2. © 2001 Six Sigma Academy Six Sigma…Key Concepts John Krupar

3. © 2002 Six Sigma Academy Cost Reduction Operational Excellence Client Satisfaction Growth Process Capability VARIABILITY FMEA CTQ Multivariate Statistics Mistake Proofing Reliability SPC Process Mapping DOE C&E Matrix Problem Solving Systems Thinking WASTE Visual Controls Linkages & Flow Testing for Value Value Stream Mapping 5S Takt Standardize Unpredictable Demand Balanced Work JIT GROWTH Supplier Capability QFD Design From Ground Up Predictive Modeling Product Development TRIZ The Breakthrough Strategy®

4. © 2002 Six Sigma Academy Cost Reduction Operational Excellence Client Satisfaction Growth Process Capability DMAIC FMEA CTQ Multivariate Statistics Mistake Proofing Reliability SPC Process Mapping DOE C&E Matrix Problem Solving Systems Thinking LEAN Visual Controls Linkages & Flow Testing for Value Value Stream Mapping 5S Takt Standardize Unpredictable Demand Balanced Work JIT DFSS Supplier Capability QFD Design From Ground Up Predictive Modeling Product Development TRIZ The Breakthrough Strategy® Solve Difficult Business Problems for the Last Time… Using the Appropriate Tools Solve Difficult Business Problems for the Last Time… Using the Appropriate Tools

5. © 2002 Six Sigma Academy Breakthrough Strategy Characterization Optimization Phase 1: Measure Phase 2: Analyze Phase 3: Improve Phase 4: Control determination of improvement opportunities Process Characterization is concerned with the identification and benchmarking of key process characteristics, and the and goals. Process Optimization is aimed at identifying, improving and controlling the key process variables which exert undesirable influence over the key process characteristics. Phase 0: Define Phase 0: Define Define the problem and agree on the objective. Define the metrics. Map Process. Validate measurement systems. Collect relevant data and begin basic analysis Identify the few key factors which are directly influencing the problem. Determine optimum values for the few key factors which resolve the problem. Determine long term control measures which will ensure that improvements are sustained. The Breakthrough Strategy®

6. © 2002 Six Sigma Academy Key Concepts - Define & Measure Understanding Customer Needs Six Sigma Starts & Ends with the Customer

7. © 2002 Six Sigma Academy Value Performance Satisfiers Satisfier – Non-Smoking Room Available Linear Linear -- $10 Discount Delighters Delighter – Bellman greets by name, Correct Pillow, Shelled pistachio’s Voice of the Customer Kano Analysis…One of Many Tools

8. © 2002 Six Sigma Academy Problem Statement Baseline Performance and Entitlement Measurement Systems Validation Process Mapping Practical Problem: 750,000 calls out of the 4,000,000 received at the call center are not resolved during the initial conversation with the client. These calls require the call center operator to make a return call to the client to answer their request. During a recent client survey, 20% of the clients stated that they were calling regarding an unresolved issue from a previous call. The Problem Statement is written understanding of the practical problemProcess Mapping gives a visual representation of the “Actual Process” Short Term and Long Term Capability provide us a look at what is possible as well as what our customers are experiencing from our process Measurement Systems Analysis ensures that all Parties have the same Operational Definition of the Problem Call Center Case Study – Measure Phase Illustrative Example

9. © 2002 Six Sigma Academy Key Concepts - Analyze Entitlement Variation

10. © 2002 Six Sigma Academy Entitlement  The focus should be to shift the overall performance to the Entitlement level. This drives dramatic short-term improvements in cost and quality with minimal investment in technology.  Only after the Entitlement level is achieved should an investment be made to redesign / reengineer the systems or infrastructure. The optimum level that a process currently performs is the Entitlement. This can be replicated once the variables are truly understood. Output Variation Days 1 5.5 11 18 38 Mean Entitlement Performanc e Shift Delivery of client Orders Upper Specification Limit Avoid Capital Investment Until Entitlement is Reached

11. © 2002 Six Sigma Academy Variation Average vs. Variation Average tells little about client experience In example 1, the average number of days it takes to deliver our product is 40 days. However, this process has a high variation, with 50% of the orders filled between 40-80 days In example 2, the average number of days it takes to deliver our product is also 40 days. However, in this process, there is very little variation and the order is filled in no more than 50 days To drive dramatic improvements in performance, the variance in a process must first be minimized Days 10 40 80 Output Variation Mean Example #1 Example #2 Product Delivery Process. Businesses do not Excel Managing ‘Averages’. Businesses (and Customers) Are Negatively Impacted by Extremes in the Variation of the Process Businesses do not Excel Managing ‘Averages’. Businesses (and Customers) Are Negatively Impacted by Extremes in the Variation of the Process

12. © 2002 Six Sigma Academy Data Collection Plan Hypothesis Testing Multi-Vari Analysis A Multi-Vari begins with a specific data sampling planThe Multi-Vari provides a graphical representation of the data The Vital Few Variables are those X’s that are supported by the data and deserve further analysis Hypothesis Tests are statistical tests that attempt to prove statistically if the averages and standard deviations of groups are the same or different Statistical Problem: Data was collected from each of 16 operators, three times a day, over three days from each of the three call centers. The graphical representation identified 4 of the operators as having a lower mean and a very low standard deviation for resolution of client calls. This phenomenon was evident only in the morning. Vital Few Variables Based on the Multi-Vari Analysis and confirmed by the Hypothesis Testing, Operator and time of day was statistically significant. The X’s identified in our process exploration that are potentially impacted by this interaction are: x1 Technical Support Availability x2 Bandwidth Availability x3 Market Volumes x4 Client Performance Call Center Case Study – Analyze Phase Illustrative Example

13. © 2002 Six Sigma Academy Key Concepts - Improve Waste Transfer Function (Re)Design “To Be” State

14. © 2002 Six Sigma Academy Waste Elimination Lean (Waste Elimination) can be summarized in five principles*: Principle 1 - Precisely specify the value of a specific process Principle 2 - Identify the value stream for each process Principle 3 - Allow value to flow without interruptions Principle 4 - Let the customer pull value from the process Principle 5 - Continuously pursue perfection * Womack, J. P. and D. T. Jones, 1996, Lean Thinking, Simon & Schuster

15. © 2002 Six Sigma Academy Pareto of Effects Statistical Solution Main Effects Plot Interaction Plots A Design of Experiments is the only true Cause and Effect tool to understand what impact each of the vital few variables has on the output The final output of a Design of Experiment is a Mathematical Transfer Function describing Y=f(x). Main Effects Plots identify those variables whose impact is directly tied to the output in question. Interaction Plots identify those variables that their result depends on the setting of another variable. Conclusions: From the mathematical model, it is obvious that when bandwidth and Technical Support are available, many of our operators are able to resolve the clients questions during the first call. Call Center Case Study – Improve Phase Illustrative Example

16. © 2002 Six Sigma Academy Key Concepts - Control Measure … Forever Control …. The Key Differentiator of Six Sigma

17. © 2002 Six Sigma Academy Aspects of Control AMOUNT OF CONTROL Verbal InstructionsWritten InstructionsVisual ManagementStatistical Process ControlPoka - Yoke (Mistake Proofing) Design for Six Sigma Amount of Effort of Process Owner Automation Desired Direction of Control Systemic Change

18. © 2002 Six Sigma Academy “Someone, who with their team, solves a difficult business problem… Definition of a Black Belt …for the last time.”

19. © 2002 Six Sigma Academy Practical Solution Financial Results Final Capability Control Continuum The Control Phase focuses on implementing the practical solution Driving the solution to a region of greater control assures the process owner that the solution is simpler than the problem… and the solution is mistake proof Each 6 Sigma project is individually audited to ensure that it has a positive impact on the business, the client, and employee satisfaction. AMOUNT OF CONTROL Verbal Instructions Written Instructions Visual ProcessStatistical Process Cntrl Poka - Yoke (Mistake Proofing) Design for Six Sigma Amount of Effort Expended by the Process 1. Bandwidth Availability: A legacy tool, which requires a significant amount of bandwidth is used by a few of the operators. This tool could only be practically employed during the morning hours of the CC East and CC South,when users logged on to the system were at a minimum. This legacy tool was thought to be obsolete, but when IT was informed that operators still had a need for the screen, they reconfigured it to use just a fraction of the bandwidth. This allowed all operators to have the screen added to available on-line help. 2. Technical Resource Availability: When the “better operators” were monitored, it was shown that they were able to quickly answer their clients questions when a couple of supervisors in Cashiering were available by phone. These resources were generally only available during the early morning hours. When we spoke with these supervisors, we determined that they were reviewing information from a level of a help screen not authorized to the call center operators. A risk assessment was completed and it was determined that all call center operators should have this access. The final capability is the statistical proof that the process is now improved Defect Rate Reduction: 97% DPMO Reduction205,000 Sigma Level Improvement0.88 Cost Savings $2.75M Summary Call Center Case Study – Control Phase Illustrative Example

20. © 2002 Six Sigma Academy A Critical “Unintended” Consequence Leadership Development

21. © 2002 Six Sigma Academy How Is Six Sigma Different From Other Change Initiatives? IT IS NOT:  Just a “quality” program IT IS:  Focused on strategic business priorities  Fact-based decision making  Focused on minimizing waste and variation  Dedicated resources with clear accountability  Narrowly scoped projects that are measured, statistically validated, controlled, and sustained  Quantified project benefits  Demonstrated track record of success across industries  An Enabler for Cultural Transformation Common Language Common Methodology Common Metrics