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SIX SIGMA COMPANIES
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DEFINITION OF SIX SIGMA
Six Sigma is a data driven philosophy andprocess resulting in dramatic improvementin products/service quality and customersatisfaction. Six Sigma is the team approach to defining,measuring, analyzing, improving andcontrolling processes. Six Sigma is a set of tools aimed at reducingvariability in the inputs and in the process toincrease predictability of outputs.
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DEFINITION OF SIX SIGMA
Six Sigma as a metric Sigma as a way to measure quality - a standard that
reflects the degree of control over any process to meet
the standard of performance established for that process
Sigma as a yardstickallows to compare very different
business processes in terms of the capability of theprocess to stay within the quality limits established for
that process
Sigma measures defects per million opportunities
(DPMO)
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DEFINITION OF SIX SIGMA
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DEFINITION OF SIX SIGMA
4.6 s99.90000% Good Product or Service 6.0 s99.99966% Good4,000 Wrong medical prescriptions
each year13
3, 000 Newborns being dropped by
doctors/nurses per year
10
400 1Lost letters per hour
2 per daymajor airports
2 per yearShort or long landings at
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Reduce Variation and Center Process
Outputs are off specs which require inspection and added cost
Within Specs and Centered, Which doesnt need Inspection resulting tosavings
DEFINITION OF SIX SIGMA
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The Villain
Cost of Poorly Performing Processes
s level DPMO CP3
2 308,537 Not Applicable3 66,807 25%-40% of sales
4 6,210 15%-25% of sales
5 233 5%-15% of sales
6 3.4 < 1% of sales
Each sigma shift provides a 10% net income improvement
Cost of Poorly PerformingProcesses (CP3)
Sigma (s) is a measure of perfection relating to
process performance capability the bigger
the better.
A process operating at a Six Sigma level
produces only 3.4 defects per millionopportunities (DPMO) for a defect. Without
dedication of significant and appropriate
attention to a process, most processes in leading
U.S. companies operate at a level between 3 and
4 sigma.
IMPORTANCE OF SIX SIGMA
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and the Hero
We dont know what we dont know.
We cant do what we dont know.
We wont know until we measure.
We dont measure what we dont value.
We dont value what we dont measure.
Typical Results: companies that properlyimplement Six Sigma have seen profit marginsgrow 20% year after year for each sigma shift(up to about 4.8s to 5.0s. Since mostcompanies start at about 3s, virtually eachemployee trained in Six Sigma will return on
average $230,000 per project to the bottomline until the company reaches 4.7s. After that,the cost savings are not as dramatic.
However, improved profit margins allowcompanies to create products & services withadded features and functions that result ingreater market share.
What Does Six Sigma Tell Us?
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PROCESS MODEL
PROCESS
for the creation of aproduct or service
INPUTS
X1
X2
X3
etc..
PERFORMANCE
MEASURES
Y1
Y2
etc..
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PROCESS METHODOLOGY
DDefine
MMeasure
AAnalyze
I
Improve
CControl
Identify and state the practical problemBased on customer input, select the appropriate response (theYs) to be improved and ensure that they are quantifiable andcan be accurately measuredAnalyze the preliminary data to document performance ofbaseline process capability. Begin identifying root causes ofdefects (the Xs or independent variables)Determine how to intervene in the process to significantlyreduce the defect levels. Several rounds of improvement maybe required.Set up control systems to prevent recurrence of a problem
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SCOPING TOOLS
1. Critical to Satisfaction Tree(CTS)
2. Kano Model
3. Quality Function
Deployment (QFD)4. SIPOC Diagram
5. Pareto Chart
6. Process Map
7. Fish Bone Diagram
8. Fruits of Six Sigma9. Cause-and-Effect Matrix
10.Value Stream Map
11.Check Sheets
12.Activity Network Diagram
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MEASURE / ANALYZE TOOLS
Correlation and Simple Regression
Attribute Agreement Analysis
Gage Repeatability and Reproducibility(GR&R)
Design on Experiments
Analysis of Variance (Anova) Multiple Regression Analysis
Others
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HYPOTHESIS TEST
Null Hypothesis = Ho: No Significant Change: For Tests Of Process Mean: H0: m = m0 For Tests Of Process Variance: H0: s2 = s20
Alternate Hypothesis = Ha: Has Significant Change:
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IMPROVE PHASE
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CONTROL CHART SELECTIONPROCESSVariable Data Discrete or Attribute
Data
Characteristic
Selected
Variable
Data?
Homogeneous or
NOT able to
subgroup data?
Proportions Counts
Individuals
Chart (I-MR)
Subgroup
size > 9
Ability to calculate s
for each subgroup
Average Chart
(Xbar-R)
Average Chart
(Xbar-s)
No
Yes
No
Yes
Yes
No
Constant
sample size
np or p Chart
p Chart
No
Yes
No
Yes
Constant
sample size
c or u Chart
Yes
u ChartNo
Yes No
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TEAMING LEARNING AGILITY MARKET FORESIGHT
DMAIC ProcessDefine
Measure
Analyze
Process
Capability
OK?
Modify
design?
Improve
Process
CapabilityOK?
Control
Redesign
YES
NO
YES
YES
NO
NO
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Outline
Purpose of the Define Phase Deliverables of the Define Phase
Key Steps in the Define Phase
The Project Charter
Tools for the Define Phase
Deliverables from the Class
Groupwork (Project Charter and CTC Tree of a
Fictitious Company)
Groupwork (Project Charter and CTC Tree of
chosen company)
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To have the team and its sponsor
reach agreement on the
scope, goals, performancetargets, financial targets,
and management of theproject.1
1 modified from the main text.
The Purpose of the DEFINE Phase
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The Purpose of the DEFINE Phase AGREEMENT
A contract / charter.
SCOPE
Product or Process to be improved.
Client segments / Stakeholders to be affected.
GOALS
Gap between requirements and process
outputs, and the desired future state.
PERFORMANCE TARGETS
Key metrics and their corresponding baseline
and targets (may be completed in the Measure
Phase depending on the availability of initial
data).
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FINANCIAL TARGETS Preliminary estimates of monetary benefits of
the project.; preferably computed directly
from the improvement in the performance
targets. PROJECT MANAGEMENT
Project Member Roles
Schedule and Milestones
Communication Plan Budget and Other Resources
The Purpose of the DEFINE Phase
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Deliverables of DEFINE PhasePURPOSE DELIVERABLES
Agreement Project Charter
ScopeSIPOC
Client Types / Segments
GoalsProblem Statement;
Project Goals
Performance Targets CTC Tree, Project Objectives
Financial Targets Business Impact approved by aRepresentative of Accounting
Project Management
Gantt Charts (Milestones)
Team Members
Communication Plan
Budget
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Key Steps of the DEFINE Phase REVIEW DRAFT PROJECT CHARTER
Champion drafts an initial charter.
Preliminary team negotiates the scope, timing
and schedule, resources needed, and members.
Deliverables: Initial Statement of the Problem,Initial Team Composition, and Preliminary
Schedule.
VALIDATE PROBLEM STATEMENT AND GOALS
Validate existence of the problem. Define who the clients are.
Deliverables: Statement of the Problem. Project
Goals. Client Types / Segments.
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CAPTURE VOICE OF THE CUSTOMER (optional) Conduct necessary tools to identify customer
needs and priorities.
Deliverables: Kano Analysis, CTC Tree, CTC
specifications. CAPTURE VOICE OF THE PROCESS (optional)
Determine Baseline data for the CTCs
Establish targets.
(may be done in the measure phase).
Deliverables: Baseline data and Target Data.
Key Steps of the DEFINE Phase
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VALIDATE FINANCIAL BENEFITS Estimate cost savings and/or increase in
revenue assuming targets are met.
Deliverables: Business Impact.
CREATE PROCESS MAP Develop high-level process maps that provides
the scope the processes being improved.
Deliverables: SIPOC.
Key Steps of the DEFINE Phase
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FINALIZE PROJECT PLANS Identify stakeholders (sponsors, customers,
managers, process owners, project facilitators)
and team members.
Develop schedule, budget, milestones,communication plans
Deliverables: Gantt Charts (Milestones),
Communication Plans, Budget, Final Team
Members. Complete Project Charter signed byappropriate executives.
Note that the charter may be updated throughout
the project duration (subject to approval).
Key Steps of the DEFINE Phase
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DEFINE M A I CThe Project Charter or Team Charter
The Customer
The Voice of the Customer (VOC) Critical to Quality
Supplier-Input-Process-Output-Customer (SIPOC)
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DEFINE M A I CThe Project Charter or Team Charter
A project charter or team charter is a team contract that
summarizes the goal of the team and the resources (people,
time) that will be deployed for the project.
It is a living document. It is updated as more pieces of
information are known as the project progresses.
Project Title
What is the specific defect?
What is the improvement goal?
Example: Square Nano Qual i ty Project Team of L it te l fus e
Project Title: Reduction of Loose Caps in
Square Nano Fuses
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DEFINE M A I CThe Project Charter or Team Charter
Problem Statement
What is the problem (name of the process/product/line, period covered,
metrics)?
What is the effect of the problem (quality, cost, delivery)?
Example of a Bad Opportunity/Problem Statement
The Package Delivery process needs to be improved. ABC Company has
received numerous customer complaints. ABC employees also confirm there is a
problem, Improving the process will increase the Customer Satisfaction scores.
Example of a Good Opportunity/Problem Statement
The ABC Company shipped P8.2 million of products in April, many of which
were late (what). Data collected from customers for the last 5 months (when)indicates that an average of 44% of southern customers (where) experienced
problems but only 8% of others customers experienced problems. During the
month of April, ABC had 40 late shipments (extent) to the southern customers
worth P1, 520, 000.
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DEFINE M A I CThe Project Charter or Team Charter
Business Case
A clear and common understanding of why we should do the project,
and what it will cost us
Why is this project prioritized over other possible projects?
Quality /Delivery/Financial Benefits
What is the expected savings for this project?
For what period will the savings be realized (annual, monthly)?
Goal Statement What is the defect that needs to be reduced?
What is the baseline and the objective?
What is the expected date the target will be achieved?
30% - 70% break through improvement
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DEFINE M A I CThe Project Charter or Team Charter
Stakeholders Who or which specific function will be directly affected by the project
(management, suppliers, customers)?
Team Members and Project Champion
Who will be able to contribute to the project?
Who will remove roadblocks and allocate resources?
Scope and Limitations
What process will the project focus on?
What processes will be excluded from the project?
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DEFINE M A I CThe Project Charter or Team Charter
Team Members and Project Champion
Senior Execut iv e-- provides the impetus, direction and alignment
necessary for 6sigmas ultimate success
Champion- takes a very active sponsorship and leadership role in
conducting and implementing 6sigma projects. He/She should have
enough influence to remove obstacles or provide resources withouthaving to go higher in the organization
Process Owner manager of the process. Has the responsibility for
the process ad has the authority to change the process on his or her
signature
Master Black Belt- keeper of the 6sigma process and advisor to
senior executives or business unit managers Black b elt a full-time change agent and improvement leader who may
not be an expert in the process under study
Green belt works on the project part time
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DEFINE M A I CBusiness Case
Our current delivery time average is 72 hours for Product X.Customers are requiring delivery in 48 hours. Our competitorsare meeting the 48-hour requirement. As a result, we arelosing 1.5% of our customer base per month for the last 10months ($75,000/month), new sales are down10% for the same 10 months ($60,000/month). By decreasingour delivery time we anticipate the loss of the currentcustomer base to drop below 0.3% (savings=$60,000/month)and new sales will increase 18% above their original base($108,000).
Opportunity StatementWe currently have an average deliver orders cycle of 72
hours. Our customers require it within 48 hours. Ourprocess is currently operating at a 2.1 sigma level.
Goal Statement Reduce cycle time from call by customer to receipt by
customer to 48 hours by fourth quarter. Reduce number of defects 10 fold; from 20,000 to 2,000
by the end of the year. Increase process sigma to 3.5.
Project Scope Order Processing Core Process
Start: Call entered into system Stop: Product in customers hands
Involve all Department Core process related Enabling process related
Project Plan Team SelectionTime
Activitywk 1 wk 2 wk 3 wk 4 wk 5
Form Team
Finalize Charter
Gather Data
Analyze Data
Select Solution
Meet Management
Develop Plan to Implement
Closure & Recognition
Albert SponsorBarry Master Black BeltCarrie Black BeltDenise Dispatch SupervisorEric Senior DispatcherFrank Administrative ManagerGwen Truck Loader
Hillary Truck Loader
Project Charter: Customer Delivery Cycle Time Improvement
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DEFINE M A I CThe Project Charter or Team Charter
Another way to evaluate a Charters completeness is through an
evaluation methodology called SMART
This acronym is a checklist to ensure that the charter is effective and
thorough
Does it address a real business problem?Specific
Are we able to measure the problem, establisha baseline and set targets for improvement?Measurable
Does it relate to a business objective?Attainable
Is the goal achievable? Is the projectcompletely realistic?Relevant
Have we set a date for completion?Time bounded
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DEFINE M A I CProject Charter
Source: www.wcqc.asq.org/2009/team-competition/index.html
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The Project Charter
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The Project Charter
(Image Source: Keller, 2011)
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Tools for the DEFINE Phase
GANTT CHART Shows the schedule of each of the project
phase/activity.
(Image Source:
www.advsofteng.com)
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Tools for the DEFINE Phase
PERT-CPM Emphasizes critical activities that may increase
project duration if not properly followed.
Visually presents prerequisite activities of a
task. Provides slack times for other non-critical
activities.
(Image Source:
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Tools for the DEFINE Phase
SIPOC A high-level process map that captures
information critical to the project
Helps a team and its sponsors agree on project
boundaries and scope Helps verify that process inputs match outputs
of upstream process and the
inputs/expectations of downstream processes.
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SIPOC Diagram -- a tool used by a process improvement team to identify allrelevant elements of a process improvement project before work begins
DEFINE M A I C
S I P O CSuppliers
The provider of
inputs to yourprocess
Inputs
Materials,
resources ordata required to
execute your
process
Process
A structured set of
activities thattransform a set of
inputs into specified
outputs, providing
value to customers
and stakeholders
Outputs
The products of
services thatresult from the
process
Customers
The recipients of
the processoutput
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DEFINE M A I C
SIPOC (Image Source: www asq org)
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SIPOC (Image Source: www.asq.org)
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DEFINE M A I C
Source: www.wcqc.asq.org/2009/team-competition/index.html
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DEFINE M A I CThe Customer
The Customer is a recipient of a product or service
A customer may be internal or external
An internal customer is in the next process of department within the
same company
An external customer of end customer is the final recipient of the
finished product or service
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DEFINE M A I CVoice of the Customer (VOC) Critical to Quality (CTQ)
Voice of the Customer (VOC) actual needs as expressed by the
customer
Critical to Quality Characteristics product or service specification
quantified and translated from the VOC
Operational Definition (OD) allows only one interpretation of the VOC
Illustration:
VOC Safety
Delivery
Quality
Cost
CTQ
Cycle time
yield
OD
Time study
ppm, Cpk
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Customer Requirements
Functional Measures
Parts Characteristic
Manufacturing Process
Production Requirements
QFD Approach
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Tools for the DEFINE Phase
CRITICAL-TO-CUSTOMER (CTC) or CRITICAL-TO-SATISFACTION (CTS) TREE
Can help convert vague needs and wants of the
customers into precise functional requirements.
Specific Types of CTC/CTS.
CTQ critical-to-quality
CTD critical-to-delivery
CTC critical-to-cost
Special Types of CTC
Trees
CTX Product Tree
CTY Process Tree
Voice of the Customer The Why(After Clarification)
CTC Requirement
I hate dealing with your
company.
Products are not
delivered on time.
10 day lead time
(+/- 1 day)
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CTC TREE (Image Source: www operations-excellence blogspot com)
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CTC TREE (Image Source: www.operations excellence.blogspot.com)
CTC TREE (Image Source: www tebyan net)
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CTC TREE (Image Source: www.tebyan.net)
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Critical-to-Quality(CTQ)Tree-- convertcustomer needs/wants to
measurable requirements for
the business to implement.
DEFINE M A I C
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Critical-to-Quality (CTQ)Tree
DEFINE M A I CExample:
Ben-Hurs Pizza wishes to add home delivery to their services in order to
expand their business. They have surveyed current and potential
customers to determine what would make them order Ben-Hur pizza
instead of a competitors or instead of a different kind of food.
Summarized VOC data told them that when customers order-in pizza,they want hot pizza, now, with my choice of toppings and crusts, at a
reasonable cost.
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Critical-to-Quality (CTQ)Tree
DEFINE M A I CCTQ Tree for VOC NOW
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LOGO
LOGO
Your company slogan in here
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