Lean Six Sigma Overview · Six Sigma Project Identification • Usually, Six Sigma projects are undertaken at the process level. However, all such projects should tie to the strategic

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Lean Six Sigma Overview

1 www.sixsigmaconcept.com

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Bill Smith

Six Sigma Was Born 0n 15 January 1987

Father of Six Sigma


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Number of repairs in factory

Fie

ld F

ailu

res

Discovery of bill smith


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Realization at Motorola

• To reduce field failures, much higher level of internal quality is

required.

• Done right, improving quality will reduce cost.

• Cost of correcting poor quality ranged $800-$900 million per

year.


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100 times

4 years

Desire of Bob Galvin


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Results of Six Sigma at Motorola

• Five fold growth in sales

• Annual increase of profit 20%

• Cumulative saving $14 Billion

• Annual stock price gain 21.3 %


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Philosophy of Six Sigma

Make customer extremely happy

And

Improve Bottom Line


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What is Six Sigma (6)?

Six Sigma is a philosophy for managing process improvement.

Six Sigma is a way to integrate quality into day-to-day activities.

Six Sigma is a means of continuously improving to meet

customer needs.

Six Sigma is a measurement of defects and variation.


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Basic Definitions

Sigma

• A mathematical term used to designate the distribution or spread of any

process around the average (mean) as expressed in “standard

deviations”.

• For a business or a manufacturing process, the sigma value is a metric

used to indicate how well the process is performing.


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Six Sigma Is…

• Improvement

• Breakthrough

• Right Projects

– Linked to Business Goals

• Right People

– Selected & Trained

• Project Management

– Management Reviews

• Right Results

– Process & Financial ($$)

• Sustaining Gains

• Process Thinking

• Process Variation

• Facts, Figures, Data

• Define, Measure, Analyze Improve,

Control (DMAIC)

• Statistical Tools

• Critical Few Variables

…an initiative …a methodology

…a measurement

• Quantifies our Process Capability


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Six Sigma Is…

…a simple, unique, proven and lasting approach for improving our

business performance based on:

• Alignment of the customer, strategy, processes and people

• Big, measurable business results

• Selective but broad deployment of advanced quality and statistical tools


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Operations Order Entry Purchasing Scheduling Invoicing

/Collection

Value (products, services, information)

Cash

Human Resources

Finance & Accounting

Information Technology

Marketing, Sales

Management & Leadership

New Product / Service Development

Six Sigma Is Emerging Into All

Aspects Of Business


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DMAIC Approach • Once Projects are identified, the Six Sigma Methodology is applied to

provide a structure to problem solving.

The Methodology:

• Define the Process / Problem

• Measure the Process / Problem

• Analyze the Process / Problem

• Improve the Process / Problem

• Control the Process / Problem


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Another View : The Roadmap

Measure Analyze Improve Control

Initiate the Project

Define the

Process

Determine

Customer

Requirements

Define Key

Process Output

Variables

Verify Critical

Inputs Using

Planned

Experiments

Design

Improvements

Pilot New Process

Analyze Data to

Prioritize Key

Input Variables

Identify Waste

Finalize the

Control System

Verify Long Term

Capability

Understand the

Process

Evaluate Risks on

Process Inputs

Develop and

Evaluate

Measurement

Systems

Measure Current

Process

Performance

Define


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Critical Input Variables

30+ Inputs

8 - 10

4 - 8

Define

3 - 6

Found Critical X’s

Controlling Critical X’s

10 - 15

All X’s

1st “Hit List”

Screened List

Analyze

Improve

Control

DMAIC Is A Filter Process

Measure

15 Www.Sixsigmaconcept.Com

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Level of Competition

Sigma DPMO Cost of poor

quality (% of sales)

% OK Competitive level

66 33..44 <<1100 9999..999999%% WWoorrlldd ccllaassss

55 223333 1100 –– 1155 9999..9977%%

44 66,,221100 1155 –– 2200 9999%% IInndduussttrryy aavveerraaggee

33 6666,,880077 2200 –– 3300 9933%%

22 330088,,553377 3300 –– 4400 6633%% NNoonn ccoommppeettiittiivvee

11 669900,,000000 >> 4400

Why is 99% not good enough?


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What Does 6 Mean In Your Daily Life?

Tax Advice

7

Sigma Level

1,000,000

100,000

10,000

1,000

100

10

1

PPM

Restaurant Bills

Payroll Processing

Prescription Writing

Baggage Handling

Airline Safety Rate

3 4 5 6 2 1


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Benefits

• Financial GE – $ 2 Billion to bottom line. (1999)

Honey Well – $ 1.4 Billion (1996)

DuPont – $ 1.6 Billion (1998)

Wipro – $ 21 Million (2003)

VSNL – $ 16.6 Million (2005)

• Customers

• Employees

• Quality


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Lean Six Sigma


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Design for Six Sigma Roadmap

Recognize

Problem

Is process

Management

Exists

Process

Management

Is Solution

Known?

Just Do It

Are Solution

Obvious?

Work Out

Is new

Production

/ Process?

DFSS

DMADV

Is it Cycle

Time

Related?

Lean

DMAIC

Y N

Y

Y Y Y Y

N N N


N

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Harvesting the Fruits of Six Sigma

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Sweet Fruit Design for Six Sigma (DMADV)

Bulk of Fruit Process Characterization & Optimization

(DMAIC)

Low Hanging Fruit Seven Basic Tools

Ground Fruit Logic and Intuition

Quick hits - KAIZEN

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

3 Wall, Beat Up Suppliers

4 Wall, Improve Processes

5 Wall, Improve Designs


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When Do You Call A Company A Six Sigma

Company? • 20-30% of Bottom line coming from Six Sigma Projects

• 5-10% of the Population are BB & MBB

• 40-50% of the Population are GB

• All the HOD are Champions

• A Stream of Projects are in pipe line

• HR Policies are aligned with Six Sigma deployment

• The Six Sigma Performance is reported to all the stake holders

• Six Sigma efforts self sustaining without external help

• It has the expertise to spread 6 Sigma culture to its Suppliers and

Customers and insist on them being 6 Sigma Companies


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Ways to select the projects

Key Business Plan / Operating Plan

Opportunities to

reach the goals Top-Down approach

Problems, Errors, Dissatisfied Customers, Inefficiency

Issues needing

attention Bottom-Up approach


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Objectives Of Six Sigma Project

• Reduce Variability

• Reduce Defects

• Improve Customer Satisfaction

• Reduce Cost.

• Reduce Lead Time

• Improve First Pass Yield.

• Improve Rolled Throughput Yield.

• Shorten Lead Time

• Optimize Process Performance

• Optimize Supply Chain.


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Six Sigma Project Identification

• Usually, Six Sigma projects are undertaken at the process level. However,

all such projects should tie to the strategic business level goals.

• Key Performance Indicators (KPI) are metrics that reflect strategic value

drivers, specify organizational goals and are key to organizational

success. Business Level KPI 1

KPI 2

KPI 3

KPI 4

Function Level KPI 1

KPI 2

KPI 3

KPI 4

KPI 5

KPI 6

Process Level KPI 1

KPI 2

KPI n

Project 1

Project 2

Project 3

Each project should address at least one KPI at the business level 25 www.sixsigmaconcept.com

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Linking Projects to the Big Ys – The Decision

Tree

• Show how each project rolls up to the Big Ys

• Indicate the amount of impact of each project.

– %

– $

– Number (e.g. days)

• Indicate the direction of impact if applicable

– Increase

– Decrease

Client

Satisfaction The Big Ys

The Xs

The Vital

Few Projects

Little Ys

EBITDA

Planning

Process

Reduce total wait

time

Reduce costs Increase

revenue

Manufacturing

Implement new

requirements form

Reduce time

to deliver

Laboratory

↓20 days

↓$1.5 mm ↓ 60 days

↑ $1.5 mm ↑ 5%

↓40 days

26

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Six Sigma - Define


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DEFINE : What is the Problem? • Goals

– Define Project Purpose

– Determine Scope And Goals

– Identify Voice Of The Customer And Define Value

– Create The Project Charter And Plan

• Deliverables

– Approved Project Charter

– Timeline chart

– Critical To Quality (CTQ) Characteristics

– VOC (Voice of Customer)

– Kano Model

– Define phase toll gate review

DMAIC

DEFINE:

Define the problem/reason for the

project, and map the value stream steps

MEASURE:

Populate the value stream map with

data, measure and baseline current state

performance

ANALYZE:

Identify and confirm root causes

IMPROVE:

Generate and implement solutions and

evaluate results

CONTROL:

Maintain the gains


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Six Sigma – Measure


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MEASURE : What is the Problem?

• Goals

– Gather relevant data

– Determine magnitude of problem

– Understand waste, cycle time, defects, and variation within the process

• Deliverables

– Baseline data and control charts, Sigma Level, Process Capability (yield, trends, etc.)

– Focused problem statement.

DMAIC

DEFINE:


project, and map the value stream steps

MEASURE:

Populate the value stream map with

data, measure and baseline current state

performance

ANALYZE:


IMPROVE:

Generate and implement solutions and

evaluate results

CONTROL:

Maintain the gains


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Six Sigma – Analyse


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Analyze : What is Causing the Problem?

• Goals

– Identify Potential Root Causes

– Conduct Data Analysis

– Validate Critical Root Causes

• Deliverables

– List of Root Causes (Critical X’s) and how they were validated

– Determination of how much of the Problem is accounted for by the

Critical x’s

DMAIC

DEFINE:

Define the problem/reason for the project, and

map the value stream steps

MEASURE:

Populate the value stream map with data,

measure and baseline current state performance

ANALYZE:


IMPROVE:

Generate and implement solutions and evaluate

results

CONTROL:

Maintain the gains


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Analyze : Common Tools

• Data and Graphical Analysis from Measure,

– Control Chart

– Histogram

– Boxplot

– Graphical Summary

– Pareto Chart

• Successive Pareto

– Can the 80/20 rule help narrow the focus on the key drivers by

diving deeper into the big bars? Count 457 73 53 19

Percent 75.9 12.1 8.8 3.2

Cum % 75.9 88.0 96.8 100.0

Co

un

t

Pe

rce

nt

Department OtherABE

600

500

400

300

200

100

0

100

80

60

40

20

0

Pareto Chart of Department

Count 399 31 31 20 16

Percent 80.3 6.2 6.2 4.0 3.2

Cum % 80.3 86.5 92.8 96.8 100.0

Cause code Other789307123456

500

400

300

200

100

0

100

80

60

40

20

0

Co

un

t

Pe

rce

nt

Pareto Chart of Cause code

www.sixsigmaconcept.com

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Analyze : Common Tools, cont.

• Brainstorming

– What factors might be causing the problem?

• 5 Whys

– What are the deeper causes of problems?

– Can you peel away the layers of symptoms to identify

the root cause?

Problem

Why?

Because

Because

Because

Because

Why?

Why?

Why?


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• Cause-and-Effect Diagram

– What are all the potential causes?

– What are the relationships between identified causes?

– Which are the deeper causes?

– What other data should we collect to validate what the root causes?

• Scatter Plot

– Does the suspected cause have a correlation to the problem?

– Could there be another factor contributing to the correlation?

Why so much

waste in

current state?

Very complex

undertaking

Lack of ability to

predict future

needs

Lack of focus on

refresh

No compliance with

stated deadlines

Lack of effective

communication

Refresh not

viewed as

value-add

Attrition/lack of

succession

Lack of understanding

of Nielsen process

No one responsible

Don’t w

ant to get

blamed for decision

Don’t know who is

responsible

Never looked at whole

process

Lack of tools to accomplish

Lack of standardization

Prid

e ou

rsel

ves

on b

eing

“cus

tom

”

Lik

e to

treat e

ach

clie

nt d

iffere

ntly

Not in job

description

Lack of decision making

Not formal

authority

Not sure if have right

people involved

Changing

environment and

Coke and Nielsen

Lack of time

Bus

y sc

hedul

es

No one’s top priority

Not s

een a

s

valu

ed w

ork

Lots of people involved


Too many competing

priorities

Tend

to d

o d

urin

g b

rand

pla

nnin

g o

r holid

ays

People don't

understand

definition of terms

People don’t

understand / use data

People don't

understand how/

what w

e want fits into

bigger picture

People get burned out

Lack of

succession

planning

Ver

y co

mple

x

unde

rtak

ing

Lack of training

Why so much

waste in

current state?

Very complex

undertaking

Lack of ability to

predict future

needs

Lack of focus on

refresh

No compliance with

stated deadlines

Lack of effective

communication

Refresh not

viewed as

value-add

Attrition/lack of

succession


of Nielsen process

No one responsible

Don’t w

ant to get

blamed for decision

Don’t know who is

responsible


process



Prid

e ou

rsel

ves

on b

eing

“cus

tom

”

Lik

e to

treat e

ach

clie

nt d

iffere

ntly

Not in job

description


Not formal

authority


people involved

Changing

environment and

Coke and Nielsen

Lack of time

Bus

y sc

hedul

es


Not s

een a

s

valu

ed w

ork



Too many competing

priorities

Tend

to d

o d

urin

g b

rand

pla

nnin

g o

r holid

ays

People don't

understand

definition of terms

People don’t


People don't

understand how/

what w

e want fits into

bigger picture


Lack of

succession

planning

Ver

y co

mple

x

unde

rtak

ing

Lack of training

Why so much

waste in

current state?

Very complex

undertaking

Lack of ability to

predict future

needs

Lack of focus on

refresh

No compliance with

stated deadlines

Lack of effective

communication

Refresh not

viewed as

value-add

Attrition/lack of

succession


of Nielsen process

No one responsible

Don’t w

ant to get

blamed for decision

Don’t know who is

responsible


process



Prid

e ou

rsel

ves

on b

eing

“cus

tom

”

Lik

e to

treat e

ach

clie

nt d

iffere

ntly

Not in job

description


Not formal

authority


people involved

Changing

environment and

Coke and Nielsen

Lack of time

Bus

y sc

hedul

es


Not s

een a

s

valu

ed w

ork



Too many competing

priorities

Tend

to d

o d

urin

g b

rand

pla

nnin

g o

r holid

ays

People don't

understand

definition of terms

People don’t


People don't

understand how/

what w

e want fits into

bigger picture


Lack of

succession

planning

Ver

y co

mple

x

unde

rtak

ing

Lack of training

0

5

10

15

20

25

0 5 10 15 20 25

X

0

5

10

15

20

25

0 5 10 15 20 25

X

Strong Positive Correlation

Large values of one set are associated

with large values of the other

10

15

20

25

5 10 15 20 25

X

Y

0

5

0

10

15

20

25

5 10 15 20 25

X

Y

0

5

0

No CorrelationValues in both data sets are unrelated

0

5

10

15

20

25

0 5 10 15 20 25

X

Y

0

5

10

15

20

25

0 5 10 15 20 25

X

Y

Strong Negative Correlation

Small values of one set are associated

with large values of the other


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• Linear Regression

– Does the suspected cause have a correlation to the

problem?

– If so, what is the mathematical model describing the

correlation?

– If the x changes, how does it affect your y?

• Advanced Statistical Tools

– What other ways can we verify the root causes?

X

YC

on

tin

uou

sD

iscre

te

Continuous

Graphical:

Scatter plots

Graph > Scatterplot

Statistical:

Linear Regression

Stat > Regression > Regression

DOE (advanced)

Fre

qu

en

cy

5150494847

6

5

4

3

2

1

0

Histogram of Hours per WeekAssociate = A

Fre

qu

en

cy

5150494847

6

5

4

3

2

1

0

Histogram of Hours per WeekAssociate = BGraphical:

Stratified Histograms & Boxplots

Graph > Histogram

Graph > Boxplot

Statistical:

T-test and ANOVA

Stat > Basic Statistics > 2-sample t

Stat > ANOVA > One-way

Logistic regression (advanced)

DOE (advanced)

Continuous

Graphical:

Scatter plots

Graph > Scatterplot

Statistical:

Linear Regression

Stat > Regression > Regression

DOE (advanced)

Fre

qu

en

cy

5150494847

6

5

4

3

2

1

0

Histogram of Hours per WeekAssociate = A

Fre

qu

en

cy

5150494847

6

5

4

3

2

1

0

Histogram of Hours per WeekAssociate = BGraphical:


Graph > Histogram

Graph > Boxplot

Statistical:

T-test and ANOVA




DOE (advanced)

Discrete

Graphical:


Graph > Histogram

Graph > Boxplot

Stratified Control charts (variables)

Stat > Control Charts > Variables

Charts for Individuals > I, mR

Graphical:

Barchart

Graph > Barchart

Pareto Chart & Successive Paretos

Stat > Quality Tools > Pareto Chart

Stratified Control charts (attributes)

Stat > Control Charts > Attributes

Charts > (p, np, c, u)

Statistical:

Chi-squared

Stat > Tables > Cross-Tabulation and

Chi-sq


DOE (advanced)

Co

un

t

Client size SmallLarge

16

14

12

10

8

6

4

2

0

Negative

Positive

Response

Chart of Client size, Response

Count 43 22 17 12 6

Percent 43.0 22.0 17.0 12.0 6.0

Cum % 43.0 65.0 82.0 94.0 100.0

Co

un

t

Pe

rce

nt

Error reason

Missp

ellin

g

Illeg

ible

Inco

rrec

t fac

t

Gram

mar

Inco

rrec

t pu

nctuation

100

80

60

40

20

0

100

80

60

40

20

0

Pareto Chart of Error reason

Sample

Sa

mp

le C

ou

nt P

er

Un

it

28252219161310741

1.3

1.2

1.1

1.0

0.9

0.8

0.7

0.6

0.5

0.4

_U=0.8098

UCL=0.9819

LCL=0.6376

1

11

1

1

1

1

1

1

11

1

U Chart of errors

Tests performed with unequal sample sizes

Obser vation

In

div

idu

al

Va

lue

51464136312621161161

260

240

220

200

180

_X=200.47

UC L=221.55

LCL=179.38

O ld New

Obser vation

Mo

vin

g R

an

ge

51464136312621161161

24

18

12

6

0

__MR=7.93

UC L=25.90

LCL=0

O ld New

I-MR Chart of bills by Phase

Statistical:

T-test and ANOVA



Test of Equal Variance

Stat > ANOVA > Test of equal variance

Regression with dummy variables (advanced)

DOE (advanced)


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Six Sigma – Improve


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Improve : Making the Problem GO Away

• Goals

– Generate, evaluate and select solutions

– Quantify financial impact

– Conduct a pilot

– Plan implementation

• Deliverables

– Recommended solution(s)

– Cost-benefit analysis

– Evaluated pilots / simulations / experiments

– Full-scale implementation

DMAIC

DEFINE:


project, and map the value stream

steps

MEASURE:

Populate the value stream map

with data, measure and baseline

current state performance

ANALYZE:


IMPROVE:

Generate and implement solutions

and evaluate results

CONTROL:

Maintain the gains


© of CBEPL

Improve : Common Tools

• Brainstorming

– What are the possible specific solutions?

• Solution Implementation plan (Piloting and Full Scale)

– Implement the identified solutions on a pilot basis

– Do validation of the solution effectiveness

– Make a full scale implementation plan


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• Before and After Metrics

– How much improvement was made?

• Before and After Chart

– How effective was the pilot?

– What went right?

– What went wrong?

– What needs to change before full implementation?

Before After

Total Cycle Time =

35 - 140 business days

Total Cycle Time =

2 - 20 business days

Yield = 14% Yield = 67%

Dec-07

Sep-07

Jun-

07

Mar

-07

Dec-0

6

Sep-06

Apr-06

Jan-06

Oct-0

5

Jul-0

5

Apr-05

10.0%

7.5%

5.0%

2.5%

0.0%

Month

Ind

ivid

ua

l V

alu

e

_X=1.2%

UCL=4.0%

LCL=-1.7%

before after

I Chart of NL reworks by Stages

Improve : Common Tools


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Six Sigma – Control


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Control : Making the Problem STAY Away! • Goals

– Determine process controls and

monitoring system

– Update standardized process documentation

– Establish clear, ongoing process ownership

– Effectively transition from a improvement project to ongoing

process management

– Translate/replicate where appropriate

• Deliverables

– Process control system

– Updated process documentation

– Replication opportunities

– Final tollgate review

DMAIC

DEFINE:


project, and map the value stream

steps

MEASURE:

Populate the value stream map

with data, measure and baseline

current state performance

ANALYZE:


IMPROVE:

Generate and implement solutions

and evaluate results

CONTROL:

Maintain the gains


© of CBEPL

Control : Common Tools

• Monitoring Plan

– How will we monitor the process

in the future?

– How will we monitor and control

the x’s in order to prevent problems with the y’s?

• Control Chart

– How will we make sure the process stays in control and

continues to meet customer requirements?

– How will we identity future improvement opportunities?

28252219161310741

25

20

15

10

5

0

Observation

Ind

ivid

ua

l V

alu

e

_X=13.26

UCL=18.31

LCL=8.20

Individuals Control Chart

USL

LSL


© of CBEPL

Control : Common tools • Standard Work Document / Procedure

– How will we train staff and standardize the new way

of working?

• Final Tollgate Storyboard

– What is the executive level view of the complete story of the

project?

– What is the more complete story of the project meant for specific

audiences?

– How did the logic flow from DEFINE

to CONTROL?

– What were the lessons learned?

Standard Operating Procedure


© of CBEPL

Thank You!!!


Documents

Lean Six Sigma Overview · Six Sigma Project Identification • Usually, Six Sigma projects are undertaken at the process level. However, all such projects should tie to the strategic