1. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing 1 Principles of Six Sigma

2. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing What is Six Sigma  It is a now standardized way to measure progress toward quality goals.  In another sense it is an overall philosophy and management system – improve what is critical to quality (CTQ) in every part of the organization.  The Six Sigma calculation itself is not a method or formula.  Best way to understand – how many patients out of one million do you want to die due to error?

3. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Key Idea Although we view quality improvement tools and techniques from the perspective of Six Sigma, it is important to understand that they are simply a collection of methods that have been used successfully in all types of quality management and improvement initiatives, from generic TQM efforts, to ISO 9000, and in Baldrige processes.

4. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Explanation of figure 10.1 and table 10.1  The off-centering values represent possible amount of drift in the process mean for short period of time before detected by control chart. Defects are product/service instances falling outside quality tolerance limits. Values in the intersections show the defects per million likely to occur with a combination of off-centering tolerance and sigma quality level. Correction typically occurs after only a small portion ot the million opportunities

5. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing k-Sigma Quality Levels

6. 6 Problem Solving  Problem: any deviation between what “should be” and what “is” that is important enough to need correcting  Structured  Semistructured  Ill-structured  Problem Solving: the activity associated with changing the state of what “is” to what “should be”

7. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Quality Problem Types (1) 1. Conformance problems – well-structured system – worked before but is not working now -- find causes and restore 2. Unstructured performance problems – poorly specified system – example – what are ‘poor sales’? --cannot ‘restore’ – needs new design

8. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Quality Problem Types (2) 3. Efficiency problems –quality ok for customers but profit not ok for stakeholders -- streamline 4. Product design problems – need CTQ (critical to quality) product/service features 5. Process design problems – need to link process to customer requirements – benchmark/reengineer

9. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Key Factors in Six Sigma Project Selection  Financial return, as measured by costs associated with quality and process performance, and impacts on revenues and market share  Impacts on customers and organizational effectiveness  Probability of success  Impact on employees  Fit to strategy and competitive advantage  Support vision & competitive strategy

10. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Problem Solving Process One method – see figure 10.2 – determine the numbers and then simple sum of products Could use this for our discussion question tonight.

11. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Key Idea A structured problem-solving process provides all employees with a common language and a set of tools to communicate with each other, particularly as members of cross- functional teams.

12. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing DMAIC Methodology 1. Define 2. Measure 3. Analyze 4. Improve 5. Control

13. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing DMAIC Methodology 1. Define the problem – drill down past the symptom to causes – note trail – unreliable motors – warranties on brushes – brush hardness – process variability 2. Measure link between process performance and customer value – operationalize definitions - - Y=f(X) –see figure 10.3

14. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing DMAIC Methodology 3. Analyze --- find the root condition which, once corrected properly permanently prevents recurrence – medical analogy – example – fuse blew – inadequate lube for bearing—lube pump not working – pump axle worn – sludge seeped into pump axle – strainer to fix 4. Improve –- implement what analysis indicates – to do list 5. Control – maintain improvements – put tools in place – establish acceptable ranges

15. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing DMAIC example -- AMEX  Define & measure – 1,000 returned renewal cards a month  Analyze – highest defect rate among returns with forwardable addresses  Improve – National Change of Address database – reduced from 13.5 K to 6K dpo  Control – track proportion of returns

16. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Tools for Six-Sigma and Quality Improvement  Elementary statistics  Advanced statistics  Product design and reliability  Measurement  Process control  Process improvement  Implementation and teamwork

17. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Design for Six Sigma  Focus on optimizing product and process performance  Features  A high-level architectural view of the design  Use of CTQs with well-defined technical requirements  Application of statistical modeling and simulation approaches  Predicting defects, avoiding defects, and performance prediction using analysis methods  Examining the full range of product performance using variation analysis of subsystems and components

18. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Key Idea All Six Sigma projects have three key characteristics: a problem to be solved, a process in which the problem exists, and one or more measures that quantify the gap to be closed and can be used to monitor progress.

19. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Key Six Sigma Metrics in Services  Accuracy  Cycle time  Cost – late delivery, errors and rework drive cost up – manufacturing & service alike have ‘hidden factories’  Customer satisfaction

20. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Lean management  Basic principle – continue to reduce required number of stations, steps, machines – two or more processes where used to complete only one  Simple example – stuffing envelopes

21. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Lean Production and Six Sigma (1)  The 5S’s: seiri (sort), seiton (set in order), seiso (shine), seiketsu (standardize), and shitsuke (sustain).  See Texas Die Casting example

22. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Lean Production and Six Sigma (2)  Visual controls – status always visible  Efficient layout and standardized work – example – impossible to insert part upside down  Pull production – kanban or similar system  Single minute exchange of dies (SMED) – slow setup comes from old system where particular line seldom changed over – now flexible manufacturing requires maximum efficiency in setup

23. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Lean Production and Six Sigma (3)  Total productive maintenance – as in 5Ss  Source inspection – every worker inspects at her/his station  Continuous improvement – by now an old idea

24. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Texas Die Casting web site  · What is 5S and Why Do We Want To Do It? - Short Summary of 5SWhat is 5S and Why Do We Want To Do It?  · · 5S Training – see all the items but especially Sort Summary with respect to red- tagging5S Training  Web slide show of the Plant-Wide 5S event on December 2002 Plant-Wide  · Office and Office Storage Areas-March & April 2006Office and Office Storage Areas-March & April 2006

25. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing http://www.tocforme.com/mainlea n.html#5s

26. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing Example  Lean mfring principles and practices – see manufacturing as a system (right side) and Six Sigma/TQM on left

27. MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Thomson Higher Education Publishing http://www.strategosinc.com/prin ciples.htm