 7 - 6.6 = 0.4
6 6 - 6.6 = -0.6
6 6 - 6.6 = -0.6
averages 6.6 0.0
Squared Deviations
0.16
0.16
0.16
0.36
0.36
0.24

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Standard deviationStandard deviation
• Standard deviation = square root of variance
Jack
Jill
Average Variance Standard Deviation
Jack 8.4 1.0 1.0
Jill 6.6 0.24 0.4898979
But what good is a standard deviation

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VariabilityVariability
The world tends to be
bell-shaped
Most outcomes
occur in the
middle
Fewer
in the
“tails”
(upper)
Even very rare outcomes are
possible
Even very rare outcomes are
possible
Fewer
in the
“tails”
(upper)
QualityGurus.com

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““Normal” bell shaped curveNormal” bell shaped curve
Normal distributions are divide up into 3
standard deviations on each side of the mean

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Causes of VariabilityCauses 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

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

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Usual vs. Unusual, Acceptable vs. DefectiveUsual vs. Unusual, Acceptable vs. Defective
Another View
LSL USL
Off-Target
USLLSL
Large
Variation
Center
Process
Reduce
Spread
The statistical view of a problem
On-Target
USLLSL LSL = Lower spec limit
USL = Upper spec limit
LSL = Lower spec limit
USL = Upper spec limit

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More about limitsMore about limits
Good quality: defects are rare (Cpk>1) Poor quality: defects are common (Cpk<1)
Cpk measuresmeasures “Process Capability”
If process limits and control limits are at the same location, Cpk = 1.
LSL and USL = Lower and Upper Specification Limits / LPL and UPL = Lower and Upper Process Limits
μ
target
μ
target

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A Six Sigma ProcessA Six Sigma Process
• Predictably twice as good as what the customer wants
1 122 3 4 5 6 7 8 9 10 11
1σ 1σ 1σ 1σ 1σ1σ
6 σLSL USL
+6
σ
−6σ

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Process shift allowedProcess shift allowed
2 3 4 5 6 7 8 9 1210 111
LSL USL
SD = 1
1.5 SD 1.5 SD

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Six Sigma MeasurementSix Sigma Measurement
3
4
5
6
7
66810
6210
233
3.4
0.02
Sigma
DPMO

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Six Sigma MeasurementSix Sigma Measurement
0
100,000
200,000
300,000
400,000
500,000
600,000
1.5 2.5 3.5 4.5 5.5
# of Sigmas
#ofDefectperMillion
Sigma Defects
numbers per million
1.5 σ 500,000
2.0 σ 308,300
2.5 σ 158,650
3.0 σ 67,000
3.5 σ 22,700
4.0 σ 6,220
4.5 σ 1,350
5.0 σ 233
5.5 σ 32
6.0 σ 3.4

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Components of Six SigmaComponents of Six Sigma

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Components of Six SigmaComponents of Six Sigma
• Two components of Six Sigma
– Process Power
– People Power

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Process PowerProcess Power

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ApproachApproach
Practical
Problem
Statistical
Problem
Statistical
Solution
Practical
Solution

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DMAIC - simplifiedDMAIC - simplified
• Define
– What is important?
• Measure
– How are we doing?
• Analyze
– What is wrong?
• Improve
– Fix what’s wrong
• Control
– Ensure gains are maintained to guarantee performance

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DMAIC approachDMAIC approach
D
Define
M
Measure
A
Analyze
I
Improve
C
Control
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
Confirm and test the statistical solution
Convert the statistical solution to a practical solution

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DefineDefine
D
Define
M
Measure
A
Analyze
I
Improve
C
Control
VoCVoC - Who wants the project and why ?
The scope of project / improvement (SMART Objective)
Key team members / resources for the project
Critical milestones and stakeholder review
Budget allocation

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MeasureMeasure
D
Define
M
Measure
A
Analyze
I
Improve
C
Control
Ensure measurement system reliability
Prepare data collection plan
Collect data
- Is tool used to measure the output variable flawed ?
- 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 ?

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AnalyzeAnalyze
D
Define
M
Measure
A
Analyze
I
Improve
C
Control
How well or poorly processes are working compared with
- Best possible (Benchmarking)
- Competitor’s
Shows you maximum possible result
Don’t focus on symptoms, find the root cause

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ImproveImprove
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.

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ControlControl
D
Define
M
Measure
A
Analyze
I
Improve
C
Control
Don’t be too hasty to declare victory.
How will you maintain to gains made?
- Change policy & procedures
- Change drawings
- Change planning
- Revise budget
- Training

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

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66 σσ TrainingTraining
Master
Black
Belt
Black
Belts
Green Belts
Team Members /
Yellow Belts
Champions
Mentor, trainer, and coach of Black Belts and others
in the organization.
Leader of teams implementing the six sigma
methodology on projects.
Delivers successful focused projects using
the six sigma methodology and tools.
Participates on and supports the project teams,
typically in the context of his or her existing
responsibilities.

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Champions
ChampionChampion
• 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

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Champions
ChampionChampion
• 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

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Master Black BeltMaster Black Belt
• Enterprise Six Sigma expert
• Permanent full-time change agent
• Certified Black Belt with additional specialized skills or
experience especially useful in deployment of Six Sigma
across the enterprise
Master
Black
Belt

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Master Black BeltMaster Black Belt
• Highly proficient in using Six Sigma methodology
(e.g., advanced statistical analysis, project management,
communications, program administration, teaching, project
coaching)
• Identifies high-leverage opportunities for applying the Six
Sigma
• Basic Black Belt training
• Green Belt training
• Coach / Mentor Black Belts
Master
Black
Belt

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Black BeltBlack Belt
• Six Sigma technical expert
• Temporary, full-time change agent (will return to other
duties after completing a two to three year tour of duty
as a Black Belt)
Blac
k
Belts

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Black BeltBlack Belt
• Leads business process improvement projects where Six
Sigma approach is indicated.
• Successfully completes high-impact 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
Blac
k
Belts

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Green BeltGreen Belt
• Six Sigma Project originator
• Part-time Six Sigma change agent. Continues to perform
normal duties while participating on Six Sigma project teams
• Six Sigma champion in local area
• Recommends Six Sigma projects
• Participates on Six Sigma project teams
• Leads Six Sigma teams in local improvement projects
Green Belts

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Yellow BeltYellow Belt
• Learns and applies Six Sigma tools to projects
• Actively participates in team tasks
• Communicates well with other team members
• Demonstrates basic improvement tool knowledge
• Accepts and executes assignments as determined
by team
Team Members /
Yellow Belts

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Financial AnalystFinancial 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.

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Project SelectionProject Selection

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Sources of ProjectsSources 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?

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Sources of ProjectsSources 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?

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Harvesting the Fruit of Six SigmaHarvesting 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
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

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What Qualifies as a Six Sigma ProjectWhat 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.