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8/4/2019 BPR Using Six Sigma[1]
http://slidepdf.com/reader/full/bpr-using-six-sigma1 1/79
Business Process
Reengineering Using
SIX SIGMA
Abella, Vanessa
Balanag, Julie Anne Mojal-Amarillo, Mary Leonite
MGT 201
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Outline:
• Overview of Business Process Reengineering
(BPR)
• Six Sigma Fundamentals
• The Lean Six Sigma Improvement Process
• Tools for Improvement that are used within
the DMAIC process• Case Study and Other Success Stories
• Conclusion
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BPR Using Six Sigma
Overview and Fundamentals
JULIE ANNE BALANAG
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BPR Overview
• BPR is a process improvement approach.
• Business Processes
- a set of activities that transform a set of outputs (goods and services) for another
person or process using people and tools.
Supplier Process Customer
INPUTS OUTPUTS
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BPR Overview
• Continuous Improvement Model - This model
attempts to understand and measure the
current process, and make performance
improvements accordingly.
DocumentAs-Is
Process
EstablishMeasures
FollowProcess
MeasurePerformance
Identify &ImplementImprovements
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BPR Overview
• BPR is a management practice that aims to
improve the efficiency of the business process.
The current process is irrelevant.
It doesn’t work!
It’s broke!
Forget it!
START OVER…
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• Breakthrough Reengineering Model
BPR Overview
ScopeProject
Learn fromOthers
Create To-be Process
PlanTransition
Implement
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• The key to BPR is for organizations to look at theirbusiness processes from a “clean slate” perspectiveand determine how they can best construct theseprocesses to improve how they conduct business.
• It started in the early 1990s, when Michael Hammerand James Champy authored a best-selling book“Reengineering the Corporation,” in which theypromoted that sometimes radical redesign and
reorganization of a process by wiping the slate cleanwas necessary to lower costs and increase quality of service.
BPR Overview
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7 Principles of Reengineering: 1. Organize around outcomes, not tasks.
2. Identify all the processes in an organization and prioritizethem in order of redesign urgency.
3. Integrate information processing work into the real workthat produces the information.
4. Treat geographically dispersed resources as though theywere centralized.
5. Link parallel activities in the workflow instead of just
integrating their results.6. Put the decision point where the work is performed, and
build control into the process.
7. Capture information once and at the source.
BPR Overview
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• Business Process Reengineering Cycle
BPR Overview
IdentifyProcesses
Review,Update,Analyze
As-Is
DesignTo-Be
Test &Implement
To-Be
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Raising the Standards
• The goal of Lean Six Sigma is to design productsand processes that do what they are supposed to
do with very high reliability.• The term Six Sigma refers to a product or process
that produces only three defects (or errors) out of every million opportunities.
• Why “Sigma?” the word is a statistical term thatmeasures how far a given process deviates fromperfection.
Six Sigma Fundamentals
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What is Six Sigma?
(Lean) Six Sigma is a comprehensive and flexiblesystem for achieving, sustaining and maximizingbusiness success. Six Sigma is uniquely driven byclose understanding of customer needs, disciplineduse of facts, data, and statistical analysis, anddiligent attention to managing, improving, andreinventing business process.
Six Sigma Fundamentals
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Six Sigma Fundamentals
Business success may be defined in different
terms, such as:
• Reduced cost
• Increased market share
• Improved customer satisfaction
• Faster time to market• Increased revenue and profits
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Input determines Output
• The basic philosophy behind Lean Six Sigma is
the idea that removing variability from
upstream operations that are inputs to a
process will yield defect-free outputs.
• The output that we are concerned about is
called a Critical To Quality Characteristic
(CTQC).
Six Sigma Fundamentals
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Six Sigma Fundamentals
Input determines Output
PROCESS
X
Input
X
Input
X
Input
X
Input
X
Input
X
Input
X
Input
X
Input
Y
Output
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The Sigma Level
• The measurement of success in achievingdefect-free output is the Sigma Level. Sigma,
or σ, is actually a Greek term that representsvariability, called the standard deviation.
• Sigma Level refers to the number of Sigma, or
process standard deviations, between themean and the closest specification for aprocess output.
Six Sigma Fundamentals
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Six Sigma Fundamentals
105 110 115 120 125
Degree Fahrenheit
Minimum
Temperature
Specification
110F
Maximum
Temperature
Specification120F
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Six Sigma Fundamentals
105 110 115 120 125
Degree Fahrenheit
Minimum
Temperature
Specification
110F
Maximum
Temperature
Specification
120F
XX X
X
X X
XXXXX XXXXX
XXXXXXX X
XXXXXXXXXXXXXXXXXXXX
X XX XXX
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105 110 115 120 125
Degree Fahrenheit
Minimum
Temperature
Specification
110F
Maximum
Temperature
Specification
120F
XX X
X
X X
XXXXX XXXXX
XXXXXXX X
XXXXXXXXXXXXXXXXXXXX
X XX XXX
Six Sigma Fundamentals
Too Cold! Too Hot!
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Six Sigma Fundamentals
105 110 115 120 125
Degree Fahrenheit
Minimum
Temperature
Specification
110F
Maximum
Temperature
Specification
120F
XX
XXXXXXXX
XXXXX
XXXXXXXXXXX
XXXXXXX
XXXXXXXXXXXXXXXXX
Too Cold! Too Hot!
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Cost of Poor Quality
• An organization can incur costs due to poor
quality throughout the value stream.
• In general, the cost of poor quality increases
exponentially as a product or service moves
along the value stream from creation to
consumption.
Six Sigma Fundamentals
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Cost of Poor Quality
Six Sigma Fundamentals
1:10:100 Rule
Base
Operation
End of
Process
Customer
100
10
1
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4 Categories of Cost of Poor Quality
1. Prevention Cost – Cost (investment) to do it right thefirst time. Training, error-proofing, pre-productionpilots, design for capability (DFSS – Design for Six
Sigma).2. Appraisal Cost – Cost of testing and inspection to
detect defects internally.
3. Internal Failure Cost – Defects detected internally:Scrap, rework, and “Seconds” sold off -price.
4. External Failure Cost – Defects detected bycustomers, including warranty, replacements,allowances, product liability, customer dissatisfaction,and lost revenue.
Six Sigma Fundamentals
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Six Sigma Fundamentals
Cost of Poor Quality Model
Six Sigma Fundamentals
C o s t P
e r G o o d
U n
i t
Prevention &Appraisal Cost
Failure Cost
-Internal &-External Total
QualityCost
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History of Lean Six Sigma
• Lean Six Sigma was born at Motorola in thmid-1980s.
• Motorola was spending between 10% and20% of revenues on poor quality – directly andindirectly.
• The true, total cost of quality is rarelymeasured because it shows up in so manyareas.
Six Sigma Fundamentals
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History of Lean Six Sigma
• By studying the linkage between external
failure experience at customers, and internal
defect experience in its factories, Motorola
began to understand that poor quality had a
significant impact on its bottom line
profitability.
Six Sigma Fundamentals
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History of Lean Six Sigma
• The first phase of Motorola’s effort to improvequality focused on finding and fixing defects. –
Four Sigma performance• Motorola realized that the only way to be
error free was to remove defects (and
production time and costs) by focusing onhow products were designed and produced – a proactive approach.
Six Sigma Fundamentals
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History of Lean Six Sigma
• The developing Six Sigma process focused on thewhole system of producing a product or service,not just individual operations.
• Lean Six Sigma took a big step forward withMotorola’s redesign of a pager product line.
• Six sigma concepts were employed from theoutset, borrowing concepts from the ToyotaProduction System and Design forManufacturability and Assembly (DFMA) – Designfor Six Sigma
Six Sigma Fundamentals
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History of Lean Six Sigma
• Higher customer satisfaction and lower cost
•Motorola reportedly saved over $2B in thefirst 4 years as many operations achieved Six
Sigma performance levels by the early 1990s.
Six Sigma Fundamentals
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• The ‘belt’ association with six sigma ranks an
employee’s experience with Six Sigma
projects.
• These are people who are trained in Six Sigma
using DMAIC typically using statistical process
control techniques with a control plan to
monitor process management goals.
Six Sigma Fundamentals
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• Green Belt
Typically an apprentice in training to become a
Black Belt. This level utilizes statistical and
quality control techniques 2% to 5% of time
(about 1-2hrs/week) and does in house
consulting and training. On average
completing a minimum of 2 projects per year.
Six Sigma Fundamentals
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• Black Belt
A team leader. Accountable for project
improvements to the completion of the
process. He is a mentor for a Green Belt.
Typically operates 5% to 10% of time (about 2-
4hrs/week) and provides consulting and
training. About 4 projects per year on average.
Six Sigma Fundamentals
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• Master Black belt
A mentor for Green and Black Belts. Typically
accountable for initiating project or process
improvement plans and monitors those plans
to the completion of the process. Will do six
Sigma projects 80% to 100% of the time. Also
will do consulting, mentoring, and trainingwith 2 to 10 projects a year.
Six Sigma Fundamentals
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BPR Using Six Sigma
Process and Tools
VANESSA ABELLA
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2 Six Sigma Sub-Methodologies
1. Six Sigma DMAIC
2.Six Sigma DMADV(also referred to as DFSS )
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1. Six Sigma DMAIC
1.
Define
2.
Measure
3.
Analyze
4.
Improve
5.
Control
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2. Six Sigma DMADV
1.
Define
2.
Measure
3.
Analyze
4.
Design
5.
Verify
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Similarities Between
DMAIC and DMADV
Talks about reduction of DPMO (defects per millionopportunities
Use the same kind of six sigma tools
Customer’s needs are the basic driving parameters forboth six sigma methodologies
Six sigma BB (black belt) and MBB (master black belt) playimportant roles in implementation for both the cases.
U COMPARISON
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Usage COMPARISON
Between DMAIC and DMADV
When to Use DMAIC
Used when a product orprocess is in existence butis not meeting customer
specification or is notperforming adequately.
When to Use DMADV
A product or process is notin existence and one needs
to be developed.
Existing product or processexists and has beenoptimized (using eitherDMAIC or not) and stilldoesn't meet the level of customer specification orsix sigma level
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Improvement Process COMPARISON
OF DMAIC and DMADV
Define the projectgoals and customer(internal and external)deliverables
Define the projectgoals and customer(internal and external)deliverables
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Measure the process
to determine current
performance
Measure and
determine customer
needs and
specifications
Improvement Process COMPARISON
OF DMAIC and DMADV
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Improvement Process COMPARISON
OF DMAIC and DMADV
Analyze and
determine the root
cause(s) of the
defects
Analyze the process
options to meet the
customer needs
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Improvement Process COMPARISON OF
DMAIC and DMADV
Improve the processby eliminatingdefects
Design (detailed)the process tomeet the customerneeds
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Improvement Process COMPARISON
OF DMAIC and DMADV
Control futureprocessperformance
Verify the designperformance andability to meetcustomer needs
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THE DMAIC TOOL KIT
TOOLS TOOLS TOOLS
Balanced Score Card QFD Team Start - up Worksheet
Cost Of Qual ity COQ Or COPQ Value Added flow chart Boundaries of Freedom
Pareto - Chart Project Priority Calculations Agenda & M.O.M. Worksheet
In - Out Matrix FMEA Problem - Statement Worksheet
Role Matrix or Responsibility Matrix DMAIC Work Break Down Stuct Enhanced SIPOC
Stakeholder Analysis Estimate EVA What is - What Isn't Analysis
Project Score card Project Schedule Comparitive Analysis
Cross - Tabulation Risk/Return Analysis Defining CTQ Characteristics
Paired Comparison Communications plan Process Mapping
Project Charter
Process Flow Chart
SIPOC Diagram
VOC Gathering
CTQ Definitions(Operational)Cause - and - Effect Matrix
Blank Graph
Base Line Performance
Affinity Diagram
CTQ Tree
Value Stream Map
Project Priority Matrx
DEFINE & PROPOSAL STAGETOOLS TOOLS TOOLS
Balanced Score Card QFD Team Start - up Worksheet
Cost Of Qual ity COQ Or COPQ Value Added flow chart Boundaries of Freedom
Pareto - Chart Project Priority Calculations Agenda & M.O.M. Worksheet
In - Out Matrix FMEA Problem - Statement Worksheet
Role Matrix or Responsibility Matrix DMAIC Work Break Down Stuct Enhanced SIPOC
Stakeholder Analysis Estimate EVA What is - What Isn't Analysis
Project Score card Project Schedule Comparitive Analysis
Cross - Tabulation Risk/Return Analysis Defining CTQ Characteristics
Paired Comparison Communications plan Process Mapping
Project Charter
Process Flow Chart
SIPOC Diagram
VOC Gathering
CTQ Definitions(Operational)Cause - and - Effect Matrix
Blank Graph
Base Line Performance
Affinity Diagram
CTQ Tree
Value Stream Map
Project Priority Matrx
DEFINE & PROPOSAL STAGE
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TOOLS TOOLS TOOLSKano Model & CT Tree Trend Charts Check SheetProcess Mapping X - Bar & R - Charts Concentration DiagramEnhanced SIPOC X Bar & s Charts Interviews and ReenactmentsGR&R Customer Definition Matrix(CDM) Cause & Effect DiagramVisual R&R Requirement Definition Matrix(RDM) Five Why'sProcess Capability Affinity Diagram/ Matrix Timeline AnalysisProcess Flow Chart Requirement Tree CT Tree Scatter DiagramData Collection "As Is" Process Map CorrelationBenchmarking Input Definition Matrix(IDM) Regression
Process Sigma Calculation Output Definition Matrix ODM Fault Tree Analysis(FTA)VOC Gathering Updating the Project Chatrter Comparitive AnalysisTrend Charts Work Flow DiagramSPC Multivariate AnalysisDiscriptive Statistics DOESix Sigma Graph Summary ANOVAMising & Out Of Range Data Hypothesis Testing
Box & Whisker Plots Force Field AnalysisPower Analysis SurveysDistribution Fitting Check ListsFrequency TablesTime Series PlotHistogramNarmality Test
MEASUREMENT
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TOOLS TOOLS TOOLS
Control Charts Architecture Importance Matrix (AIM) Special Testing
Histograms Fault Tree Analysis(FTA) Interviews
Pareto Charts FMEA Failure AnalysisCross - Tabulation Risk Vs. Importance Plot Finite Element Analysis
Cause & Effect Diagram Input Importance Matrix(IIM) Concentration Diagrams
Paired Comparison Variable Selection Matrix(VSM) Statistical Analysis
Hypothesis Testing Data Collection Plan(DLP) Fault Tree Analysis(FTA)
ANOVA Update The Project Charter Root Cause Analysis
Regression Analysis Multivariate Analysis
DOE Advanced Statistics
Scatter Plot Simulations
Five Why's Computer Modeling
Process Map Review Accelarated Testing
Covariance & Variance Time Line Analysis
Friedman Kruokal Wallis Test Comparitive Analysis
Levene Modified Test Work Flow Diagram
Man Whitney Test Cpk Analysis
Wilcoxon Sign Force Field Analysis
Wilcoxon Signed test Surveys
Normality Test Check Lists
Non Normal Data Analysis
Stratification Analysis
Binomial Chi Squared Test
Analysis Stage
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TOOLS TOOLS TOOLSCp; Cpk; Process Sigma Corrective Action Matrix Run ChartsThroughput Yield Check Process Concentration Diagrams
Rolled Throughput Yield Simulations Musts and WantsNormalized Yield Concept Selection Matrix Boundaries Of FreedomMulti - Vari Chart "Should - Be - Process" Map Activity PlanningDOE Output Definition Matrix Work Flow DiagramDFMEA DFMEA Affinity GroupingHypothesis Testing Architecture Importance Matrix (AIM) Nominal Group TechniquePugh's Concept Matrix Risk Vs. Importance Plot Voting and Ranking
Pareto Analysis Input Importance Matrix(IIM) PERT ChartBrainstormig Variable Selection Matrix(VSM) GANTT ChartSPC - Quality Control Charts Data Collection Plan(DLP) Just In Time TheorySix Sigma Summary Update The Project Charter Analysis Of WantsHistograms Update "Should - Be - Process" Map ROI & PaybackStratification AnalysisCause & Effect Diagram
Corrective ActionDFMESSolution Selection MatrixSyatem DynamicesSystem ApproachSyatem DiagramMistake - Proofing
IMPROVEMENT STAGE
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TOOLS TOOLSPFMEA Hoshin Planner Mistake - Proofing Tests Of Significance
Control ChartsHistogramsPareto AnalysisCross - TabulationCause & Effect DiagramPRE - ControlProbability Distributions
Contrl PlanAction PlansRisk Mitigation PlanProcess Sigma CalculationsCp;CpkTest Plans
DPMO Yield (All Three Kinds)% Out Of Spec.Cost Saving CalculculationTest PlansCheck ListsProject Management Tools
CONTROL STAGE
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FUNDAMENTAL TOOLS FOR
IMPROVEMENT UNDER THE DMAIC
1. Process Maps
2. Value Added Flowcharts3. Pareto Charts
4. Cause and Effect Diagrams
5. Brainstorming
6. Control Plans
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PROCESS MAPS
• Visual tool to capture and communicate theelements of a process or system
• Useful tool in developing and communicatingknowledge of a process
• Help identify and focus project activity at thepoint of greatest leverage to improve results
• Employed during the DEFINE Stage of DMAIC
• Examples includes: Value Stream Maps or SIPOCMaps and Flowcharts
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TYPES OF PROCESS MAPS
• SIPOC Maps; (Supplier-Input-Process-Output-Customer) - five useful categories for identifying andorganizing process elements.
• Flowcharts or Diagrams-used to augment the processmaps; useful in charting procedures and decisionprocesses
• System Diagrams-useful tool to map the behavior of a system
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Process maps is constructed for:
• 1. Identifying waste and prioritize Lean Six
Sigma projects• 2. Understanding relationship between input
(X’s) and output( Y’s)
Two critical aspects of process mapping are:1. Draw the process map exactly as it exists. If
you create the map at your desk, you arelikely to miss key elements of the process,
such as any redundant work or reworkloops.
2. Always walk the process to validate thecorrectness of your process map.
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Hierarchy of Processes
New Product
Development
Demand
Generation
Demand
Fulfillment
Customer
Service
Ordering
MaterialsProducing Picking
Shipping
Mixing Filling Sealing Packing
1
2
3 Flowchart
SIPOC MAP or
Flowchart
SIPOC MAP
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VALUE ADDED FLOWCHARTS
• Used when Lean Six Sigma Project is focused onreducing cycle time or improving productivity
• Mechanism to improve cycle times and productivityby visually separating value-adding from non-valueadding activities
• Example: 7 Forms of Waste as identified in thedevelopment of Toyota Production System :
Defects; Overproduction, Transportation; Waiting;Unnecessary Inventory; Unnecessary Motion andExcessive Processing
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Pareto Charts
• Shows the relative frequency of defects in rank-order
and provides prioritization tool so that process
improvement activities can be organized
• Originated in 1897 thru an Italian Economist namedVilfredo Pareto
• Useful in the DEFINE Stage when you need to sort
data and set priorities and also often used in the
MEASURE and ANALYZE stage of the DMAIC
Pareto Charts can be used
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Pareto Charts can be used
to Answer the ff. questions:
• Which defects occur most frequently?
• What is the relative frequency or relative
value of the items or categories?• How should improvement process be
categorized?
Returned Software Reasons
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Returned Software Reasons
Problem Count Percent of Total Cumulative Percent
Not compatible 23 30.67 30.67
Does not perform
as expected15 20.00 50.67
Found at acheaper price 11 14.67 65.34
Changed mind 10 13.33 78.67
Too complicated 7 9.33 88.00
Missing manual 5 6.67 94.67
Missing disk 4 5.33 100.00
Totals 75 100.00 100.00
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Brainstorming
• commonly used to generate an abundance of
potential s
• Identification of improvement opportunities for
existing products or services, new products orservices, and problem resolution are among the
reasons to use this tool
• Useful in the ANALYZE Stage
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Steps in conducting brainstorming:
1. Determine the session facilitator; generally the team leader
facilitates the session
2. Determine prior to the session who will be writing down the
team’s responses.
3. Have flip-chart paper available- use of a dry erase board isn’t
prohibited, but flip-chart paper is permanent. Dry erase boards,yes, can be erased… losing all your important ideas if you can’t
finish the session within the allotted time.
4. Gather your team in a conference room. This is preferred to a
classroom setting. A classroom can be used by arranging the
tables and chairs in a “U-Shape”. This encourages participation.
5. State the issue to be considered.
6. Solicit responses from the team.
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Control plan
• Centralized document used to keep track of
the status of all significant characteristics
• Referred to as the Road Map for the
identification of the output
• Generally created under the operational level
rather than on a company wide level (ISO
purposes)
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BPR Using Six Sigma
Case Study
MARY LEONITE MOJAL-AMARILLO
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KEY CONCEPTS OF SIX SIGMA
Critical toQuality
Defect
Process
Capability
Variation
Stable
Operations
Design forSix Sigma
6σ
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KEY CONCEPTS OF SIX SIGMAAttributes most
important to thecustomer
Failing to deliverwhat the
customer wants
What yourprocess candeliver
What thecustomer sees
and feels
Ensuring consistent,
predictable processes toimprove what the customer
sees and feels
Designing to meetcustomer needs and
process capability
6σ
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THE IMPACT OFSIX SIGMA
IMPLEMENTATION ATGENERAL ELECTRIC (GE)
GE… We bring good things to life
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Quality Management: Six Sigma
GE’s Toughest Stretch Goal:
“We want to be not just better in quality, but a
company 10,000 times better than its competitors.
We want to change the competitive landscape bybeing not just better than our competitors, but by
taking quality to a whole new level. We want to make
our quality to special, so valuable to our customers,
so important to their success that our products
become the only real value choice.”
- Jack WelchGE Chairman
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The Biggest Opportunity for Growth
January 1996 - GE’s annual gathering of 500 top managers
Official announcement: Launching the quality
initiative program described as, “the biggestopportunity for growth, increased profitability,and individual employee satisfaction in thehistory of the company”.
GOAL: Becoming a six sigma quality company-producing nearly defect-free products, services,and transactions- by the year 2000.
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Making Customers Feel Six Sigma Quality
• What is Six Sigma?Six Sigma (6σ) is a highly disciplined process that
helps us focus on developing and delivering near-perfect
products and services. For GE, it is a vision of quality which
equates with only 3.4 defects/million opportunities for each product or service transaction. Strives for perfection.
Sigma (σ) is a statistical term that measures how far a given
process deviates from perfection.
The central idea is that if you can measure how many
“defects” you have in a process, you can systematically
figure out how to eliminate them and get as close to“zero defects” as possible.
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GE’s Evolution Towards Quality
High
Low
I N T E N S I T Y
TIME1990
Work-Out/Town Meetings:
Empowerment, Bureaucracy Busting
Productivity/Best Practices:
Looking Outside GE
Process Improvement:
Continuous Improvement, Reengineering
Change Acceleration Process:
Increase Success and Acceleration Change
Key Strategy Initiatives:
QMI, NPI, OTR, SM, Productivity, Globalization
Six Sigma Quality:The Road to Customer Impact
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Key Elements of Quality…
1. TheCustomer
2. TheProcess
3. TheEmployee
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THE CUSTOMER
• Delighting Customers
Customers are the center of GE’s universe:
they define quality. They expect performance,
reliability, competitive prices, on-timedelivery, service, clear and correct transaction
processing and more.
Delighting our customers is a necessity…
because if we don’t do it, someone else will!
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THE PROCESS
• Outside-In ThinkingQuality requires us to look at our business
from the customer’s perspective, not ours. In
other words, we must look at our processes fromthe outside-in. By understanding the transaction
lifecycle from the customer’s needs and
processes, we can discover what they are seeing
and feeling.With this knowledge, we can identify areas where
we can add significant value or improvement from
their perspective.
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THE EMPLOYEE
Leadership Commitment Involving all employees is essential to GE’s quality
approach. It is committed to providingopportunities and incentives for employees to
focus their talents and energies on satisfyingcustomers.
All GE employees are trained in the strategy,statistical tools and techniques of Six Sigma
quality.Quality is the responsibility of every employee.
Every employee must be involved, motivated
and knowledgeable if we are to succeed.
Results achieved over the first two years
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Results achieved over the first two years
(1996-1998) of 6σ implementation at GE
Results achieved over the first two years
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Results achieved over the first two years
(1996-1998) of 6σ implementation at GE
Revenues have risen to $100 billion, up 11%
Earnings have increased to $9.3 billion, up 13%
Earnings per share have grown to $2.80, up 14%
Operating margin has risen to a record 16.7%
Working capital turns have risen sharply to 9.2%,
up from 1997’s record of 7.4
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• In 2006, GE claimed to have saved
more than $1.5 billion beyond its
initial investment in a period of 4years. In addition, its impact is seen
not just in terms of cost savings but
also in rates of customersatisfaction.
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TACO BELL
• In 1993, initiated re-engineering
efforts and resulted to 22 %
growth in revenues by ‘rethinkingwho the customer is and by
focusing on enhancing activities
that bring value to the customer’.