Presentation on theme: "For too many organizations the costs (often hidden) of defects and waste in the way they operate are huge. Having processes in which errors occasionally."— Presentation transcript:
For too many organizations the costs (often hidden) of defects and waste in the way they operate are huge. Having processes in which errors occasionally occur may not seem such a big deal. But when you consider how many errors may be lurking in company-wide processes, the monetary impact on overall productivity, customer satisfaction, and profitability multiplies dramatically! The Six Sigma approach to managing is all about helping you identify what you don’t know as well as emphasizing what you should know, and taking action to reduce the errors and rework that cost you time, money, opportunities, and customers. Six Sigma translates that knowledge into opportunities for business growth.
Six sigma is a statistical concept that measures a process in terms of defects. Achieving six sigma means your processes are delivering only 3.4 defects per million opportunities (DPMO)—in other words, they are working nearly perfectly. Sigma (the Greek letter σ) is a term in statistics that measures something called standard deviation. In its business use, it indicates defects in the outputs of a process, and helps us to understand how far the process deviates from perfection.
Six Sigma originated as a set of practices designed to improve manufacturing processes and eliminate defects, but its application was subsequently extended to other types of business processes as well. In Six Sigma, a defect is defined as any process output that does not meet customer specifications, or that could lead to creating an output that does not meet customer specifications. The idea of Six Sigma was actually “born” at Motorola in the 1970s, when senior executive Art Sundry was criticizing Motorola’s bad quality. Through this criticism, the company discovered the connection between increasing quality and decreasing costs in the production process. Before, everybody thought that quality would cost extra money. In fact, it was reducing costs, as costs for repair or control sank.
Then, Bill Smith first formulated the particulars of the methodology at Motorola in 1986.Six Sigma was heavily inspired by six preceding decades of quality improvement methodologies such as quality control, TQM, and Zero Defects, based on the work of pioneers such as Shewhart, Deming, Juran, Ishikawa, Taguchi and others.
Like its predecessors, Six Sigma doctrine asserts that: Continuous efforts to achieve stable and predictable process results (i.e., reduce process variation) are of vital importance to business success. Manufacturing and business processes have characteristics that can be measured, analyzed, improved and controlled. Achieving sustained quality improvement requires commitment from the entire organization, particularly from top-level management.
Features that set Six Sigma apart from previous quality improvement initiatives include: A clear focus on achieving measurable and quantifiable financial returns from any Six Sigma project. An increased emphasis on strong and passionate management leadership and support. A special infrastructure of "Champions," "Master Black Belts," "Black Belts," "Green Belts", etc. to lead and implement the Six Sigma approach. A clear commitment to make decisions on the basis of verifiable data, rather than assumptions and guesswork.
Six Sigma is a registered service mark and trademark of Motorola Inc. As of 2006 Motorola reported over US$17 billion in savings from Six Sigma. Other early adopters of Six Sigma who achieved well- publicized success include Honeywell (previously known as AlliedSignal) and General Electric, where Jack Welch introduced the method. By the late 1990s, about two-thirds of the Fortune 500 organizations had begun Six Sigma initiatives with the aim of reducing costs and improving quality.
STAGE 1:DEFINE What is the problem,why is it important,who is going to solve it? Using a host of tools and templates such as “project charters” and “critical to quality” diagrams. The more work done defining the problem,the more likely the problem will be successfully resolved. METHOD OF SIX SIGMA (DMAIC)
STAGE 2:MEASURE Understanding and quantifying the current reality, by using tools such as process mapping, collecting and validating data. STAGE 3:ANALYZE The quality of the hard supporting data has been verified,the six sigma team can begin the analysis. Identifying the ways in which people fail to ensure effective control at each stage.
STAGE 4:IMPROVE It is about eliminating the root cause of the problem and implementing a solution that will flag early if the process is on a slippery slope to defect land. STAGE 5:CONTROL The team creates controls,these are enabling the company to sustain and extent the improvements.
Manufacturing companies successfully using six sigma process improvement methodology. Example: General Electric and Motorola. Some service industries such as American Express.
DMADV OR DFSS The DMADV project methodology, also known as DFSS(Design For Six Sigma) DEFINE design goals that are consistent with customer demand and the enterprise strategy. MEASURE and identify CTQs (characteristics that are Critical To Quality), product capabilities, production process capability, and risks.
DESIGN details, optimize the design, and plan for design verification. The phase may require simulation. VERIFY the design, set up pilot runs, implement the production process and hand it over to the process owner.
Lack of originality One of the more common criticisms is that it has little to offer that can't be found elsewhere, that it's simply a marketing ploy.
Role of consultants The use of "Black Belts" as itinerant change agents has (controversially) fostered an industry of training and certification. Critics argue there is overselling of Six Sigma by too great a number of consulting firms, many of which claim expertise in Six Sigma when they only have a rudimentary understanding of the tools and techniques involved
Prices of course Another major criticism is about the price tag attached to the six sigma training. Typical price tag of a four week black belt course is $ 25000! This is prohibitive for most of the small and medium scale organization
Six sigma has been embraced by a large number of corporations in diverse areas including Motorola, General Electric, Du Pont, CITIBANK, Dow Chemical, Conseco Financial Services, Sony, and many others.
Mumbai’s Dabbawallahs & Six Sigma An interesting example of six sigma process in India is the Dabbawallahs of Mumbai. These folks have received international acclaim for their defect-free handling of lunch boxes for clients.
There are 1,75,000+ lunch boxes served everyday by approximately 5,000 Dabbawallahs within 3 hours using a 25 KM public transportation system of Mumbai. These lunch boxes are picked up from home and then delivered to office workers by lunch time. Dabbawallahs carry these lunch boxes for delivery using local trains, buses etc.. and deliver the lunch boxes on time. This service has been in existence for over 115 years and has been given Six Sigma award by Forbes magazine. There is no six sigma training conducted for them to deliver these lunch boxes without errors and yet they manage to keep their defects at just 1 defect every 6,000,000 deliveries.Six SigmaForbes magazine
From a six sigma perspective, the Dabbawallahs must contend with two CTQ’s (critical-to-quality parameters): (1) lunch boxes must be delivered on time, and (2) recipients must receive their own lunch boxes and not some one else’s. The response variables therefore are (1) arrival time, (2) correct box delivered (yes/no)? Out-of-tolerance response variables lead to defects and to customer dissatisfaction. A process map, if prepared, would have revealed what steps the Dabbawallahs would have to follow from pick up to delivery. The process map would also show the areas for data collection
According to what has been reported in the Indian press, every lunch box has marked on it a circle or a flower of a specific color and a digital identity number. The example reported is “K-BO-10-19/A/15”, where K is the identity letter of the Dabbawallah, BO stands for the area from where the lunch box is to be collected, (Borivali), The number 10 refers to Nariman point area and 19/A/15 refers to the 19th Building and the 15 th floor in Nariman point area where the box is to be delivered. In its July 11, 2008 issue, The Economist news magazine reported that dabbawallas are a model of Six Sigma management, holding a delivery accuracy rate of “ %.”
The intention of drawing a parallel of the Dabbawallahs process to six sigma is that six sigma is applicable to any process or transaction. In the world of business, processes and transactions are invariably more complex requiring comprehensive analysis and a tool set available in six sigma.
Concluding Remarks: Six sigma is powerful approach achieve breakthrough improvements in manufacturing, engineering and business processes. The approach relies heavily on advanced statistical methods that complement the process and product knowledge to reduce variation in processes. It is new way of doing business that would eliminate the existing defects efficiently and would prevent defects from occurring. Different strategies are used by organizations to introduce and deploy six sigma approach. Each of these strategies has advantages and potential failure modes that must be addressed and avoided.