Six Sigma Introduction 1 1

WHAT IS SIX SIGMA? Six Sigma is a highly disciplined process that helps us focus on developing and delivering near-perfect products and services – as defined by our customers. Why ”Sigma“? The word is a statistical term that measures how far a given process deviates from perfection. The central idea behind Six Sigma is that if you can measure how many “defects” you have in a process, you can systematically figure out how to eliminate them and get as close to “zero defects” as possible. 2

KEY CONCEPTS OF SIX SIGMA Critical to Quality: Defect: Process Capability: Variation: Stable Operations: Attributes most important to the customer. Failing to deliver what the customer wants. What our process can deliver. What the customer sees and feels. Ensuring consistent, predictable processes to improve what the customer sees and feels. 3

SIX SIGMA ─ ELEMENTS OF QUALITY Three key elements of quality: customer, process and employee. Delighting Customers: In every attribute that influences customer perception, we know that just being good is not enough. Delighting our customers is a necessity. Because if we don’t do it, someone else will! Outside-In Thinking: Quality requires us to look at our business from the customer’s perspective, not ours. With this knowledge, we can identify areas where we can add significant value or improvement from their perspective. Leadership Commitment: People create results. Quality is the responsibility of every employee. Every employee must be involved, motivated and knowledgeable if we are to succeed. 4

GAUSSIAN DISTRIBUTION ─ BELL CURVE -4 -3 -2 -1 68.26% Number of standard deviations of average value 95.4% 99.74% 34.13% 13.57% 2.16% 0.13% Reversal Point To achieve Six Sigma quality, a process must produce no more than 3.4 defects per million opportunities.

The higher the value, the more efficient the process THE SIGMA-LEVEL Measuring Method to Determine Process Performance SIGMA ERROR RATE DEFECTS PER MILLION* SUCCESS RATE (Y%) 1 69% 691.462 31 2 31% 308.538 69 3 6.7% 66.807 93.3 4 0.62% 6.210 99.38 5 0.023% 233 99.977 6 0.00034% 3.4 99.9997 7 0.0000019% 0.019 The higher the value, the more efficient the process

SIX SIGMA AND CX Our Customers Feel the Variance, Not the Mean Often, our inside-out view of the business is based on average or mean-based measures of our recent past. Customers don’t judge us on averages, they feel the variance in each transaction, each interaction. Six Sigma focuses first on reducing experience and process variation and then on improving the process capability. Customers value consistent, predictable business processes that deliver world-class levels of quality. This is what Six Sigma strives to produce. 7

BREAKTHROUGH-STRATEGY DURATION IN YEARS 3 1 2 5 4 IMPROVEMENT QUOTA BREAKTHROUGH- IMPROVEMENT SIX SIGMA (Optimal Improvement) STANDARD METHODS (Gradual Improvement) GRADUAL IMPROVEMENT: Kaizen Re-Engineering TQM Current Tools and Approaches

SOURCES FOR SIX SIGMA PROJECTS The Following Methods are Applied DMAIC Improvement of existing processes (DMAIC-Cycle: Define, Measure, Analyze, Improve, Control) DFSS – DESIGN FOR SIX SIGMA Creating new products and processes (DMADV-Cycle: Define, Measure, Analyze, Design, Verify) CHANGE MANAGEMENT Tools to initiate, support and control the necessary alteration processes PROJECT MANAGEMENT Coordination and implementation of all initiated projects. Due to state of the art development tools companies operate faster, more individual, more rational

SIX SIGMA – SUCCESS FACTORS Increase of Company Value through Customer Satisfaction and Customer Loyalty SIX SIGMA Evaluation + improvement of customer’s satisfaction > DMAIC-Process View through rearview mirror Customer Loyalty through implementation of critical improvements based on customer demands DESIGN FOR SIX SIGMA Detect + fulfill future important customer requirements > DFSS View through front window

DMAIC-CIRCLE / DMAIC-CYCLE DMAIC-Cycle to Measure Current Projects and Their Improvement WHAT IS THE PROBLEM Problem description and definition of project objective; initiation of project and planning of milestones SEVERITY OF THE PROBLEM Determination of causes for actual problems and cause variables, quality, data and facts REASONS Processing of the results and problem analysis SOLUTION Selection of solution alternatives and implementation of a strategy to reach goals IMPROVEMENT AND SUSTAINMENT Implementation of solution approach, monitoring, controlling and documenting CONTROL ANALYZE DEFINE MEASURE IMPROVE

DEFINE – DEFINITION PHASE Tasks of the Six Sigma Champion Preparation of project charters 1 Focus on customer requirements and company interest 2 Securing of sufficient project resources within the team (commitment of all participants) 3 Strict separation from other projects 4 5 Consideration of economical value, probability of success and availability of resources

PROJECT ORGANIZATION AND ROLES Description of roles and related skills CONTROL CIRCUIT CHAMPION MASTER BLACK BELT BLACK BELT GREEN BELT YELLOW BELT Responsible for budget and resources; sponsor of Six Sigma projects Experienced senior project manager; management of cross-sectional strategic projects Project manager and Coach; executes projects together with other business divisions Leads projects within his sector of responsibility; implementation of smaller Six-Sigma projects Part of the project team, which applies Six Sigma methods; supports execution of projects TEAM MEMBER 13

THREE IMPLEMENTATION APPROACHES COMPANY WIDE STRATEGY TOOLBOX IMPROVEMENT PROGRAM IMPLEMENTATION IN TOP-DOWN-PROCESS Management makes decisions on the introduction of Six Sigma, which are transferred to all company levels USE POTENTIALS Internal improvement initiative, to use improvement potentials within the day-to-day routine of the company 7X7-TOOLBOX Success by integration of selected improvement tools from the 7x7-Toolbox (mixture of techniques, methods and mental models)

RECAP – WHAT IS SIX SIGMA? INDICATOR OF Efficiency of processes TOOLBOX Process, analysis, statistics, problem solving strategy PROBLEM SOLVING METHOD Systematically , data oriented, (DMAIC-Method, DMADV) PROCESS IMPROVEMENT Operative and productive processes QUALITY INITIATIVE Measurable success like increased revenue and lowered costs CUSTOMER REQUIREMENTS Not quality improvement at all costs 15

FEELING QUALITY (CX) Practical Meaning of Process Performance 16