Basics of six sigma public information on the inter

An Introduction to Six Sigma
© 2008 InnoCentrix, LLC
Jeffrey T. Gotro, Ph.D.

Agenda
What is Six Sigma?
Why would a company adopt Six Sigma?
What are the challenges?
© 2008 InnoCentrix, LLC 2
What are the challenges?
What are the rewards?
How is Six Sigma implemented?
Summary and Questions

Six Sigma has many meanings
A Symbol
A Measure
A Benchmark or Goal
A Benchmark or Goal
A Philosophy
A Method

Six Sigma: A Symbol
σ
σ
σ
σ is a Statistical Symbol for
Standard Deviation
Standard Deviation is a Measure
Standard Deviation is a Measure
of Variability

Six Sigma: A Measure
The “Sigma Level” of a process can be
used to express its capability
How well it performs with respect to customer
How well it performs with respect to customer
requirements.
Percent Defects, Cp, Cpk, ppm

Doing the math
6 Sigma = 3.4 defects per million
5 Sigma = 230 defects per million
4 Sigma = 6,210 defects per million

Six Sigma: A Benchmark or Goal
The specific value of 6 Sigma (as opposed
to 4 or 5 Sigma) is a benchmark for process
excellence.
Adopted by leading organizations as a goal
Adopted by leading organizations as a goal
for process capability.

100K
10K
1K Purchased Material
Lot Reject Rate
Payroll Processing
Journal Vouchers
Wire Transfers
Air Line Baggage
Order Write-up
IRS - Tax Advice (phone-in)
Average
Company
Restaurant Bills
Doctor Prescription Writing
(6,210 ppm)
(66,800 ppm)
Defects
per
Million
OpportunitiesSome Examples to Illustrate Typical Defect Rates
SIGMA (with ±1.5 Sigma Shift)
2 3 4 5 6 7
100
10
1
(230 ppm)
Lot Reject Rate
(0.43 ppm)
Air Line Baggage
Handling
Best in Class
Domestic Airline
Flight Fatality Rate
(3.4 ppm)
Defects
per
Million
Opportunities

Six Sigma: A Philosophy
A vision of process performance
Delivering nearly defect-free products
and services
Focus on variation reduction
Focus on variation reduction
A Guiding Management Principle

Six Sigma: A Method
A well defined process and toolkit
used for:
Product/Service Design
Quality Control
Quality Control
Quality Improvement
Strategic Planning

Six Essential Themes
A genuine focus on the customer
Data and fact-driven management (using effective
measurement systems)
Process focus [Y = f (x)]
Process focus [Y = f (x)]
Proactive management drives improvement efforts
Boundaryless* collaboration (including customers,
suppliers, and supply chain partners)
A drive for perfection with a tolerance for failure
(freedom to take risks, learning from mistakes, drive
to try new approaches)
* Termed by Jack Welch, CEO of GE

DMAIC Approach
30
35
40
Sporadic Spike (Special Cause)
Define Measure/Analyze Control
Improve
Defect
Rate
0
5
10
15
20
25
-
1
0
-
8
-
6
-
4
-
2
0
2
4
6
8
1
0
1
2
1
4
1
6
1
8
2
0
2
2
2
4
2
6
2
8
3
0
3
2
3
4
3
6
3
8
4
0
Chronic Waste
Chronic Waste
Defect
Rate
Time
Common Cause Variation

Define Measure Improve Control
Analyze
• Project Scope
• Project Charter
• Business Impact
• Process Map
• Data Collection
• Control Charts
• Multivari
Analysis
• Cause Effect
• Brainstorming
Creativity tools
• Design of
• Statistical Process
Control (SPC)
• Standard Operating
Six Sigma DMAIC Process
• Business Impact
• Voice of the
Customer (VOC)
• Affinity Diagram
• Kano Model
• CTQ Tree
diagram
• Control Charts
• Pareto Charts
• Prioritization Matrix
• Measurement
System Analysis
• Process Capability
• Yields (RTY)
• Cause Effect
Matrix
• FMEA
• Hypothesis
testing
• ANOVA
• Noise Variables
• Scatter plots
• Design of
Experiments
• Design of
Experiments
(DOE)
• Full Factorial
• Fractional
Factorial
• Response
Surface
• Pilot Trials
• Implementation
Plan
• Standard Operating
procedures (SOP)
• Data Collection
sampling plans
• Control Plans
• Measurement
Systems Analysis
(recheck)
• Project summary
lessons learned

All Work is a Process
Supplier
Process
Value-added
Customer
Requirements Requirements
Inputs Output
Value-added
tasks
Feedback Feedback
S. I. P. O. C.

What is a process?
Controllable
Inputs
(X’s)
Key Process
Outputs
(Y’s)
Process
(X’s) (Y’s)
Noise Inputs
Y = f (X)

Process Capability
Lower
Specification
Limit
Upper
Specification
Limit
Lower
Specification
Limit
Upper
Specification
Limit
Lower
Specification
Limit
Upper
Specification
Limit
Capable Process
Lower
Specification
Limit
Upper
Specification
Limit
This process is not capable

Visualizing Process Capability
4
3
2
1
0
-1
-2
-3
-4
0.4
0.3
0.2
0.1
0.0
Lower
Spec.
Limit
Upper
Spec.
Limit
Cust. Tolerance
8
6
4
2
0
-2
-4
-6
-8
0.4
0.3
0.2
0.1
0.0
Lower
Spec
Limit
Upper
Spec.
Limit
Cust. Tolerance
Cp=1 Cp=2
Process Capability
Process
Capability

Process Drift
Cp = 1.33
Cpk = 1.33
1.33
0.4
0.3
0.2
0.1
Lower
Spec.
Limit
Upper
Spec.
Limit
Cust. Tolerance
5.33
4.0
2.67
1.33
-1.33
-2.67
-4.0
-5.33 0
0.0
0
0.4
0.3
0.2
0.1
0.0
5.33
4.0
2.67
1.33
-1.33
-2.67
-4.0
-5.33
Lower
Spec.
Limit
Upper
Spec.
Limit
Cust. Tolerance
Cp = 1.33
Cpk = 0.83
0.83

Unstable Process
• Mean shifts present
• Excess variation (σ
changes)
Time
Fri
Unstable Process
LSL USL
changes)
• Special causes of
variation are present,
• Process output is not
stable over time and
is not predictable
Mon
Tue
Wed
Thur

Stable process:
• Variation reduced (lower σ)
• Process is centered in spec window
• Mean shifts reduced
Stable Process
Time
LSL USL
• Only common cause variation
is present
• Process output is stable/predictable
• The process is termed “in statistical
control.”

History of Six Sigma
Originated at Motorola in the early 80’s
Doesn’t use “Quality” in the name
Uses a modification of the Deming Plan-Do-
Uses a modification of the Deming Plan-Do-
Check-Act (PDCA) cycle
Adopted widely in the 90’s by major
corporations including AlliedSignal (now
Honeywell), GE, Kodak, and a growing list.

Six Sigma Strategy
Implementation is top-down. CEO driven with
executive management and Champions (process
owners) leading the initiative.
Improvement projects must be integrated with the
goals of the organization.
Six Sigma uses a “divide and conquer” approach. Find
Six Sigma uses a “divide and conquer” approach. Find
and work on the most important key customer related
projects.
Uses several levels of competency in Six Sigma
implementation:
Champions
Master Black Belt
Black Belt
Green Belt

Roles Responsibilities
Executive Team:
Provide continuous support to drive for results. Sets
strategic direction, identify core business process issues,
prioritize
Champion:
Champion:
Identifies high impact projects by combining the strategic
vision of the executive team the key customer and
process needs of the business.
Facilitates successful project completion, coaches teams
Master Black Belt:
Highly skilled experienced in all aspects of Six Sigma
Coach and mentor to Black Belts, works with Champion on
project selection

Roles Responsibilities
Black Belt:
Project Leader
Highly trained in Six Sigma methods and tools
Influencer, team facilitator, project manager
Influencer, team facilitator, project manager
Green Belt:
Project team member
Trained in Six Sigma methods and tools

Training for Six Sigma
Executives
8 hour Six Sigma overview and implementation roadmap
development.
Champion
30 hour course, overview of DMAIC, Tools overview
Focus on developing project selection skills
Black Belt
160 hours of classroom
Required to have a project
Class for 1 week (40 hours) and project work for 3-4 weeks
Total of 4 months to train
Green Belt
30-80 hours depending on training philosophy
May or may not have to complete a project

Projects Drive Six Sigma Success
Types of Six Sigma Projects
Manufacturing Quality Improvement (origin of Six Sigma
initiatives)
Design for Six Sigma (DFSS) for product development
Business process improvement (transactional Six Sigma)
Some companies find much larger impact in transactional type
projects:
One company:
$150-250K for manufacturing improvement projects
$500K for transactional projects
Process management methods rarely used for business process
improvements
Transactional Six Sigma is a Huge Opportunity

Identifying Six Sigma Projects
Basic Project Criteria
• Problem in key business activity
• Large financial impact
• Can measure and quantify performance
Easy to Fix?
yes
Quick Hit
Solution
Available?
Easy to Fix?
no
yes
no
Quick Hit
Other Initiative
Six Sigma Project
• Process focus
• Analyze Y = f(x)
• Reduce variation defects
• Complex relationships

Project Focus
Projects are chartered by Champions and business
leaders
Led by Black Belts
Assisted by Green Belts
Each experienced Black Belt can typically handle
between 4-6 projects per year
Typical financial impact is approximately $175,000
per project
Experienced Black Belt can generate about $1M in
savings per year

Why adopt Six Sigma?
Concept has been around for 16 years, proven
track record at big companies.
Has shown the most endurance and return on
investment of any improvement initiative.
Starting to be implemented in small and medium-
sized corporations.
Provides a comprehensive set of philosophies,
tools, methods, and fundamental concepts leading
to quantifiable business results.
Involves the entire organization; from CEO, CFO,
Champions, Black Belts, Green Belts, and workers.

What are the Challenges?
Takes careful preparation and a commitment to
fundamental change efforts required.
Training – key for all levels in the organization
It is not a quick fix nor a “one-size-fits-all” approach.
Implementation tends to be uneven and lapses
occur frequently.
Tendency to work on too many projects at once.
Resource limitations are real!
Need to manage expectations on payback time,
typically takes 9-12 months from roll-out to start
seeing quantifiable financial gains.

What are the Challenges
Not everything has to be Six Sigma; this was the
downfall of reengineering efforts! Choose your
projects carefully.
Statistical analysis is not generally part of the
engineering discipline in most companies.
engineering discipline in most companies.
Determine the role of DFSS and transactional Six
Sigma in your organization
Needs to focus on people issues and change
management
People must not fear giving “bad news” and
continually require data-driven decision making.

What are the Rewards
Increased value to the customers and
shareholders.
Improved reliability and predictability of products
and services.
and services.
Significant reduction in defects.
Institutionalization of a “process” mindset.
Increased competitive advantage.

Some Results…
Motorola – 10 years; $11 Billion Savings
AlliedSignal - $1.5 Billion estimated savings
General Electric – started efforts in 1995
1998: $1.2 Billion less $450 Million in costs… net
1998: $1.2 Billion less $450 Million in costs… net
benefits = $750 Million
1999 Annual Report: more than $2 Billion net
benefits
2001: 6,000 projects completed; $3 Billion in
savings

The Road to Six Sigma
Usually has many twists and turns!

Six Sigma Implementation
Charter
Implementation
Team
Develop
Roadmap
Goals
Train
Execs
Champions
Develop
Project
Portfolio
Implement
BB GB
Training
Project
Reviews
Support
• Appoint an implementation team leader
• Use a multifunctional team to lead roll-out
• Work with Execs Champions to develop a Six Sigma Roadmap
• Establish quantifiable goals
• Formulate an implementation plan
• Develop a mechanism to coach black belts teams
• Implement project review and metrics tracking mechanism

Six Sigma Roadmap
Identify core processes key customers
Define key customer drivers
Voice of the Customer (VOC)
Critical to Quality (CTQ’s)
Measure and baseline current performance
Prioritize, analyze, charter and kick-off key
improvement projects
Develop a diversified project portfolio (short and
long term projects)
Expand and integrate the Six Sigma system across
the enterprise as experience grows

Costs to Implement
Direct payroll (individuals dedicated full-time to Six
Sigma)
Indirect payroll (executives, champions, process
owners, etc.)
Training and consulting costs (Champion, black and
green belt, implementation and project reviews)
Improvement implementation costs (cost to
implement solutions found in BB projects)

Where Do You Start?
Business Transformation
Full scale change initiative
Strategic Improvement
Address a strategic weakness
Address a strategic weakness
Used to build a core competency that is missing
(such as VOC, or measurement systems)
Problem Solving
Most popular starting point
Focus on key short-term and long-term
improvement projects to get maximum impact

What are your core processes?
Product Development Process
Order fulfillment process
Customer service process
Support Processes
Support Processes
Finance
Administration (HR, legal, etc.)
Information technology

Customer centric core process
Understand
Product Development Process
Understand
Customer
Needs
Design
Product
Build
Product
Test
Product
Sell
Product

Customer centric core process
Develop
Order Fulfillment Process
Develop
Customer
Relationship
Take
Order
Build
Product
Service
Product
Bill
Customer

Six Sigma Summary
Disciplined Systematic Approach
Process orientation, drive for variation reduction
Focus on quantitative methods and tools
Focus on control to hold the gains
Uses a new metric for defects (sigma, DPMO, ppm)
Uses a new metric for defects (sigma, DPMO, ppm)
Results oriented management leadership, using
data-driven decision making
Significant training organizational learning

Six Sigma Summary
Success happens “one project at a time”
Good project selection leads to large financial
impact
Implementation is hard work, not magic. Expect
Implementation is hard work, not magic. Expect
bumps in the road, stay the course, results will
happen
Six Sigma is “A journey not a destination”

InnoCentrix, LLC
Jeffrey Gotro, Ph.D.
Jeffrey Gotro, Ph.D.
949-635-6916
www.innocentrix.com
info@innocentrix.com

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