Six Sigma Programs Students should be able to: Describe the key elements of a Six Sigma program and how they can be applied to any business process. Explain the five-step process for successful Six Sigma programs. Identify the important drivers for successful implementations of Six Sigma.

What is Six-Sigma?  Focus on and deliver what the customer wants  Simplify processes and close gaps in capabilities  Improve employee productivity and satisfaction  Achieve better business results…market share, revenue and income A strategy... discipline.... a set of tools that:

Key Concepts of Six Sigma Critical to Quality (CTQ):Attributes most important to the customer (Competitive Priorities) Defect:Failing to deliver what the customer wants Process Capability:What your process can deliver Stable Operations:Ensuring consistent, predictable processes to improve what the customer sees and feels Variation:What the customer sees and feels Six Sigma focuses first on reducing process variation and then on improving process capability.

Why Variability is Important Lower specification Mean Upper specification Six sigma Four sigma Two sigma Nominal value

Process Capability Nature of the Problem Six Sigma Methodology identifies Processes That Are Off-target, and/or Have a High Degree of Variation, and Corrects the Process

1.Define--Identify the gaps between competitive priorities and competitive capabilities.  What is a defect?  Scope  Deliverables  Team composition  Steering committee  Goals Six Sigma: A Five-Step Process D - M - A - I - C

2.Measure — quantify the work the process does that affects the gap.  Process flowchart Six Sigma: A Five-Step Process D - M - A - I - C

Pricing Process

3.Analyze—determine the drivers for optimal outcomes and establish procedures to make the outcome routine.  Process capability analysis  Cause and effect matrix Six Sigma: A Five-Step Process D - M - A - I - C

Incapable Processes Process average Nominal value Lower specification Upper specification Off Target Lower specification Upper specification Nominal value Too Variable

Capability Measures Cpk = Minimum of ProcessCapabilityIndex Upper specification – x 3  x – Lower specification 3 , = = Target ValueVariability Capability 1.00 Three Sigma 1.33 Four Sigma 1.67 Five Sigma 2.00 Six Sigma

Capability Measures Cp = Upper specification - Lower specification 6  Process Capability Ratio Target ValueVariability Capability 1.00 Three Sigma 1.33 Four Sigma 1.67 Five Sigma 2.00 Six Sigma

Cause and Effect Matrix

Sales Data

4.Improve—modify or redesign existing methods to meet new performance objectives  Decision guidelines  Escalation process  Exception codes Six Sigma: A Five-Step Process D - M - A - I - C

What Continuous Improvement Looks Like

5.Control—monitor processes to make sure high performance levels are maintained.  Monthly performance reviews Six Sigma: A Five-Step Process D - M - A - I - C

GE Early Dispute Resolution Process What are the competitive priorities for the EDR process? What is causing us to miss the competitive priorities? What process measurements would you suggest?

GE EDR System Level 1: PrivateResolution Level 3: PublicAdjudication Level 2: ExternalFacilitation No Further Action Necessary Conflict Noted Business Unit Attempts to Informally Resolve Conflict ResolutionReached? No Yes No Further Action Necessary Litigation Refer to Legal Group: Form DR Team Evaluate Case Select Dispute Resolution Vehicle/ Review Ongoing Discussion w/Opponents Form DR Team Evaluate Case Select Dispute Resolution Vehicle/ Review Ongoing Discussion w/Opponents Convene for ADR Appeal ResolutionReached? No Further Action Necessary Yes ResolutionReached? No ResolutionReached? No Further Action Necessary No ADR Process (Mediation, Negotiation, Arbitration; Mediation Preferred) Yes No

Summary Everything we do is a process that can be defined. Every process can be broken down, measured, and analyzed into its component parts and therefore can be improved by focusing on what is critical to the customer’s perception of quality. To be successful, the entire process and any improvements must be continually measured and controlled. Drivers for success include a corporate culture institutionally committed to the notion of change, a profound commitment to quality in everything the business does, and strong leadership.