Six Sigma-top Bosses

Excellence is doing ordinary things extraordinary well

Perfection is not attainable. But if we chase perfection we can catch excellence.

Discovery of Bill Smith

Field Failures

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Number of repairs in factory

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Realization at Motorola

• To reduce field failure much higher level of internal quality is required • Done right, improving quality will reduce cost. • Cost of correcting poor quality ranged $800-$900 million per year.

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Desire of CEO at Motorola

100 times

4 years

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Philosophy of Six Sigma

Make customer extremely happy And

Improve Bottom Line

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How Six Sigma is Different?

Six Sigma breakthrough is a

business initiative, rather than quality initiative

Comprehensive approach to excellence

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Benefits

DFSS DMAIC

Traditional project management Rapid expense reduction Business as usual

Commitment/Sustainability

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Facets of Six Sigma Vision – To be known as best company

Facets of Six Sigma

Goal – Only 3.4 defects in million opportunity Methodology – Disciplined framework for problem solving Metric – Something we calculate & measure to indicate level of process performance

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Typical functional processes Product development

Marketing/sales/customer services Production planning Quality and testing Technology support Distribution Billing/contract

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• It is Greek letter.

σ

What is sigma?

• Used to define standard deviation of population. • It measures the variability of spread of data

Understanding process variation - pattern of population

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20 15 10 5 2.330

2.323

2.316

2.309

2.302

2.295

2.288

2.281

2.274

0 2.267

Frequency

25

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Understanding process variation

Process mean

-4

-3

-2

-1

0

1

2

3

Process spread

Process spread expressed as σ

4

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What is σ distance?

σ=3

30

35

40

45

50

1σ

55

2σ 3σ 4σ

60

65

70

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Sigma Level of Quality - Mathematically

It is the distance of upper or lower specification limits from target measured in terms of standard deviation, σ.

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One Sigma process (σ = 2)

LSL

16

18

20

1σ

1σ

22

USL

24

26

28

% with in specification = 68.27 DPMO without shift = 3,17,310 = (31.73%)

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Two Sigma process (σ = 1)

LSL

16

18

20

2σ 22

USL

2σ

24

26

% with in specification = 95.45 DPMO without shift = 45,500 =(4.55%)

28

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Three Sigma process (σ = 2/3)

LSL

16

18

20

3σ

22

USL

3σ

24

26

28

% with in specification = 99.73 DPMO without shift = 2,700 =(0.27%)

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Four Sigma process (σ = 0.5)

LSL

16

18

20

4σ

22

USL

4σ

24

26

% with in specification = 99.9937 DPMO without shift = 63

28

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Five Sigma process (σ = 0.4)

LSL

16

18

20

5σ

5σ

22

USL

24

26

28

% with in specification = 99.999943 DPMO without shift = 0.52

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Six Sigma process (σ = 0.333)

LSL 16

18

20

6σ 22

6σ

USL

24

26

28

% with in specification = 99.9999998 DPMO without shift = 0.002

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Sigma processes at a glance

USL

LSL

16

18

20

22

24

26

28

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Defects per Million Opportunities - Best

Sigma level

DPMO

One

3,17,310

Two

45,500

Three

2,700

Four

63

Five

0.52

Six

0.002

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A practical situation

Keeping a process at the target, all the time, is impossible. A process shift of 1.5σ was observed at Motorola. Now widely agreeable.

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Allowable shift of 1.5 σ

1.5σ

1.5σ

0

2

4

6

8

10

12

14

16

18

20

22

24

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Defects per million opportunities with shift

Sigma level

DPMO (with shift)

1

697700 308700

2 3 4 5 6

66810 6210 233 3.4

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Comparison best VS worst possible

Sigma level

DPMO (without shift)

DPMO (with shift)

1

3,17,310

6,97,700

2

45,500

3,08,700

3

2,700

66,810

4

63

6,210

5

0.52

6

0.002

233 3.4

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What is Six Sigma?

Six Sigma refers itself to a statistically derived performance target of operating with only 3.4 defects for every million

activities or opportunities.

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Expression of Six Sigma ?

• A measure of variation that achieves 3.4 defects per million opportunities • A measurement system of performance • A goal

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Other expression of Six Sigma ?

• A cultural value of philosophy towards your work • Never ending dissatisfaction with current performance • A process of Benchmarking (within)

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Six Sigma – a formal expression

Six Sigma provides companies with a series of probes and statistical tools that can lead to breakthrough profitability and quantum gains in quality.

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Other expression of Six Sigma

The Six Sigma strategy involves the use of statistical tools within structured methodology for gaining knowledge to achieve better, faster and lower cost products and services

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What is Six Sigma?

Six Sigma is a sweeping “cultural change efforts” to position a company for greater customer satisfaction, profitability and competitiveness.

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Driving force behind Six Sigma

Six Sigma is driven by close understanding of the needs of customer, disciplined use of factual data and statistical analysis, while paying diligent attention to manage, improve and reinvent the business process.

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What Six Sigma does?

Forces organisations to: – Re-examine how the work gets done – Simplifying the system and process – Improve capability of the process – Find ways to control system and process permanently.

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Cost mathematics

Selling Price = Cost price + Profit

Profit = Selling price - Cost price

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Cost Price

=

Value added & non value added activity

Cost of value added activity

+

Cost of non value added activity

20 %

80 %

50 %

50 %

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Non value added activities

Over production Waiting Transportation Inventories Non conforming product leading to cost of poor quality

Non involvement of the people

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Major focus in high functioning organisations

Profit = Customer + Process + Employees Customer

Process

Employees

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A Process Value addition

X4

X5 Output

Input

X1

X2

X3

X6

Y

Key Process Output Variable, Y = f(X)

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Process control & improvement model Voice of process

Man Machine Material Methods Measurement Milieu Input

SPC Process Process

Data Product Service

Customer

Output

Voice of customer

Changing needs

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Supplier

Input

SIPOC Model Process

Output

Customer

Critical customer requirements

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Supplier

Variation in input

Input

Effect of variation

Process

Variation in process

Output

Customer

Variation in output

Defects

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Nature of customer requirements

Requirements of customer are dynamic in nature and change with the needs of customer.

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Current service requirements

Existing process

0

5

10

Processing time in days

15

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What Six Sigma organisation do? Seeks to change location Reduce variation

Improved process after Six Sigma project

0

Existing process

5

10

Quality characteristics

15

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New critical to customer requirements 7 days

New requirement

Improved process

Old requirement

0

5

Number of days

10

15

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Sigma DPMO 6 5 4 3 2 1

3 .4 233 6,210 66,807 308,537 690,000

Level of competition

Cost of poor quality (% of sales) <10 10 – 15 15 – 20 20 – 30 30 – 40 > 40

Competitive level World class Industry average Non competitive

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Level of competition Industry average

World class

PPM

1000000 10000 100 1

Non competitive

1

2

3

4

Sigma Level

5

6

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From sigma level 2 3 4 5

Times improvement (Exponential)

3

5

To sigma level 4 5

55 11

1485 297 27

6

1,02,465 20,493 1863 69

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Case of carpet cleaning

With three sigma process normally 4 to 100 sq ft will remain un-cleaned

1500 sq ft

With six sigma process only pin to pencil head will remain un-cleaned

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Event Wrong drug prescription Unsafe drinking water Incorrect surgical operation

3σ VS 6σ supplier performance gap

3-Sigma 54,000/year

6-Sigma 1 in 25 years

1 sec in 25 2 hours/month years 1,350 / week

54,000 per Lost article in post hour

1 in 20 years 35 in a year

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Benefits of Six Sigma - #1

Generates sustained success. - generally business life of a product is 3 years. - To survive we must have double digit growth. - constantly innovates and restructures the organisation.

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Benefits of Six Sigma - #2

Sets performance goals for every one – uses common business frame work – ensures consistency for meeting customer requirements.

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Benefits of Six Sigma #3a

Enhances value to customer We want to make our quality so special, so valuable to customer, so important to their success that our products become their only real choice.

Jack Welch

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Benefits of Six Sigma #3b

Good and defect free product does not guarantee success. The focus on customers in Six Sigma means what value means to customer and planning how to deliver them profitably.

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Benefits of Six Sigma - #4

Accelerates the rate of improvement 100 times improvement in four years at Motorola. – it helps companies not only to

improve performance, but

improve the improvement

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Benefits of Six Sigma - #5

Promotes Learning and Cross Pollination • Accelerates development and sharing of new ideas throughout the organisation. • Six Sigma is data based and therefore applicable to any functional area.

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Benefits of Six Sigma #6

Executes Strategic Change – Introducing new product – Launching new ventures – Entering new markets – Acquiring new organisation are now routine.

Six Sigma facilitates change over. over

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Proven benefits of Six Sigma

• Cost reduction • Productivity improvement • Market-share growth • Customer retention • Cycle reduction time • Defect reduction • Cultural change • Product / service change

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Six Sigma at Motorola

Today’s existence due to Six Sigma Invented for survival Method for tracking company’s performance vis a vis customer requirement Improvement 10X in two years or 100X in four years

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Results of Six Sigma at Motorola

• Five fold growth in sales • Annual increase of profit 20% • Cumulative saving $14 Billion • Annual stock price gain 21.3 %

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Bottom line improvement at GE

• Launched Six Sigma in 1995 • Profit by 1998 $750 Million • Profit by 1999 $ 1.5 Billion • Cutting invoice defect by 98% • Streamlining of contract review - $1 Million/year • GE Medical – body scan time 3 minute to .5 minute • GE Mortgage – Call reaching person 76% to 99%

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Jack Welch’s important discovery

One thing we discovered with certainty is that anything we do that makes the customer more successful inevitably results in financial return to us.

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As per GE, Most Important one

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Explanation of Jack Welch

• The best Six Sigma project begin not inside the business but outside it. • Focused on answering the question how can we make customer competitive. • Knowing what is critical to customer and providing it.

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Results at Allied Signals

• Savings of $600 million per year • Reduction in time from drawing to certification of aircraft engines from 42 months to 33 months. • Increase in productivity by 6 % • Increase in market share 27% annually

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We cannot go on with this

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New Operating philosophy

Bullet Train Train Philosophy Philosophy Bullet

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Kaizen in Japan

Japan Top Middle Supervisor Worker

t n e m e e v c o r n p a n Im e t n i a M Percentage of time

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Kaizen in USA/Europe

USA/Europe Top Middle Supervisor

100% maintain

Worker

100% maintain

Percentage of time

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Culture at worst companies

Top

100% maintain

Middle

100% maintain

Supervisor

100% maintain

Worker

100% maintain

Percentage of time

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A

Changing criteria

B

C

X

Effort to Improve

Control with Carrot & Stick

Support & Stimulate

Performance

P-Criteria

R-Criteria

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Basic philosophy of quality

Whatever measured must be recorded Records must be analyzed using statistical techniques. Information obtained must be acted

upon.

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Old ways

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Goal Post Strategy

Target

Sudden Loss

Sudden Loss Bad product

Good product

LSL

USL

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Interpretation of Data

Target Sudden Loss C B

LSL

Sudden Loss A

USL

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Taguchi’s loss function

Customer Dissatisfaction

Poor

Poor

Fair

Fair Good

Good Best

LSL

USL

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Implementing Six sigma

1. Emphasizing ‘sigma level’ as a standard metric that can be applied to all parts of organisation • Manufacturing • Engineering • Administrative • Software

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Implementing Six sigma

2. Providing extensive training followed by deployment of team on project for: – – – –

Improving profitability Reduce non value added activities Reduction in cycle time Simplifying the procedures

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Implementing Six sigma

3. Focusing on corporate sponsors for: • Supporting team activities. • Helping to overcome resistance to change. • Obtain resources

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Implementing Six sigma

4. Creating highly qualified process improvement experts: – Green belt – Black belt – Master black belt

Who can apply improvement tools

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Implementing Six sigma

5. Early identification of appropriate metric that focuses on business results. 6. Setting stretch objectives for improvement.

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Key principles for effective implementation of Six Sigma

Involved leadership – Leading with aggressive goals – Spending time in Six Sigma training wave – Dropping in Six Sigma reviews – Gathering first hand information – Monitoring Six Sigma progress

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Key principles for effective implementation of Six Sigma

• Process thinking – Mapping of all business processes and key activities.

• Disciplined customer and market intelligence gathering – Knowledge of customers’ need is vital

• Bottom line orientation

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Key principles for effective Implementation of Six Sigma

Training – Six Sigma depends heavily on training – Nearly everyone in the organisation must know rigorous statistical techniques and problem solving tools. – At GE, everyone goes for 10 days training over with a project

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Determine key customer or business need

Determine metrics and goals

Requires team & analysis Yes Scope of project

Determine baseline and bottom line benefits

Apply QFD to determine project opportunities Viable project

Process Map for Six Sigma Projects

Yes

No Stored ideas for future projects

Big hitter?

Project charter and overall plan Yes No

No

Motivate d team? Yes Project execution Presentation

No Low hanging fruits

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Breakthrough Strategy

Define opportunities – What is important? Measure performance – how are we doing? Analyse opportunities – what is wrong? Improve performance – what needs to be done? Control performance – how do we generate & sustain performance?

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6σ is extensively data driven

We need smart Statistical analysis tools

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Process Redesign

Complicated process Disconnect Bottleneck Redundancy Rework loop inspection

Simplified process

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CE-Diagram for defective Items

Materials

Method Procedure

Source

Layout

Shape

Make

Accuracy

Wobble

Machine

Mood Attitude

Man

Defective Items Training

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Pareto Analysis – For Prioritization

Frequency

200 150 100 50 0 A

B

C

D

E

Ev ents

F

G

H

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Histogram

16 14 12 10 8 6 4 2 0 40

41

42

43

44

45

46

47

48

49

50

51

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Normal probability plot

13 X

11 9 7 5 -3

-2

-1

0 Z

1

2

3

Used for assessing - Normality of distribution

Sample Mean

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Typical control chart

52.0 51.5 51.0 50.5 50.0 49.5 49.0 48.5 48.0

UCL

CL LCL 0

5

10 15 Sample No.

20

25

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Inspector A

Gauge repeatability & reproducibility studies

Reproducibility

Inspector B

Repeatability Repeatability

Variable Scale

Final Average

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Scatter Diagram

100 90 80 70 60 50 40 40

50

60 70 80 Quiz Average

90

100

Realistic tolerance and realistic specification

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Wall Thickness

70.0 65.0 60.0 55.0 Realistic Tolerance

50.0 100

105

110

115

120

Air Pressure

125

130

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Analysis of Variance

Identifying which of the factors are responsible for variation in out quality characteristics. – One way ANOVA – Two way ANOVA

GRRS, DOE, Process Capability, Relationship

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Correlation & Regression Analysis

X4 X1

X2

X3

Y = f(X1, X2, X3,…)

Y

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Response Surface Methodology

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Cumulative sum graph

20

CUSUM

15 10 5 0

1 2

3 4 5

6 7

8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Sample No.

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Thanks