Professional Development Series: SIX SIGMA

Copyright 2010 CGM Associates, LLC – All Rights Reserved

Professional Development Series:

SIX SIGMA

University of Louisville School of BusinessMarch 27, 2010

Agenda

Part I: The Nature of Six Sigma

Part 3: Benefits and Value

• Historical perspective

• 100,000 foot view – roles, methodology

• Advantages

• Trends

• Career value

• Personal value

Part 2: Training and Certification• Curriculum and requirements

• Providers and costs

• Other Resources

2


PART 1:

The Nature of Six Sigma

• Early 80’s: Motorola develops a statistically-based problem-

solving methodology to improve the „Bandit‟ pager

(manufacturing focus only)

• Late 80’s: Motorola entrepreneurs leave to promote Six

Sigma elsewhere

• 1995: Allied Signal introduces Six Sigma to GE

• 1998 - Present: Six Sigma evolves into non-manufacturing,

design and transactional applications

• 2000 – Present: Lean Six Sigma and DFSS become prevalent

Six Sigma changes the business culture

The History of Six Sigma

4

Determine

customer

need to

be

satisfied

Identify

the

business

process

that fulfills

the need

Study the

process,

identify

variation

drivers

Optimize

the

processEnsure that

customer

need is met

and fix is

sustained

DEFINE

MEASURE

ANALYZE

IMPROVE

CONTROLCustomer

Scope

TeamMeasurement

Baseline

Graphs

Statistics

Experiment

OptimizeSustain Validate & Close

The Phases of Six Sigma

5

• ‘Effectiveness’ (customer‟s view): meeting customer requirements and creating „delight‟

Customers feel VARIATION, not averages

Win by preventing fires, not fighting them

Customer Satisfaction is the differentiator in today‟s market

• ‘Efficiency’ (management view): providing streamlined processes, minimizing internal costs

Six Sigma goal: satisfy customers profitably

Why Six Sigma Now?

6

‘Top 10’ Six Sigma Concepts

1. Customers are ALWAYS the starting point

2. The methodology is the key, not the tools

3. Issues arise from the process, not the people

4. Excessive variation is the enemy

5. Control the x‟s, not the „y‟

6. Change must be managed

7. Measurement systems create variation

8. Data always drive good decision-making

9. Test theories before making decisions

10.Create systems to sustain the gains

7

Six Sigma Roles

Green Belts

~ 80% of those

trained

Black Belts~ 15%

~ 5%Master Black

Belts:

Yellow Belts (team members)

• Project leaders (typically smaller-scope projects)

• Part-time process improvement role

• Project leaders (typically larger-scope projects)

• Typically full-time process improvement role

• Mentor Green Belts

• Project leaders (typically strategic initiatives)

• Full-time process improvement role

• Mentor Black Belts, Green Belts

• Subject-matter experts, trainers, facilitators

Other Roles:

• Process Owner – first-level „client‟, budget-owner of functional area

• Champion – roadblock remover, resource provider, ultimate process owner

• Sponsor – high-level supporter of project (typically VP+)

8

Six Sigma Roadmap & Tools

DEFINE PHASE – Understand Customer Needs

Step 1: Customer

Step 3: Scope

Step 2: Team

MEASURE PHASE – Develop Process MeasurementsStep 4: Measurement

Step 5: Baseline

ANALYZE PHASE – Develop Theories

Step 6: Correlation

Step 7: Theories

IMPROVE PHASE – Create Solutions, Test & Optimize

Step 8: Causation

Step 9: Performance

CONTROL PHASE – Sustain the Gains

Step 10: Methods

Step 11: Closure

Tools: VOC, COPQ, Stakeholder Analysis

Tools: Pareto, C & E, CTQ tree, QFD, SIPOC, Process Map, Value Stream

Tools: Project Charter, Elev. Speech, T/O Matrix, Comm. Plan

Tools: Operational Definition, Measurement Validation

Tools: Brainstorming, Sampling, DPMO/Sigma Level, Benchmarking

Tools: Graphical analysis, Basic Stats

Tools: Inferential Stats, Analogy, FMEA, Impact/Control Matrix

Tools: Anti-solution, Pilot Studies, DOE

Tools: Confirmation Runs, Tolerancing, Re-baselining

Tools: Control Plan

Tools: 5-S‟s, Mistake-Proofing, SPC

9

(DPMO Distribution Shifted 1.5s)

2 308,5373 66,8074 6,2105 2336 3.4

Sigma Level DPMO

Process

‘Capability’Process

‘Performance’

1.5 500,000

Yield

50%69%93.3%99.379%99.9767%99.9997%

Quantifying ‘Six Sigma’

(Defects Per Million Opportunities)

10

X’s

Independent

variables

CAUSES

f = Process

Noise

The Mechanics of Six Sigma

INPUT OUTPUTY’s

Dependent

variables

EFFECTS

‘Process’: a sequence of steps that produces an output

THE OUTPUT IS A FUNCTION OF THE INPUT (‘y = f(x)’)

Three Basic Strategies:1. Control the X‟s (DMAIC)

2. Change the Process

3. Reduce the Noise

11

Trying to control the output is like closing the doors after the horse has already left the barn . . .

Control the X’s

• The „y‟ is the OUTPUT . . . It depends

on the INPUT (the x‟s)

• Trying to control the output is a

reactive approach that doesn‟t work –

it‟s too late

• By the time you take action on process

output that has gone bad, the customer

has already felt the „pain‟

Proactive Approach: CONTROL the x’s, monitor the ‘y’

12

N

Y

Start Point: Customer calls to place order End Point: Call is ended by customer

Y

YY

Y

N N

NN

Customer call

answered

New

customer

?

Enter

demographic

info

Model # known

?

Look up

model #’s

Access

demographic

database

Are models

available

?

Check

credit

Credit OK

?

Transfer to

Customer

Service

Verify order

Submit

order

Is

B/O

OK

?

Check

Availability

END CALL

Order Entry Process Map

Request

delivery loc,

date, time

END CALL

13

What you

think it is . . .What it actually

is . . .What you

would

like it to be

Understanding the Process

14

From a statistical point of view, there are only two

problems with any process . . .

It has too much spread -

too variable

It needs centering -

off target

xx

x

x

x

xx

xx

x

x

x

x

x

xxx

xxx

xxxx

xx

Basic Process Issues

15

Concept Focus: Measurement Validation

Measurement systems can be

extremely variable

The necessity of training farm hands for first-class farms in

the fatherly handling of farm livestock is foremost in the

minds of farm owners. Since the forefathers of the farm

owners trained the farm hands for first-class farms in the

fatherly handling of farm livestock, the farm owners feel

they should carry on with the family tradition of training

farm hands of first-class farms in the fatherly handling of

farm livestock because they believe it is the basis of good

fundamental farm management.

How many ‘f’s do you see?

16

• The methodology is „closed loop‟, not one-way . . . It

begins and ends with the customer

• The Six Sigma methodology requires valid measurement of

quantifiable results that are tied to business strategies

• Implementation of the methodology instills a disciplined

approach to problem-solving and process improvement

• Because of the required team approach, functional „silos‟

in an organization are bridged by doing projects

• When done correctly, the fix stays fixed

Six Sigma Advantages

Six Sigma can be used anywhere a

process can be defined (ANYWHERE!)

17

PROCUREMENT

Blocked Invoice

Reduction

Late Payment Reduction

SERVICE

Service Call Completion

Rate Improvement

Repeat Call Reduction

Parts Availability

Service Call Scheduling

LOGISTICSOn-time Delivery

Pick/Pack Accuracy

Returns Reduction

Damage Reduction

HUMAN

RESOURCES

Attendance Improvement

Employee Retention

Open Position Fill Time Improvement

CALL CENTERS

Speed of Answer Increase

% of Calls Answered Increase

Claim Cycle Time Reduction

ORDER-TAKING

Fill Rate Improvement

Order Accuracy

Invoice Error Reduction

Speed of Order Improvement

Six Sigma Project Examples

FINANCE

DSO Reduction

Quarter Close Efficiency

MANUFACTURING

Cycle Time Improvement

Waste Reduction

Defect Elimination

INVENTORY

Forecasting Accuracy

Warehouse Availability

Inventory Aging Reduction

Inventory Turns Improvement

IT

System Downtime Reduction

Code Error Reduction

18

Project Benefits

Quantifying project benefits is a critical success factor

The 3 ‘Benefit Buckets’:

1 2 3

Cost Out

• „Hard‟ savings

• Direct budget

impact

• Internal focus

(typically)

• „Bottom Line‟

Customer

Satisfaction

• „Soft‟ savings

• Indirect budget

impact

• External focus

• „Top Line‟ or

„Bottom Line‟

Revenue

Growth

• „Soft‟ savings

• Indirect budget

impact

• External focus

• „Top Line‟

19

Six Sigma Linkages

Change Mgmt

Lean

Project Mgmt

Six Sigma:

DMAIC

For maximum effectiveness, ‘traditional’ Six Sigma is blended with

concepts from other disciplines

• Vision

• Stakeholders

• Communication

• Elimination of waste

• Cycle time

• Continual improvement

• Scope

• Schedule

• Cost

20

Six Sigma Trends

• Customization for business needs

o Transactional vs. manufacturing

o Naming („BPM‟, „BPI‟, „PDO‟, „PIDEAS‟, „VDS‟ . . . etc.)

• Benefits are not just cost-out; more direct customer focus

• Emphasis on DFSS – Design for Six Sigma – designing in quality for both

new products and new processes

• Practitioner collaboration (not Lean vs. PMP® vs. Belt)

• Lean first, then Six Sigma; project and change management

throughout

• Recognition that “the soft stuff is the hard stuff” – Michael Hammer

(the need for effective change management)

• The methodology is the power, not the tools

21

The 10 Questions

DEFINE Phase:1. Who is (are) the customer(s)?

2. What does the customer care about? (or, What „pain‟ is the customer is having with the process output you provide?)

3. How should we measure what the customer cares about?

MEASURE Phase:4. Is the measurement system acceptable/valid?

5. How are we performing today, relative to what the customer cares about?

ANALYZE Phase:6. What are all of the potential causes of the process problems?

7. What is the proof (data) that shows that the things we think need fixing really should be fixed? (are these really the

causes of the problem?)

IMPROVE Phase:8. Have we tested the proposed solution to be sure that it really fixes the problem? (without unintended consequences)

CONTROL Phase:9. What provisions have been made to keep the fix fixed? (sustainability)

ALL Phases:10. How will we communicate the changes made and the results of the project outside of the project team?

10 questions that must be answered satisfactorily to

successfully implement any improvement project:

22


PART 2:

Training and Certification

Typical Six Sigma Green Belt Curriculum

DEFINE MEASURE ANALYZE IMPROVE CONTROL

Deliverables required for Certification:

Optional Tools to Support Each Phase:

Define:Assess stakeholder

impact

Translate VOC to

CTQ to Project y

Create Project

Charter

Develop

communication plan

Create high-level

process map

Review, sign-off of

Define Phase by

Certification Board

Measure:Create detailed process map

Define a defect in „y‟

Develop operational

definition for „y‟

Validate measurement

system

Brainstorm list of potential

x‟s

Develop data collection plan

Baseline process performance

– graphical presentation

Review, sign-off of Measure

Phase by Certification Board

Analyze: Conduct Process Analysis with

supporting in-depth process

maps

Conduct Data Analysis with

supporting graphs and/or

statistics

Provide a summarized list of

screened potential Vital x‟s

Review, sign-off of Analyze

Phase by Certification Board

Improve:Brainstorm list of

potential solutions

Select the potential

solution(s) that optimize

performance

Pilot improvements

Collect data to verify

performance with

comparison of before &

after

Implement improvements

Review, sign-off of

Improve Phase by

Certification Board

Control:Develop and implement

Control Plan

Document new process

Summarize and validate

business benefits with

Champion

Transition to Process

Owner

Review, sign-off of

Control Phase by

Certification Board

Complete project closure

documentation

Measure:

Process Map

MSA (Measurement System

Analysis)

Brainstorming Tools: Fishbone,

Affinity diagram, Multi-Voting

Data Collection Plan

Baseline Performance Tools:

Histogram, Pie Chart, Bar

Chart, Run Chart, Individuals

Chart, DPMO, Sigma Quality

Level, Capability Analysis,

Benchmarking

Analyze:

Process Analysis: Analogy, 5

Why?s, Walk the Process,

Value-Adding Analysis, FMEA

Graphical Analysis: Boxplot,

Scatterplot, Dotplot, Pareto

Chart, Multi-vari chart

Statistical Analysis:

Hypothesis Testing

Team Effectiveness

Evaluation

Improve:

Solution Brainstorming:

Anti-solution, Chain

Letter,5S, Mistake-Proofing

Solution Selection:

Selection Matrix , Pugh

Matrix, Cost-Benefit

Analysis

Process Map (To Be)

Pilot Study

DOE (Design of

Experiments)

Re-Baseline, Interval Plots

Control:

FMEA (on improved process)

Change Sustainability Model

Control Plan

Process Monitoring: Control

Charts, Dashboards and/or

Scorecards

Training Plan

Change Management Plan

Project closure and team

recognition

Define:

Stakeholder Analysis

CTQ Tree

SIPOC Map

Risk Mitigation Plan

Cost of Poor Quality

Communication Plan

Roles & Responsibilities

Chart

Elevator Speech

Quick Wins (if applicable)

MGPP (Multi-Generational

Project Plan

24

Typical BB/MBB Training Enhancements

The training content at each Belt level builds upon the previous level

(although the basic project deliverables remain the same)

Black Belt (BB) = Green Belt (GB), PLUS

• Higher-order statistical tools

• Lean applications, details

• DFSS (Design for Six Sigma) elements, including

modeling

• Mentoring skills (BBs provide mentoring for GBs)

Master Black Belt (MBB) = Black Belt (BB), PLUS

• Financial analysis

• Leadership skills

• Mentoring skills

• Program management skills

• Other technical tools, such as TRIZ, Theory of

Constraints, Systems Theory, etc.

• High-level statistical tools, statistical theory

NOTE: the

elements

described here are

recommended,

but illustrative

only – there may

be significant

variation in course

content from one

training provider

to another

25

Six Sigma Belt LevelApproximate

Duration (Hrs)

Yellow Belt (awareness) 24

Green Belt (GB) 60

Black Belt (BB) 120

Master Black Belt (MBB) 80

Training – Providers, Costs

Where?

• Corporations –o Internal training

• Open Enrollment

Providerso Air Academy

o ASQ (American

Society for Quality)

o BMG

o Juran Institute

o Motorola University

o SSA & Co.

o Stat-a-Matrix

o Others . . .

• Universitieso NC State

o Rutgers

o UT-Austin

o Villanova

o Others . . .

How Much?

Six Sigma Belt Level Approximate Cost*

Yellow Belt (awareness) $1,000

Green Belt (GB) $3,500

Black Belt (BB) $8,000

Master Black Belt (MBB) $8,500*Costs based upon iSixSigma magazine survey, March, 2009 – value represents at

least 14 open-enrollment providers at each belt level

How Long?

*Duration based upon iSixSigma magazine survey, March, 2009 – value represents

at least 14 open-enrollment providers at each belt level

Each level

is a pre-

requisite

for the

next – costs

are

additive

Each level

is a pre-

requisite

for the

next –

durations

are

additive

26

Other Considerations

• Green Belt (GB) classes may be 5 or 10 days in duration; the 10-day courses are typically

separated by 4-6 weeks to allow application of concepts to a project

• Black Belt (BB) classes are typically one week per month over approximately four months

• Most providers require participants to bring a laptop; a few provide software . . . Most do not

• There are 3 statistical software packages widely used for Six Sigma training:

1. Minitab (currently version 15) - $1,195

2. JMP (pronounced “Jump” – from SAS) - $1,595

3. SigmaXL (Excel add-in) - $249

• Specialization – some providers offer differentiated courses for finance, healthcare, IT,

manufacturing and service

• Training Project – courses which do not require participants to work on their own projects as part

of the course are not viewed favorably . . . Six Sigma proficiency requires practical application

(some courses provide simulations, but these are still considered sub-standard for certification

purposes)

• Certification - typically requires successful course completion, passing a certification exam, and

completion of at least one project (BB and MBB requirements are more extensive – see the

example on the next slide)

27

Typical Certification Requirements

Green Belt Black Belt

• Two completed, certified projects

• Minimum score of 80% on certification exam

• Mentor at least four projects to completion

• Mentor/Certification Board approval

• One completed, certified project

• Minimum score of 80% on certification exam


Master Black Belt

• Two completed, certified projects (in addition to GB, BB)

• Successful leadership of a program aligned to a business metric

• Minimum score of 80% on MBB certification exam

• Mentor at least ten projects to completion.

(Mentored projects must be led by different GBs and BBs, and are in addition to the projects mentored as a BB)

• Lead a Six Sigma discussion forum, or teach or develop a GB training module


28

Successful Belt Characteristics

Yellow Belts• Willing to serve as a contributing project team member

• Able to gather data for the team

• Willing to actively participate in brainstorming and other team tool

sessions

Green Belts

• Good project management skills, capable of directing team activities

according to a budget and schedule

• Able to successfully lead 1-2 projects/year within their current job

role

• Proficiency in graphical tools and basic statistics

Black Belts

• Capable of successfully leading 4-5 projects/year, typically in a full-

time process improvement role

• Comfortable and proficient in Six Sigma methodology and higher-

level statistical tools

• Good presentation skills

• Able to effectively coach and mentor multiple GBs simultaneously

• Methodology expert in Six Sigma, Lean, Change Management, Project

Management

• Expert in Six Sigma tools, software and statistics

• Capable of developing and delivering all levels of training

• Excellent coach and mentor

• Strategic focus; able to lead programs of multiple BB and GB projects

• Able to interact effectively with upper management and customers

Master Black Belts

29

Successful Deployment Characteristics

• The Quality organization reports directly into the CEO leadership team

• Six Sigma project selection flows down from the business strategy;

senior executives are responsible for project identification

• Belt candidates are formally screened and/or nominated for admission

to training

• Belt progression is reflected in formal HR career path documentation

• Dedicated mentors (MBBs, BBs) are available inside the organization

• Projects are formally tracked and reviewed at phase tollgates

• Belts are encouraged to participate in Best Practice Sharing sessions

• Certification is a big event

30

Resources

Websites:

www.asq.org

www.isixsigma.com

www.moresteam.com

Other References:

1. American Society for Quality (ASQ)

2. ‘The Power of Six Sigma’ – Subir Chowdhury (Dearborn Trade, 2001)

3. ‘The Goal’ – Eliyahu M. Goldratt (North River Press, 2nd Ed., 1992)

4. ‘Six Sigma’ – Mikel Harry and Richard Schroeder (Doubleday, 2000)

5. ‘The Six Sigma Way’ – Peter Pande, Robert Neuman, Roland Cavanagh (McGraw-Hill, 2000)

6. ‘Lean Thinking’ – James P. Womack and Daniel T. Jones (Simon & Schuster, 1996)

7. ‘Lean Six Sigma for Service’ – Michael L. George (McGraw-Hill, 2003)

31

http://www.isixsigma.com/



http://www.moresteam.com/


PART 3:

Benefits and Value


Career Value

• Expanded business opportunities across companies

o 82% of Fortune 100 companies use Six Sigma

o 53% of Fortune 500 companies use Six Sigma*

• Cross-functional career paths within companies

o Concepts apply to all functions

o Expertise in Six Sigma creates functional bridges and career vistas

• Promotion potential within companies

o Effective problem-solvers are valued managers, executives

• Salary impact

− Belt level

− Black Belt – US average: $90,600 + $13,600 bonus **

− Master Black Belt – US average: $122,500 + $22,000 bonus**

− Certification

− 89% of Black Belts are „certified‟ (caveat emptor)

− 73% of Master Black Belts are „certified‟

* From iSixSigma magazine, Jan ‟07

** From iSixSigma magazine, Mar/Apr „1033


Personal Value

• The gift of choice

− Many applications, including non-profits

− Continuing evolution generates a huge

range of specialization possibilities

• The confidence to solve problems

− Fear of the unknown is minimized

− The roadmap is always the same

− This stuff works at home, too

• Respect

− Funny titles aren‟t laughed at any more

34


Closing

35

• Other Questions?

• Evaluation Form

Goodbye . . . And, Thank You!

Documents

Professional Development Series: SIX SIGMA