Six Sigma Material

© Fred Van Bennekom, Great Brook, 2004 Slide 1

Learning Agenda

Define Six Sigma and its key elements The Case for Six Sigma The Six Sigma process: DMAIC

– Exercise to learn • Process variability• Process capability

– Six Sigma Players– Implementation Issues


Operational Systems: The Basics

The operational system transforms inputs into goods & services.

OUTPUTSINPUTS PROCESS

FEEDBACK

Material flow Information Flow

Improvement objectives: Be more efficient in use of resources in the process Create outputs that lead to greater effectiveness in the market


What is Six Sigma?

Measurement of variability Program for quality improvement

– Fact-based– Customer-driven

Management system to achieve sustainable competitive advantage

Set of tools for improvement efforts


What is Six Sigma?

““A comprehensive and flexible system for achieving, A comprehensive and flexible system for achieving, sustaining and maximizing business success. Six sustaining and maximizing business success. Six Sigma is uniquely driven by close understanding of Sigma is uniquely driven by close understanding of customer needs, disciplined use of facts, data and customer needs, disciplined use of facts, data and statistical analysis, and diligent attention to statistical analysis, and diligent attention to managing, improving and reinventing business managing, improving and reinventing business processes.”processes.”

The Six Sigma Way, by Pande, Newman and Cavanaugh


Six Sigma according to Jack Welch

“A highly disciplined process that helps us focus on developing and delivering near-perfect products and services.

The word Six Sigma is a statistical term that measures how far a given process deviates from perfection.

The central idea behind Six Sigma 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.

Six Sigma has changed the DNA at GE – it is the way we work – in everything we do and in every product we design.”


“Lean Six Sigma” at Xerox

By creating a culture that strives to constantly improve and eliminate waste, “event-driven” major restructurings can be avoided.-- Anne Mulcahy, CEO Xerox


Six Sigma Philosophy

Customer Focused; Build to Critical To Quality (CTQ) criteria determined through listening to Voice of the Customer

Top-down approach Fact-driven, measurement-based Project Oriented Structured problem solving approach Widespread

– Improvement projects become part of everyone’s job


Who’s Practicing 6 Sigma?

Avery Dennison Dow DuPont Foxboro Sony Deere & Co. Delphi Allied Signal Ford Bose

Johnson & Johnson Caterpillar Lockheed Martin IBM CitiGroup

(Visa/MasterCard) G.E. J.P. Morgan ServiceMaster Eaton


Six Sigma Players

Senior Management– Openly commit to support the process!

Champions– Manager in the project area

Master Black Belts– Mentors the project teams

Black Belts– Full time team leader, trainer, facilitator

Green Belts– Team members


Does 6 Sigma matter?

20,000 articles of mail lost each hour

2.6 Sigma = 99% Good

15 minutes of unsafe drinking water every day 5,000 incorrect surgical operations per week 2 short or long landings at most major airports each day

200,000 wrong drug prescriptions each year

6 Sigma = 99.99966% Good7 articles lost per hour

2 minutes unsafe water per year

2 incorrect procedures per week

1 short or long landing every 5 years

68 wrong prescriptions per year


Cost of Poor Quality (COPQ)

Sigma Level Defects per Million Opportunities Cost of Poor Quality2 398,537 (Noncompetitive Companies) Not applicable3 66,800 25-40% of sales4 6,210 (Industry Average) 15-25% of sales5 233 5-15% of sales6 3.4 (World Class) < 1% of sales

Each sigma shift provides a net income improvement which equals 10% of sales.

Six Sigma, by Harry and Schroeder, p. 17


Juran’s Cost of Quality Accounting

Prevention AppraisalInternal Failures

External Failures

Costs to prevent failures

•Training

•6 Sigma program management

•Experiments

•Testing

Costs to measure quality levels

•Inspections

•Audits

Costs of failures caught before “shipment”

•Scrap

•Rework

•Equipment down time

Costs of failures in customers’ hands

• Warranty repairs

• Complaint Handling

• Support • Expediting• Recalls• Law Suits• Reputation


Cost of Quality

How to get people thinking about costs of poor quality:– Suppose all the defects disappeared. – Would the costs in question also disappear? – What other costs would disappear or be reduced?


Organization Within the Organization

The primary operation that produces your products and services

“Fix-IT” operation that cleans up the defects caused by the primary

Need to fire the Fix-It factory!


What is Sigma… and why Six?

Lower case, Greek letter S

In statistics, the standard deviation of a distribution of data

Measures the variability, dispersion, or spread of the data around the mean (average) of the data

Sigma


Variability explained…

Look at the bottle of water (or soda) in front of you (Let’s assume it’s a 12-ounce bottle.)

Is it exactly 12.00000000000000000 ounces????– No, it’s probably slightly above or slightly below 12

ounces Take all the bottles in the room and weigh the

contents. We would have a set of data with – Mean or average around 12– Distribution of the data around the mean– … And a wet room


Variability explained… with pictures

X or sample mean~12.0 ounces

measures the spread of the distribution

The lower the value, the more tightly clustered the values around

the mean


Variability explained… with pictures

X~12.0 ounces

Let’s assume = 0.05 oz.

+312.15 oz.

-311.85 oz.

99.74%


Describing a distribution

-6 -5 -4 -3 -2 -1 x +1 +2 +3 +4 +5 +6 68.26%

95.44%99.74%99.993%

99.9993%

99.99966%


Let’s Switch Gears… from the observed result to the goal

Who cares about the distribution?– The customer! (And probably The Government!)

– Therefore, so does (should!) the bottler Implications for business practice

– Design Specification Limits – Upper and Lower – for the amount of water that should be in each bottle. (Let’s assume it’s 12 +/- 0.1 oz)

Target12.0 ounces

UDS12.1 oz

LDS11.9 oz


Compare Design Specifications to Process Variability

X~12.0 ounces

= 0.05 oz.

Design Spec = 12 +/- 0.1 oz.

+312.15 oz.

-311.85 oz.

UDS12.1 oz

LDS11.9 oz

Conclusion: A 3-sigma process is not capable of

meeting specifications


3 Sigma versus 6 Sigma

UDSLDS X or sample mean~12.0 ounces

A 6 process is more

capable and thus more

likely to be defect free

3 compared to specs

6 compared to specs


Inherent Capability Analysis

Determine the inherent capability of the process to produce goods at some quality level.– Gather historical data on a process– By convention, if most output (99.74% = +/-3falls

within Design Specs, then process is deemed capable– But good can get better!

Six-Sigma Quality Level– When 12 output (+/- 6falls within Design Specs


Process Capability Ratio

Upper specification - Lower specificationCp = --------------------------------------------------

6

This works fine if… the mean of the output is the same

as the target specification.


Compare Design Specifications to Process Variability

X11.92 oz.

+312.07 oz.

-311.77 oz.

UDS12.1 oz

LDS11.9 oz

= 0.05 oz.

Design Spec = 12 +/- 0.1 oz.

Note that mean of the output

does not match the target

specification.

target12.0 oz


Process Capability Index

Cpk = Minimum of

Upper specification – x3

x – Lower specification3

,=

=

X-double-bar = mean output of the process, not the target specification


DefineOpportunity

AnalyzeCauses

ImproveSolutions

ControlSustain

MeasureSymptoms

DefineProgram

Description

MeasureNeeds &

Req’ts

AnalyzeHigh Level

Design

DesignDetailedDesign

VerifyRoll-Out

& Control

DMAIC

Charter Performance Drivers Actions Controls

Six Sigma’s 2 Key Methodologies: DMAIC & DMADV

DMADV


Why Two Methodologies?

Six Sigma initially focused on current processes– DMAIC– A variation of the Deming Wheel:

Plan – Do – Check - Act Yet…

– The design phase drives life-cycle costs– DMADV– Sometimes called Design for Six Sigma (DFSS)


DMAIC Step 1: Define

Identify our internal and external customers

– Determine what our customers want

– Critical To Quality (CTQs) characteristics

Identify our suppliers– Determine what we need

from our suppliers

Identify problems– Identify the process that

contributes to the problems

Identify improvement opportunities– Pareto Analysis

Scope the improvement project

Select the right players Set goals and objectives


DMAIC Step 2: Measure

Review the current process– Process mapping

Develop metrics for that best describe the current and desired states

– Performance– Cost

Metrics must align with indicators of business success

Train team members on data collection and analysis

Collect data Organize data Evaluate the performance of

the process– Defects– Cycle time– Other relevant measures

Determine degree of process variation


DMAIC Step 3: Analyze

Identify issues that occur at each step in the process

Assess customer impact of problems

Root Cause Analysis improvement opportunities

– Methods (processes)– Machines (technology)– Manpower (people)– Materials (data,

instructions)

Assess the effect on outputs or performance

Generate potential solutions

Target best candidates

Tools– Control Charts– Cause-and-Effect Diagrams– Flowcharts– Run Charts– Scatter Diagrams, etc.


Fishbone Cause-and-Effect Diagram

Problem Outcome

MethodMethod Machines

MaterialsManpower

Organizational tool for approaching the

problem


DMAIC Step 4: Improve

Develop Action Items

Prioritize areas to attack

Pilot test solutions

Refine solutions

Document solutions

Implement solutions


DMAIC Step 5: Control

Beware of lapses!

Measure progress

Quantify benefits of the improvements in financial terms by the bean counters

Document the project; debrief for learning experiences

Communicate for organizational learning

Recognize the team’s efforts and success

Monitor and manage to hold gains

Adjust for continuous improvement


Statistical Process Control Charts

Capable processes also must be controlled SPC attempts to distinguish 2 types of variability

– Normal (Random) variability– Abnormal (Structural) variability

How to apply SPC– Construct charts (and update occasionally!)– Collect data regularly applying sampling plan– Observations outside of limits indicate the process

potentially is “out of control”- statistically speaking– Find Assignable Causes to improve operation


Control Charts

Attribute Control Charts (assumes normal distribution)– Variability of some physical measure (weight, distance, time)– Mean – Range Chart = standard deviation

p - chart (assumes binomial distribution), More applicable to services.– Proportion or fraction defective = SQRT [p*(1 - p)/n]

c – chart (assumes Poisson distribution)– Characteristics, also known as defective chart = SQRT (mean)


Developing Control Charts

Identify the process you want to study Check whether the process is running OK Collect sample data (more is better) For each sample, calculate the Mean and the Range After taking sufficient samples, calculate mean of the

sample means and the ranges Upper Control Limit (UCL) = Mean + 3*Std.Dev. Lower Control Limit (LCL) = Mean – 3*Std.Dev.


Statistical Process Control Charts

Upper Control Limit

Lower Control Limit

1 2 3 4 5 6

Observation Number over time

x

xx

x

x

x

xx

7 8

Center line

These are “out of control” – search for Assignable Causes


Product Reliability

Reliability = Reliability = product product of reliability of componentsof reliability of components

rrss = (= (rr11)()(rr22) . . . () . . . (rrnn))wherewhere

rrss = = reliability of the complete productreliability of the complete product

nn = = number of subsystemsnumber of subsystemsrrnn = = reliability of the subsystem or reliability of the subsystem or component component nn


Let’s Build a Product

2”

5” Production Process• One person cuts strips for

each color• One person glues each

color strip onto graph paper in order shown

Measurements• Length & width of green

strips (at midpoint)• Placement of red strip

1

2

3

4


The Results


Six Sigma Organizational Fit

Ready for Six Sigma– Willingness to change– Healthy self-criticism– Flat organization structure– Rewards for intelligence

and creativity– Rigorous strategic planning– Ability to measure client

satisfaction, market share, cost, and productivity

Not Ready for Six Sigma– Resistance to change– Blame/credit mentality– Rigid, hierarchical

organization structure– Low appreciation of staff– Inability to dedicate project

resources– Inability to measure


Where do you Start?

Processes/operations with – Impact of the process on customer satisfaction– Current wide variance– Ease of defining “opportunity” and “defect”– Clear improvement opportunities– “Ease” of measurement


Total Quality Management

TQM is a management approach to long term success through customer satisfaction

TQM is based on the participation of all members of an organization in improving processes, products, services, and the culture they work in.

TQM benefits all organization members and society.– American Society of Quality


Six Sigma vs. Lean – Complementary

Six Sigma Remove variation from

processes to achieve uniform flow

Problem/project focus Research projects with

longer timeline (3-4 months)

Higher complexity with root cause unknown

Lean Remove waste, rework,

inventory to reduce flow time

Flow focused– Remove bottlenecks– Material velocity

Immediate results(1-2 weeks)

Low complexity with known solutions


Lean Production

JIT production (cellular manufacturing) Heijunka: Level workloading Pursuit of perfection Visual process management Empowered teams Kaizen: Continuous improvement involving everyone Poka Yoke: mechanism to stop defects or make errors

obvious


Other Kaizen Tools: 5 Ss

Step Name Action Catch Phrase

1 SortRemove unnecessary items

from the workplace “When in doubt, throw it out”

2 StraightenLocate everything at the point

of use “A place for everything, and everything in its place”

3 SweepClean and eliminate the

sources of filth “The best cleaning is to not need cleaning”

4 StandardizeMake routine and standard for

what good looks like “See and recognize what needs to be done”

5 Self-disciplineSustain by making 5S second

nature “The less self-discipline you need, the better”

Source: http://www.kaizen-consulting.com/training_5s.htm


Mudas – 7 WastesThe 7 Wastes – Definition Examples Causes Countermeasures

Over-|production Producing more than the customer needs right now

Producing product to stock based on sales forecastsProducing more to avoid set-upsBatch process resulting in extra output

ForecastingLong set-ups“Just in case” for breakdowns

Pull system schedulingHeijunka – level loadingSet-up reductionTPM

Trans-portation

Movement of product that does not add value

Moving parts in and out of storageMoving material from one workstation to another

Batch productionPush productionStorageFunctional layout

Flow linesPull systemValue Stream organizationsKanban

Motion Movement of people that does not add value

Searching for parts, tools, prints, etc.Sorting through materialsReaching for toolsLifting boxes of parts

Workplace disorganizationMissing itemsPoor workstation designUnsafe work area

5SPoint of Use StorageWater SpiderOne-piece flowWorkstation design

Waiting Idle time created when material, information, people, or equipment is not ready

Waiting for partsWaiting for printsWaiting for inspectionWaiting for machinesWaiting for informationWaiting for machine repair

Push productionWork imbalanceCentralized inspectionOrder entry delaysLack of priorityLack of communication

Downstream pullTakt time productionIn-process gaugingJidokaOffice KaizenTPM

Processing Effort that adds no value from the customer’s viewpoint

Multiple cleaning of partsPaperworkOver-tight tolerancesAwkward tool or part design

Delay between processingPush systemCustomer voice not understoodDesigns “thrown over the wall”

Flow linesOne-piece pullOffice KaizenLean Design

Inventory More materials, parts, or products on hand than the customer needs right now

Raw materialsWork in processFinished goodsConsumable suppliesPurchased components

Supplier lead-timesLack of flowLong set-upsLong lead-timesPaperwork in processLack of ordering procedure

External kanbanSupplier developmentOne-piece flow linesSet-up reductionInternal kanban

Defects Work that contains errors, rework, mistakes or lacks something necessary

ScrapReworkDefectsCorrectionField failureVariationMissing parts

Process failureMis-loaded partBatch processInspect-in qualityIncapable machines

GembaSigmaPokayokeOne-piece pullBuilt-in quality3PJidoka

Source: www.Gemba.Com


Bibliography

The Six Sigma Way (ISBN 0-07-135806-4) by Pande, Neuman, and Cavanaugh

The Power of Six Sigma (ISBN 0-7931-4434-5) by Subir Chowdhury

Six Sigma (ISBN 0-385-49437-8) by Harry and Schroeder.

The Six Sigma Handbook (ISBN 0-07-137233-4) by Pyzdek is more technical and becoming the 'handbook' for Black Belts.

The Machine that Changed the World, James Womack

www.6-sigma.com www.sixsigma.co.uk www.sixsigmasystems.com www.isixsigma.com www.shawresources.com/pdf/Choosi

ng%20a%20Quality%20Improvement%20Methodology.pdf

www.ge.com/en/commitment/quality/whatis.htm

http://www.swmas.co.uk/Lean_Tools/The_7_Wastes.php

http://www.kaizen-consulting.com/training_7w.htm

http://www.6-sigma.com/

http://www.sixsigma.co.uk/

http://www.sixsigmasystems.com/

http://www.isixsigma.com/

http://www.shawresources.com/pdf/Choosing%20a%20Quality%20Improvement%20Methodology.pdf



http://www.ge.com/en/commitment/quality/whatis.htm

http://www.ge.com/en/commitment/quality/whatis.htm






More References

http://www.strategosinc.com/just_in_time.htm– A GREAT summary of manufacturing improvement concepts from Ford

to lean. A MUST READ. http://hbswk.hbs.edu/item.jhtml?id=2646&t=operations http://www.kaizen-consulting.com/training_5s.htm http://www.kaizen-consulting.com/training_7w.htm

– This site from Gemba Research does a nice job of summarizing lots of the TPS tools and concepts.

http://www.strategosinc.com/just_in_time.htm

http://hbswk.hbs.edu/item.jhtml?id=2646&t=operations

http://www.kaizen-consulting.com/training_5s.htm


Documents

Six Sigma Material