A BRIEF INTRODUCTION TO SIX SIGMA

A BRIEF INTRODUCTION TO SIX SIGMA

Dr. Ömer YağızDepartment of Business Administration

METU

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What is six-sigma?

Six-sigma is a is a comprehensive and flexible system for achieving, sustaining, and maximizing business success by minimizing defects and variability in processes.

It relies heavily on the principles and tools of TQM.

It is driven by a close understanding of customer needs; the disciplined use of facts, data, and statistical analysis; and diligent attention to managing, improving, and reinventing business processes.

What is six-sigma?

Another definition from Isixsigma.com Six Sigma is a rigorous and disciplined

methodology that uses data and statistical analysis to measure and improve a company's operational performance by identifying and eliminating "defects" in manufacturing and service-related processes.

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What is six-sigma?

GE and many other successful practitioners of six-sigma, view it as a strategy

focusing on what the customer wants, internal or external

aiming at total customer satisfaction achieve better business results as

measured by market share, revenue and profits

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What is six-sigma?

a discipline it has a formal sequence of steps, called

the Six-sigma Improvement Model, to accomplish desired improvements in process performance

the goal is to simplify processes in order to make them more efficient and effective

a set of tools makes use of many powerful tools, some

of them statistical in nature, in order to monitor, analyze, correct and/or redesign operations and processes used in all areas of an organization 5

Origins of Six-sigma

Motorola credited with developing six-sigma in

1987 to improve its manufacturing capability in a world marketplace that was becoming increasingly competitive

set a “stretch goal in 1987 to “Improve product and services quality ten

times by 1989, and at least one hundred fold by 1991. Achieve six sigma capability by 1992.

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At Motorola, six sigma became part of the common language of all employees. To them it meant “near perfection”, even if some did not understand the statistical details.

Six Sigma helped Motorola realize powerful bottom-line results in their organization - in fact, they documented more than $16 Billion in savings as a result of Six Sigma efforts.

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Other early adopters of Six Sigma who achieved well-publicized success include Honeywell (previously known as AlliedSignal) and General Electric, where the method was introduced by Jack Welch. By the late 1990s, about two-thirds of the Fortune 500 organizations had begun Six Sigma initiatives with the aim of reducing costs and improving quality.

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http://www51.honeywell.com/honeywell/our-culture-n3n4/continually-improving.html?c=11

http://en.wikipedia.org/wiki/AlliedSignal

http://www.ge.com/

http://en.wikipedia.org/wiki/Jack_Welch

http://en.wikipedia.org/wiki/Fortune_500

Statistical meaning of Six-sigma

Every instance of a product coming off a production line is in some way different from every other instance. The thickness or length of a part is never exactly the same

The amount of time it takes to perform a certain transaction varies from instance to instance

In other words, variation is a fact of life in manufacturing and services

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Statistical meaning of Six-sigmaProcess variability

Process Capability

Süreç (proses) yeterlilik Process capability is the ability of the

process to meet the design specifications for a service or product.

Nominal value is a target for design specifications.

Tolerance is an allowance above or below the nominal value.

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Process Capability

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2020 2525 3030 MinutesMinutes

UpperUpperspecification specification

LowerLowerspecificationspecification

NominalNominalvalue value

Process is capable

Process distributionProcess distribution

Process Capability

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Process is not capableProcess is not capable

2020 2525 3030 MinutesMinutes

UpperUpperspecification specification

LowerLowerspecificationspecification

NominalNominalvalue value

Process distributionProcess distribution

Calculating population standard deviation from a single large sample

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Outside diameter of 100 components (inch)0.516 0.510 0.509 0.508 0.507 0.507 0.5060.514 0.510 0.509 0.508 0.507 0.507 0.5060.513 0.510 0.509 0.508 0.507 0.507 0.5060.513 0.510 0.509 0.508 0.507 0.507 0.5050.513 0.510 0.509 0.508 0.507 0.507 0.5050.512 0.510 0.509 0.508 0.507 0.507 0.5050.512 0.510 0.509 0.508 0.507 0.506 0.5050.511 0.510 0.509 0.508 0.507 0.506 0.5040.511 0.510 0.509 0.508 0.507 0.506 0.5040.511 0.510 0.509 0.508 0.507 0.506 0.5010.511 0.510 0.509 0.508 0.507 0.5060.511 0.509 0.508 0.508 0.507 0.5060.511 0.509 0.508 0.508 0.507 0.5060.511 0.509 0.508 0.508 0.507 0.5060.511 0.509 0.508 0.507 0.507 0.506

Std. Dev.= 0.002278 Process Cap. = 6 (.002278) = 0.013666

Standard deviation of a group of data

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n

xxi

2

where = arithmetic mean of data i = 1, 2, …, n n = total number of observations

x

x xi

i1

n

n

Process Capability

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1 0 02

4

12

22

1815

118

2 31 0 1 0

0

5

10

15

20

25

0,5010,5020,5030,5040,5050,5060,5070,5080,5090,510,5110,5120,5130,5140,5150,516

Fre

qu

ency

Diameter (in.)

Histogram

Frequency

USL = 0.515LSL = 0.505(outside diameter)

Process Capability = 6σ

Relationship of Proc. Cap. to specification limits

Three cases (situations):

1. 6σ < USL – LSL

2. 6σ = USL – LSL

3. 6σ > USL – LSL

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Relationship of Proc. Cap. to specification limits

Process Capability and the specification limits (i.e., tolerances) are combined to form a Capability Index:

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6LSLUSL

C p

If Cp 100.

If Cp 100.

If Cp 100.

Case 3

Case 2

Case 1

Capability Index Cp

The capability index measures whether the process or machine can produce pieces which conform to the specifications.

The larger the index, the more likely the process will generate conforming parts or pieces provided that the process is centered at the nominal or target value. (CP >= 1.33)

CAUTION : The capability index does not indicate process performance in terms of the nominal or target value.

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Nominal = 7 USL = 9 LSL = 5

16.040 X

17.4)16.0(6

59

6

LSLUSL

C p

LSL = 5 USL = 940 X

Suppose

Although Cp > 1.33, the process is not capable. Why not ?

An Illustration of Process Capability Index:

A better measure of process capability (Cpk)

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This measure takes into account the centering of the process. We first obtain two one-sided indexes, then select the minimum of the two.

30XUSL

C pu

3

0 LSLXC pl

C Min C Cpk pu pl { , }

Cpk Illustration

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Nominal = 7 USL = 9 LSL = 5

33.070 X

2)33.0(3

79

puC 2

)33.0(3

57

plC

2)2,2( MinCpk

The process is capable.

Cpk Illustration

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LTL = 5 UTL = 970 X

Cpk Illustration

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80 X

1)33.0(3

89

puC 3

)33.0(3

58

plC

1)3,1( MinCpk

The process is barely capable.

If

Cpk Illustration

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LTL = 5 UTL = 980 X

The process is barely capable.

Process variation and its effect on process defects per million opportunities (DPMO)

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USLLSL

Process variation

Process variation

Process variation

Process variation

3 sigma process variation

= 66800 defects per million opportunities






= 3.4 defects per million opportunities

USLLSL USLLSL USLLSL

Case of process shift in the long run

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UTLLTL +6sigma

- 6sigma

With the process centered exactly in the middle (nominal dimension), only 2 defectives out of one billion are expected.

If the process mean shifts ± 1.5 sigma, the expected number of defectives will be 3.4 per million.What is the key to achieving six-sigma capability?

Defects per million occurrencesDPMO

Sigma quality levels (defects per million)

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Sigmas DPMO

2 308,538

3 66,803

4 6,200

5 233

6 3.4

Now what?

What all this explanation boils down to is this: The objective of Six Sigma improvement efforts

is to reduce process output variation so that on a long term basis, which is the customer's aggregate experience with our process over time, this will result in no more than 3.4 Defects Per Million Opportunities – DPMO.

therefore make sure that you have a capable process, i.e. keep 6σ < USL – LSL with proper centering, and

reduce process variation as much as you can so that you achieve a DPMO of 3.4 defects. (In reality, this is not achieved easily; but this should be the ultimate goal of your improvement efforts)

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What does six-sigma do?

Six Sigma focuses on improving quality by helping organizations produce products and services better, faster and cheaper.

In more traditional terms, Six Sigma focuses on defect prevention, cycle time reduction, and cost savings. Unlike cost-cutting programs that reduce value and quality, Six Sigma identifies and eliminates costs that provide no value to customers; in other words, waste costs.

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What does six-sigma do?

The “Six Sigma” quality philosophy incorporates many of the traditional quality philosophies and approaches established by Shewhart, Deming, Juran, Taguchi, and Ishikawa, by developing an organized framework for continuous improvement.

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Six-sigma infrastructure

A very powerful feature of Six Sigma is the creation of an infrastructure to assure that performance improvement activities have the necessary resources. Six Sigma makes improvement and change the full time job of a small but critical percentage of the organization’s personnel.

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These full time change agents who act as the catalysts that institutionalize change are classified as follow: Champions and Sponsors: Six Sigma champions are

high-level individuals who understand Six Sigma and are committed to its success. They are usually a member of senior management who are charged with leading and energizing the Six Sigma effort and most often theirs is a full-time position, such as an Executive Vice-President. They are also often charged with identifying projects, prioritizing those projects in relation to the organization’s strategy, and assigning projects to Black Belts and/or Green Belts. Sponsors are owners of processes and systems, who help initiate and coordinate Six Sigma improvement activities in their areas of responsibility.

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Master Black Belts: Master Black Belts are the senior technical advisors for a Six Sigma effort, providing technical leadership for the Six Sigma program. Thus, they must know everything the Black Belts know, as well as understand the theory on which the statistical methods are based. Master Black Belts must be able to assist Black Belts in applying the methods correctly in unusual situations.

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Black Belts: The front line leaders of Six Sigma are called black belts. These individuals are full-time project leaders with the primary responsibility of providing technical expertise and leadership for process improvement projects. Since they are dedicated to the implementation, it becomes cost effective to invest additional resources in developing the Black Belts’ ability to apply a broad range of process improvement tools and techniques

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Green Belts: are Six Sigma project leaders capable of forming and facilitating Six Sigma teams and managing Six Sigma projects from concept to completion. They receive a wide range of training that covers project management, quality management tools, quality control tools, problem solving, and descriptive data analysis. It is generally a part-time commitment and suitable for middle managers, engineers and supervisors.

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The good thing about the belt system is that everyone in the organization is speaking the

same language. Another important impact of such company-

wide training is that it fosters a culture whereby the ownership of quality is viewed as the responsibility of the entire organization and not just of the quality department.

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Six Sigma Improvement Model

known as DMAIC model Define, Measure, Analyze, Improve

and Control highly disciplined and structured

problem-solving and improvement methodology

has five steps for improving processes and solving problems both in goods production and servicesLet us take look at DMAIC in more detail…..

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DMAIC Improvement Model

Define Define the goals of the improvement

activity. At the top level the goals will be the strategic objectives of the organization, such as a higher ROI or market share.

at the operations level, a goal might be to increase the throughput of a production or service department.

at the project level goals might be to reduce the defect/error level and increase throughput.

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Measure Measure the existing system. establish valid and reliable metrics to

help monitor progress towards the goal(s) defined at the previous step.

begin by determining the current baseline. Use exploratory and descriptive data analysis to help you understand the data.

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Analyze Analyze the system to identify ways to

eliminate the gap between the current performance of the system or process and the desired goal.

apply statistical and other tools provided by TQM to guide the analysis.

identify several possible causes of variation or defects that are affecting the outputs of the process.

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Analyze cont’d one of the most frequently used tools

in the Analyze step is the cause and effect diagram. Root cause is the number one team deliverable coming out of the Analyze step.

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Improve Improve the process or system. modify or redesign the process or system be creative in finding new ways to do

things better, cheaper, or faster. use project management and other

planning and management tools to implement the new approach.

use statistical methods to validate the improvement.

improvements should be selected based on probability of success, time to execute, impact on resources, and cost

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Control teams may develop poka-yokes or

mistake proof devices to help control a process. The ultimate goal for this step is to reduce variation by controlling the inputs and monitoring the outputs.

institutionalize the improved system by modifying compensation and incentive systems, policies, procedures, budgets, operating instructions and other management systems.

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Documents

A BRIEF INTRODUCTION TO SIX SIGMA