2What is Six Sigma? What is it? How does it work? What are the Benefits?What are the Main Challenges?What will it take?
3What is Six Sigma? What is it? How does it work? What are the Benefits?What are the Main Challenges?What will it take?
4Six Sigma can seem overwhelming! What IS 6? Six Sigma Includes…Master Black Belts, Black Belts, Green BeltsBusiness Process CouncilTrainingTeamsSponsors/ChampionsDFSSSigma CalcsDMAIECDASHBOARDS that Drive to Achieve StrategyChange AccelerationStrategyProcessesProjectsRewards, Recognition, Promotions, Bonuses: NOT OPTIONAL!ACTIVE LeadershipDOELean SigmaSix Sigma can seem overwhelming! What IS 6?
5Sigma Is a Measure of Process Capability... CustomerRequirement65Sigma123456DPMO4680,000298,00067,0006,0004003.4321DPMO – Defects per Million Opportunities…that focuses on the average and variation of the output.
6Importance of Reducing Variation To increase a process performance, you have to decrease variationLess variation providesGreater predictability in the processLess waste and rework, which lowers costsProducts and services that perform better and last longerHappier customersGreater predictability has numerous beneficial side effects, such as making forecasts more reliable, increasing ability to meet schedules, etc.
7Six Sigma is about satisfying customer needs profitably What Is the Goal?Six Sigma is about satisfying customer needs profitablyFrom GE Capital’s Six Sigma Vision
8Six Sigma’s Methodologies Alignment & Linkage to Business Strategy & Transformation ObjectivesDesign new products and processes that meetcustomer needsImprove existing processes so that their outputs meetcustomer requirementsSix SigmaDesign For Six SigmaDMAIECProcess ManagementControl and Manage cross-functional processes to meet business goals
9How Can Six Sigma Help Us? Provides a standard toolkit to improve business processesMakes processes transparent, manageableEnables fact-based decision makingProvides a platform for profitable growthAligns organizational and process goalsHelps establish customer focusEstablishes a common language
10What is Six Sigma? What is it? How does it work? What are the Benefits?What are the Main Challenges?What will it take?
11What Is Sigma?Sigma is the scale that compares the output of a process to customer or design specifications.Customer specCustomer specFREQUENCYFREQUENCYDimensionDimensionGetting better requires reducing the variation and moving the average away from the spec limit.
12The Sigma Scale provides a common metric for comparison. Sigma AdvantagesWhich process is performing best?PROCESS PERFORMANCECall servicing 32 seconds vs goal of 35Manufacturing Cable 98% defect freeAccounts Receivable 33 days average aging vs goal of 40Customer Service 82% rated 4 or 5 on responsivenessThe Sigma Scale provides a common metric for comparison.
14Calculating the “Sigma Level” “Counting Defects” Approach:A packaging process is required to put at least 5 kg. of fertilizer in each bag. In addition, the fill date must be stamped on the bag.Last weeks performance:Bags produced (units) – 10,000Under-filled bags – 62Fill dates missing – 21Number of defect opportunities - 2Sigma Calculation:From Sigma Table:Sigma Level ~ 4.1
15Sigma Conversion Table Long-Term Process Yield (%)Short-Term SigmaDPMO6.68933,1938.080.1919,2439.680.2903,19911.510.3884,93013.570.4864,33415.870.5841,34518.410.6815,94021.190.7788,14524.200.8758,03627.430.9725,74730.851691,46234.461.1655,42238.211.2617,91142.071.3579,26046.021.4539,82850.001.5500,00053.981.6460,17257.931.7420,74061.791.8382,08965.541.9344,57869.152308,53872.572.1274,25375.802.2241,96478.812.3211,85581.592.4184,06084.132.5158,65586.432.6135,66688.492.7115,07090.322.896,80191.922.980,75793.32366,80794.523.154,79995.543.244,56596.413.335,93097.133.428,71697.733.522,75098.213.617,86498.613.713,90398.933.810,72499.183.98,19899.3846,21099.534.14,66199.654.23,46799.744.32,55599.814.41,86699.874.51,35099.904.696899.934.768799.954.848399.974.933799.9852335.115999.9895.21085.3725.4485.5325.6215.722.214.171.124
16Calculating the “Sigma Level” When Process Data is Continuous:A packaging process is required to put at least 5 kg. of fertilizer in each bag.Last weeks performance:Bags produced (units) – 10,000Mean Fill Weight: 5.1 kg.Standard Deviation of Fill Weight: 0.03 kg.Sigma Calculation:“Short-Term Sigma Level
17Attacking Problems—Pre-Six Sigma PRACTICAL PROBLEMPRACTICAL SOLUTIONNEXT PROBLEMIn some cases, effective But can result in fire fighting and in recurring problems.
18The Six Sigma Way to Attack Problems DefineMeasurePRACTICAL PROBLEMSTATISTICAL PROBLEMControlExecuteAnalyzePRACTICAL SOLUTIONSTATISTICAL SOLUTIONIdentifyWhat Factors Drive Performance?How Can We Prevent Problem Reoccurrence?NEXT PROBLEM
19The Power of the DMAIEC . . . Control Analyze Improve Execute Measure Not just an assortment of tools, but what to do at each step of the improvement process.QC ChartDocumentationMonitoringControlDoERegressionANOVAt-testsProcess AnalysisAnalyzeSelect SolutionsRisk AnalysisImprovePlanningPilotingImplementationExecuteCharterVOCSIPOCCE MatrixDefineData Collection PlanGage R&RControl ChartCapability AnalysisMeasureCommon language and synergy of employing a standard improvement approach
20The DMAIEC Way to Attack Problems PRACTICAL PROBLEMDEFINE: We are not consistently achieving “Ready for Control” (Y).MEASURE: There was a lot of variation in “Y” - poor performance (RFC = 35%, 1.1). Determined RFC was a function of (1) boiler tube failures, (2) excessive cooldown (previous shutdown), (3) turbine first-stage metal temperature control, and (4) operator errors. The boiler tube failures and temperature control were major contributorsSTATISTICAL PROBLEMANALYZE: Pareto Analysis & Weibull Analysis of boiler tube failures revealed inadequate water/steam flow in the ends of the waterwall tubesheetSTATISTICAL SOLUTIONIDENTIFY/EXECUTE AND CONTROL: Design changes improving flow distribution were implemented and process is currently achieving RFC 91% of the time (2.7) (other countermeasures also contributing).PRACTICAL SOLUTION
21Design For Six Sigma (DFSS)…What is it?? A process - a more structured approach to designA tool setAn enhancement to our current design processA tool for assessing and mitigating riskTeamworkCustomer focusedA culture change“…a continuation of the six sigma tool set being applied specifically to process, product, or service design.”
22DFSS – “50,000 foot” View Define Measure Explore Design Validate ImplementLaunch TheProjectDefineOutcomesScope ProjectIdentify StakeholdersSelect TeamDetermine ProjectApproachCreate Project PlanDefine Project ControlsIdentify CustomersDefine State of Current Customer KnowledgeDevelop & Implement Customer Research PlanTranslate Customer Needs to Product/ Service CTQ’sSpecify Targets, Tolerance Limits & Sigma TargetsDevelop Product/ Service Necessary FunctionsDevelop Conceptual Product/ Service DesignsDevelop High-Level Production ProcessesPredict Capability & Evaluate GapsDevelop Detailed Product & Service DesignsDevelop Detailed Production ProcessesRefine Capability & Gap Evaluation, Perform TradeoffsDevelop Process Control & Validation PlansBuild Pilot ProcessesValidate Pilot ReadinessPerform Pilot TestingAnalyze Gaps, Determine Root CausesEvaluate Scale-up PotentialDevelop Implementation & Transition PlansBuild Full-Scale Processes, Train StaffPerform Start-up TestingAnalyze Gaps, Determine Root CausesTransition to Process OwnersEvaluate & Close Design Project- Design Review
23What is Six Sigma? What is it? How does it work? What are the Benefits?What are the Main Challenges?What will it take?
24Six Sigma’s Broad Application J&J over $1 Billion in 2 yearsGE Capital over $1 Billion in value in 1996.JP Morgan created $510 Million in value in year oneAIG found $38 million in revenue from one of first nine projectsSixSigmaResultsSigma often reveals that less than 10% of total service process time is devoted to value-added work.Measuring the “soft stuff” becomes not only possible but profitable.Quality of Deal teams. VOC says experience in industry and size of deal were the decisive factors in which firm to engage for an IPO. Quantified & easily measured.Quality of Communications in a leasing business. Do you notify me of changes in schedule, do I have a designated rep, do you return calls, s etc within 8 hours? Quantified & easily measured.Quality of Customer Contact. “10, 5, first and last” teller measures. Quantified & easily measured
25What is Six Sigma? What is it? How does it work? What are the Benefits?What are the Main Challenges?What will it take?
26The real Six Sigma advantage… the transformation of the culture. Six Sigma ChallengesNew (?) Ways of Thinking...Customer Thinking (customer specs)Process Thinking (leading indicators)Statistical Thinking (variation)Causal Thinking [y = (x1, x2, x3 … xn)]Experimental Thinking (data-driven hypothesis testing)Control ThinkingStretch ThinkingAdopting Common language/way of thinking about problemsAccountability ThinkingThe real Six Sigma advantage… the transformation of the culture.
27What is Six Sigma? What is it? How does it work? What are the Benefits?What are the Main Challenges?What will it take?
28General Electric – The Benchmark! “Senior leadership, especially Jack Welch, provided unyielding commitment to get the initiative going and ensure its continued success. This will not be easy for other companies to copy.”Hoerl, Roger (2002), “An Inside Look at Six Sigma at GE,” Six Sigma Forum Magazine, Vol. 1, No. 3, May, pages
29General Electric – The Benchmark! “Six Sigma was directed toward specific, tangible objectives, including financial objectives. The culture changed as a result of delivering tangible benefits, not because of a focus on the culture itself.”Hoerl, Roger (2002), “An Inside Look at Six Sigma at GE,” Six Sigma Forum Magazine, Vol. 1, No. 3, May, pages
30500 Black Belts and Master Black Belts “for ever and ever” Six Sigma At 3M500 Black Belts and Master Black Belts “for ever and ever”Each has a two-year assignment.All 28,000 salaried and technical people trained at least at Green Belt level. Many hourly people selected also for Green Belt training.Major goal is to have for first time common approach to problem solving, new product development, and measurement across entire company.W. James McNerney, Jr. CEO, 3M Company, 25 June 2002
31Twenty Key Lessons Learned The time is right.The enthusiastic commitment of top management is critical.Develop an infrastructure.Commit top people.Invest in relevant hands-on training.Select initial projects to build credibility quickly.Make it all pervasive, and involve everybody.Emphasize DFSS.Don’t forget design for reliability.Focus on the entire system.Gerald J. Hahn, “20 Key Lessons Learned,” Six Sigma Forum Magazine, May 2002, pages
32Twenty Key Lessons Learned Emphasize customer CTQs (critical to quality).Include commercial quality improvement.Recognize all savings.Customize to meet business needs.Consider the variability as well as the mean.Plan to get the right data.Beware of dogmatism.Avoid nonessential bureaucracy.Keep the tool box vital.Expect Six Sigma to become a more silent partner.Gerald J. Hahn, “20 Key Lessons Learned,” Six Sigma Forum Magazine, May 2002, pages
33The Essential Role of Leadership Shareholder ValueCustomer Loyalty/Revenue GrowthCost/Working Capital ReductionBusinessDashboardsSix SigmaMethodologies& ToolsVoice ofthe CustomerChangeManagementProcessManagementThe Essential Role of Leadership
34The Strategic Process-Management Approach 1. Identify Core Business Processes and Strategic Opportunities2. Define Process Goals that lead to Competitive Advantage3. Determine the Process Measures needed to evaluate Process Performance5. Project Selection4. Process ManagementIdentify & Prioritize Performance GapsDevelop Process Goals & DashboardsValidate Measurement & CausalRelationshipsIdentify Priority ProjectsCharter, Launch and Support ProjectsAssign and Build Accountabilities
35Six Sigma Companies - Characteristics Start with a prioritized list of customer and business requirements and specificationsHave a clear sense of process ownersTrack performance over timeAnalyze causes of process and output variation with statistical and process analysis toolsThink systematically about solutions and determine financial return (the ROI may not be there to move from 4.5 to 6.0 Sigma)Standardize processes to hold the gainsSix Sigma is prioritized, disciplined problem solving to deliver on-target performance with minimum variation.
36Six Sigma Summary Six Sigma IS’s: A Framework to Improve Performance Applicable to Every Function and BusinessAbout Business PerformanceSix Sigma NOT’s:The Solution for EverythingApplicable Only to ManufacturingIt’s Just About Statistics
37Using 6 to Achieve Your Co’s Objectives Large Group Discussion: What are the Your Company Business Objectives/Opportunities?As a small group, discuss how the Six Sigma Approach can help Your Company Achieve the Business Objectives.What will Six Sigma not achieve, relative to the Objectives?Summarize your team conclusions on a flipchart and be prepared to discuss your list with the large group.