Barry Murash MBBit Nortel 2007 DMAIC – An Overview Barry Murash MBBit Nortel 2007

6 Sigma Evolution… Where did it come from… A continuation of the overall TQM (Total Quality Management) concept of “continual improvement” of a process originally introduced by the “Quality Guru’s” …Deming…Juran…Crosby…Taguchi. Conceptualized and formally introduced by Motorola in the mid 1980’s as a quality goal required because technology was becoming so complex that the traditional ideas about acceptable quality levels were inadequate. In 1989 Motorola announced a five-year goal – a defect rate of not more than 3.4 parts per million – or 6 Sigma on its key processes.

By the Numbers . . . Fortune 500 companies doing Lean Six Sigma 100 Dollars returned compared to dollars invested 8:1 Benefits as a percent of revenue for top companies 5 $1B KO only - Additional $2.3-$3.9B potential within the Bottling System

Six Sigma: Measure of Process Capability Sigma (“”) is a measure… 6 Process output = 3.4 Defects per Million Opportunities 6 5 4 Defective 3 * DPMO = Defects per million opportunities 2 Process Output (Variation) 1 Motorola developed the Six Sigma methodology in the mid-1980s Six Sigma has evolved from a set of statistical process control tools to a framework for managing a business end-to-end. Six Sigma focuses on understanding what the Customer wants (value added), and then focuses on rigorously improving performance: Reduce process variation Ensure the process will meet the Customer’s expectations. Sigma (“”) is a measure of process variation. The Sigma level indicates the amount of process output that meets the Customer’s expectations. The higher the Sigma level, the less variation there is in the process, and the Customer is more satisfied. The Sigma level relates to the number of defects created in one million opportunities. EXAMPLE: What if the Customer expects a proposal response within 48 hours? If we are at 2 capabilities then 31 responses out of every 100 proposals will exceed 48 hours. If we are at 3 capabilities then 7 responses out of every 100 proposals will exceed 48 hours. If we are at 6 capabilities then only 4 responses out of 1 million proposals will exceed 48 hours. FOR TEAM DISCUSSION: Where do you think we are operating in our current functional process? (Most companies are operating at 3-4 Sigma levels.) What should we be measuring to know we are meeting Customer expectations? Customer Expectation …that focuses on the variation of the process output

A Structured Framework Tell us what’s important - Focus - Helps us fix the problem - Improve - Top-Level Indicators Problem Solving (DMAIC) Closing Performance Gaps Aligning the Organization Managing Processes DEFINE the project boundaries Define Measure Analyze Improve Control MEASURE the defects and where they occur in the process ANALYZE why the defects occur and verify which reasons are root causes IMPROVE performance by implementing solutions that eliminate root cause(s) CONTROL the process by monitoring upstream to ensure the problems stay fixed Vision Tell us what’s not working - Measure - Process (Re) - Design (DMADV) Process Management Control Systems DEFINE the project opportunity and boundaries Define Measure Analyze Design Validate MEASURE and prioritize customer requirements (CTQs) ANALYZE alternative high level process design against CTQs DESIGN optimize the detailed process flow supporting the high level selected VALIDATE that the design meets and achieves performance objectives To instill process discipline & fact-based decisions

DMAIC – An Iterative approach Define Measure Analyze Improve Control Team Charter Process Mapping Defining CTQs SIPOC Measure process Performance Measure CTQs Determine baseline sigma level Identify & Quantify root causes Use various statistical and analytical tools, identify low hanging fruit Select, design & Implement solution Institutionalize Improvements Implement ongoing Controls Standardize process

DEFINE at a Glance To define the customer, their CTQs, the team charter, and map the core business process Identify Business Opportunity/Gap ($) Identify Outcome Indicators Select Resources (% Time) and Charter Project Select measures that link process performance to problem area related to CTQ Shows need for improvement Identify Customer’s Critical To Quality (CTQ) Attributes Develop Preliminary Problem Statement Map High Level Processes and Set Boundaries Assess Financial $ Impact (COQ) Prepare Communication & Project Plans

MEASURE at a Glance To measure the process performance Create Detailed Process Map Develop Data Collection Plan Assess Process Performance Set Process Performance / $ Improvement Goal Collect Data Stratify Data Identify Value Added & Non-Value Added Steps Develop Final Problem Statement Customer Calculate Performance Plot Defect Data Over Time

Brainstorm and Organize Potential Causes ANALYZE at a Glance To analyze the data and the process map to determine root causes and opportunities for improvement Brainstorm and Organize Potential Causes Confirm Root Causes Root Cause and Effect Diagram Root Cause Cause 1 Sub Sub Cause 1 Sub Sub Cause Sub Sub Sub Sub Sub Sub Sub Cause Sub Cause Cause Sub Cause Sub Cause and Effect Diagram Cause Final Problem Statement Final Problem Statement Sub Sub Sub Sub Cause Cause Cause Sub Sub Cause Cause Sub Cause Sub Sub Cause Sub Cause Sub Sub Cause Sub Sub Cause Cause Root Sub Sub Cause Root Sub Sub Cause Cause Cause 2 2 Verify Potential Causes with Data 5 Made the Sale Did Not Make the Sale Time With Customer (in minutes) 10 15 20 25 30 3 40 45 50 55 60 >60 Did Not Make the Sale Stratified Frequency Plots Contingency Table Sub Cause Yes No Present Not Defect Scatter Plots Y X

IMPROVE at a Glance } To generate, select, and implement improvements Identify and Select Solutions Conduct Risk Analysis Develop Pilot Plan Update Outcome Indicators Gantt Chart FMEA Solution Selection Matrix Cost Action Problem Root Causes Solutions Effectiveness Ease to Implement Total Score Specific Tasks Item or Process Step Potential Failure Mode Effect (s) of Failure Cause(s) Current Controls RPN Recommended Action Responsibility and Target Date Action Taken Severity Occurrence Detection “After” Total Risk Priority Number = Risk Priority Number = Before After IMPROVE changes implemented } Improvement Good Time DEFINE Before Before After After Good 3.6s 3.2s IMPROVE changes implemented } Improvement Time Time Conduct Cost/Benefit Analysis Develop Action Plan For Full Implementation Quantify Pilot Results Updated Pareto Chart Cost/Benefit Analysis Approval from Finance Cost Benefit Solution (s) / Specific Task (s) ____________________________ Problem Statement ________________________________________ : Task / Project Who Due Date Status Before After 1.3 s A1 A2 A3 A4 } Improvement 3.1 s 50% 25% 75% 100%

CONTROL at a Glance CONTROL: Story Components To institutionalize the improvement and implement ongoing monitoring CONTROL: Story Components To institutionalize the improvement and implement ongoing monitoring Develop and Document Standard Practices Train Personnel Train Personnel Verify Cost/Benefit Develop and Document Standard Practices Training Curriculum Training Manual Cost/Benefit Analysis Approval from Finance Standard Practice Training Curriculum Training Manual Standard Practice Fully Implement Solutions and PMCS Fully Implement Solutions and PMCS Close Project and Celebrate “X” Upstream Indicators UCL LCL “Y” Outcome Indicators Good “X” Upstream Indicators UCL LCL “Y” Outcome Indicators Good Build the Process Management Control System Replicate Projects at Other Locations Build the Process Management Control System Verify Cost/Benefit Cost/Benefit Finance Approval Close Project and Celebrate Replicate Projects at Other Locations