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8/10/2019 Six Sigma 1 Intro
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Upendra Kachru SIX SIGMA
Introduction to Six Sigma
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Whats in a name?
Sigma is the Greek letter representing the standard deviation of apopulation of data.
Sigma is a measure
of variation (the data spread) variation
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What does variation mean?
Variation means that a
process does not produce
the same result (the Y)
every time.
Variation exists in everything. Even the best machine cannot make
every unit exactly the same. Some variation will exist.
Variation directly affects customer experiences.
Customers do not feel averages!
-10
-5
0
5
10
15
20
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Reduce Variation to Improve
Performance
Put another way, Sigma level measures how often we meet (or failto meet) the requirement(s) of our customer(s).
s
x
30 min. or less
0 10 20 30 40 50
How many standard
deviations can you
fit within customer
expectations?
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Process Performance: ExampleThe pizza delivery example. . .
Customers want their pizzadelivered fast!
Guarantee = 30 minutes or less
What if we measured performance and found an averagedelivery time of 23.5 minutes?
On-time performance is great, right?
Our customers must be happy with us, right?
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How often are we delivering on time?
Managing by the average doesnt tell the whole story. The average andthe variation togethershow whats happening.
s
x
30 min. or less
0 10 20 30 40 50
Answer: Look at
the variation!
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Improved capability to reduce processvar iation and defects, becomes a
necessity, due to the need of :
Improved designs
Lower costs
Better performance
All of this leads to the ability to operate
to a tight tolerance, without producing
defects and becomes a major advantage
to the organization.
Improve Process Variation & Defect Rates
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What is Six Sigma
Six Sigma is a highly disciplined approach, which
relies heavily on statistical tools, used to reduce
process variations to such a great extent that the level
of defects is reduced to less than 3.4 per millionprocess, product, or service opportunities.
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What is Six Sigma - Example?The wait time is 7.5 minutes. The standard deviation of the
process is 1 min. Then six sigma from the centerline is 1.5minutes (in the negative direction and 13.5 minutes (in the
positive direction). The customer wait time should not
exceed 13.5 minutes 2 times in a billion opportunities.
xx1.5 13.57.5
Centerline
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Six Sigma is not
In the example, we said the customer wait time should not
exceed 13.5 minutes 2 times in a billion opportunities. Butthe accepted error rate in Six Sigma is 3.4 defects in a
million opportunities. Why the difference?
s
1.5 Sigma
In Six Sigma, the long termmean is shifted by 1.5 Sigma.
This is because external failure
rates seem to be consistently
higher than expected when
measured by internal estimates.
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Six Sigma is.
In other words, 4.5 standard deviations is used as an
acceptable measure of performance and this comes to 3.4
defects in a million opportunities. Though the derivation is
arbitrary, it is the accepted norm.
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Six-Sigma Metrics Defectany mistake or error that is passed on to a customer
Defects per unit (DPU) = number of defects discovered number of units produced
Defects per million opportunities (DPMO) = DPU 1,000,000 opportunities for error
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Comparing on a Sigma Scale
In a world at 3 sigma. . .
There are 964 flight cancellationsper day in India.
The police make 7 false arrestsevery 4 minutes.
In Calcutta Hospital, 5,390newborns die each year.
In one hour, 47,283 international
long distance calls areaccidentally disconnected.
In a world at 6 sigma. . .
1 is cancelled every 3 weeks inIndia.
There are fewer than 4 falsearrests per month.
1 newborn dies every 4 yearsin Calcutta Hospital.
It would take more than
2 years to see the same numberof dropped international calls.
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Example of a Six Sigma Scale
Say, Indian Railways runs 14,444 trains everyday.Passengers expect the trains to be on time. For the trains to
be time everyday the number of opportunities are:
14,444 x 365 = 5,272,060
At Six Sigma level (3.4 defects per million opportunities)Indian Railways will have to meet the standard:
(5,272,060/100,000) x 3.4 = 18
Therefore, no more than 18 trains can be late during annually
for Indian Railways to meet Six Sigma standards.
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Calculating on Sigma Scale
At Yes Bank customers expect that they should get acomplete set of documents within 3 days of their
submitting their application to open an account.
Management considers that if a customer gets his/her
documents after 3 days, it is a defect.
At the main branch of the bank, a total of 5000 accounts
were opened in the last three months. Data shows that in
the case of 125 accounts the target was missed. What is
the quality level?
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T
heSigmaScale
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Calculating on Sigma Scale
The level of defects per million can be calculated as follows:DPMO = (125/5000) = 25000
Sigma Calculator
The level of defects corresponds to a sigma level of 3.46.
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Up the Sigma Scale
Sigma % Good % Bad DPMO
1 30.9% 69.1% 691,462
2 69.1% 30.9% 308,538
3 93.3% 6.7% 66,8074 99.38% 0.62% 6,210
5 99.977% 0.023% 233
6 99.9997% 0.00034% 3.4
World-class
Minimum
Acceptable
Quality
Level
DPMO Si R l i hi
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1,000,000
100,000
10,000
1,000
100
10
1
2 3 4 5 6 7
d
p
m
o
66807 *
6210
233
3.4*
DPMO to Sigma Relationship
Sigma
*6 Sigma is not twice as good as 3 Sigma, it is almost
20,000 times better
Sigma Ranges
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Sigma Ranges
The y axis, representing DPMO is logarithmically scaled. As the
sigma level is increased, the defects per million level decreaseexponentially. For example, moving from 3 Sigma to 4 Sigma DPMO
drops from 67,000 to 6500, then to just over 200 at 5 Sigma.
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Cost of Quality at Different Sigma Levels
The cost of quality can be measured for any organization using
established criteria and categories of cost. In the figure the y axisrepresents the cost of quality as a percentage of sale. For a 2 Sigma
organization, nearly 50% of sales is spent on non-value adding
activities.
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Cost of Quality at Different Sigma Levels
At 3 or 4 Sigma, where most organizations operate, it spends 15 to
25% on quality related activities. Some of the costs are: qualitydepartments, customer complaint departments, returns, and warranty
repairs etc. Rule of thumb: An error that costs Re.1 will require Rs. 10
to detect in-house and Rs. 100 if the customer detects it.
C t f Q lit t Diff t Si
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Cost of Quality at Different Sigma
Levels
As the organization moves to 5 Sigma, its quality
costs drop to about 5%. And at Six Sigma it drops
to 12 % and customer satisfaction increases.
Th Si Si E l ti Ti li
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The Six Sigma Evolutionary Timeline
1736: French
mathematicianAbraham de
Moivre publishesan articleintroducing the
normal curve.
1896: Italian sociologist Vilfredo
Alfredo Pareto introduces the 80/20rule and the Pareto distribution in
Cours dEconomie Politique.
1924: Walter A. Shewhart introduces
the control chart and the distinction ofspecial vs. common cause variation as
contributors to process problems.
1941: Alex Osborn, head ofBBDO Advertising, fathers a
widely-adopted set of rules forbrainstorming.
1949: U. S. DOD issues Military
Procedure MIL-P-1629, Proceduresfor Performing a Failure Mode Effects
and Criticality Analysis.
1960: Kaoru Ishikawa
introduces his now famouscause-and-effect diagram.
1818: Gauss uses the normal curve
to explore the mathematics of erroranalysis for measurement, probabilityanalysis, and hypothesis testing.
1970s: Dr. Noriaki Kanointroduces his two-dimensional
quality model and the threetypes of quality.
1986: Bill Smith, a senior
engineer and scientist introducesthe concept of Six Sigma at
Motorola
1994: Larry Bossidy launches
Six Sigma at Allied Signal.
1995: Jack Welchlaunches Six Sigma at GE.
1798: Eli Whitneyintroduces the concept
of interchangeable partsand Go gauges.
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Major Contributions to Six Sigma
1. Create Constancy of Purpose for Improvement of Product and
Service
2. Adopt the New Philosophy
3. Cease Dependence on Mass Inspection for Quality Control
4. End the Practice of Awarding Business on Price Tag Alone
5. Constantly and Forever Improve the System of Production and
Service
6. Institute More Thorough, Better Job-Related Training
7. Institute Leadership
Demings 14 Points
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8. Drive Out Fear
9. Break Down Barriers Between Departments
10. Eliminate Slogans, Exhortations, and Targets of the Work Force
11. Eliminate Work Standards on the Factory Floor
12. Remove Barriers that Rob People of Pride of Workmanship
13. Institute a Vigorous Program of Education and Self-Improvement
14. Put Everybody in the Organization to Work to Accomplish the
Transformation
Major Contributions to Six Sigma
Demings 14 Points (contd.)
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Phillip Crosby
FOUR ABSOLUTES OF QUALITY MANAGEMENT
Definition of Quality: Conformance toRequirements
System: Prevention
Performance Standard: Zero Defects
Measurement: Cost of Quality
Major Contributions to Six Sigma
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Crosbys 14 Steps
1. Management Commitment
2. Quality Improvement Team
3. Quality Measurement
4. Cost of Quality Evaluation5. Quality Awareness
6. Corrective Action
7. Zero Defects Planning
8. Quality Education
9. Zero Defects Day
10. Goal Setting
11. Error Cause Removal12. Recognition
13. Quality Councils
14. Do It All Over Again
Major Contributions to Six Sigma
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Genichi Taguchi
Four-time winner of the Deming Award
Joined ECL in 1949 with the charge to improve efficiency of
R & D activities. Cultivated the application of designedexperiments.
Advocates a three-stage process design model:1. System Design
2. Parameter Design
3. Tolerance Design
Quality Loss Function
Signal-to-Noise Ratio
Major Contributions to Six Sigma
Major Contributions to Six Sigma
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Joseph Juran
Major Contributions to Six Sigma
Definition of Quality:Fitness for Use
O h M j C ib i Si Si
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Other Major Contributions to Six Sigma
M t l d Si Si
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Motorola and Six Sigma
Motorola was greatly impacted by the quality improvements
in foreign products. Under the leadership and support of BobGalvin, the companys zeal for quality improvement
flourished.
Stealing the best practices from the best companies (known
as the bandit project) was Motorolas attempt at turningaround the pocket pager business in the early 1980s.
Process Variation & Defect Rates
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CenterProcess
ReduceSpread
Off-Target Too Much Variation
CenteredOn-Target
Process Variation & Defect Rates
Bill Smith, leading the Motorola team, realized that there are
two things that can occur as a result of variation:
The process is "off-center." This means that the output from the
process is missing the target.
The process has too much spread. This means that there is a wide
variance in the output from the process.
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Process Capability
As the objective was to understand customer
requi rements and reduce process variation and defects,
Bill Smith and other Motorola executives combined
the concepts of process capability and
product specifications
to arrive at the Six Sigma Framework.
Six Sigma - Process Capability and
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Six Sigma Process Capability and
Product Specifications
Six Sigma marries the concepts of process capability andproduct specifications.
Process capability (Cp) is a technique to find out the measurable
property of a process to a specification.
Process capability index (Cpk) is the measure of process
capability. It shows how closely a process is able to produce the
output to its overall specifications.
M t l d Si Si
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Motorola and Six Sigma 3 Sigma ( Process capability of 1 CPK ) - if the process
(lorry) slightly varies then the scrap or damage will occur
6 Sigma ( Process capability of 2 CPK ) - if the process
(lorry) varies, there will be no scrap or damage
Curbs= required
process tolerances
CPK of 2
(6 sigma)
CPK of 1
(3 sigma)
Example
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ExampleFood served at a restaurant should be between 38C and 49C when it
is delivered to the customer. The process used to keep the food at thecorrect temperature has a process standard deviation of 2C and the
mean value for these temperature is 23. What is the process capability
of the process?
Given:
USL (Upper Specification Limit) =49C LSL (Lower Specification Limit) =39C
Standard Deviation =2C
Mean = 23
To Find:
Process Capability & Process Capability Index
Solution
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Solution
Process Capability :
Process Capability = (49 - 39) / (6 * 2)= 10 / 12
= 0.833
Process Capability Index :
Solution 1
(USL-mean/ 3*std.Dev) = (49 - 23) / (3 * 2)
= 4.33
Solution 2
(mean-LSL/3*std.Dev) = (23 - 39) / (3 * 2)
= 2.66
Now, find the minimum value.
Process Capability Index = min (Solution 1, Solution 2)= min (4.33 , 2.66)
= 2.66
M t l d Si Si
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Motorola and Six Sigma
Cp and Cpkmeasurements were used to measure
process performance. The calculation for capability was
defects per million opportunities (DPMO).
Traditionally, processes aimed for process capability of3 to 4 sigma (Cpk=1.0 to 1.33 or 93% to 99.3%
acceptable).
The customer received 6200 defective product permillion at best. The process was failing the customerexpectations
Motorola and Six Sigma
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Motorola and Six Sigma
4 Sigma Process Capability 99.38% Current Standard
6 Sigma Process Capability 99.99966% World-Class
Long-Term Yield
3 Sigma Process Capability 93.32% Historical Standard
The companys approach was based on a comparison of process
performance and product specification, and aggressive efforts to drive
down defects.
Processes now aimed for 6 sigma (Cpk=2).The customer would receive 3.4 defective product per million.
Motorola and Six Sigma
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Motorola and Six Sigma
To ensure widespread acceptance, the challenge was to make their
people understand that significant opportunities could be identified inthe DPMO formula, and customers ever changing expectations must
be considered.
It was also important to understand that a companywide mindset of
continuous improvement was as important as targeting a specific
quality level, such as 3.4 DPMO.
In 1991 Motorola certified its first 'Black Belt' Six Sigma experts,
which indicates the beginnings of the formalisation of the accredited
training of Six Sigma methods.
Motorola and Six Sigma
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Motorola and Six Sigma
As a result of winning the Baldrige Award in 1988, Motorola was
compelled to share its quality practices with others. AlliedSignal wasone of the first companies to adopt and use the methodology in 1991.
IBM and other companies adopted the concepts of Six Sigma and
shared the new methodology and philosophy with their suppliers,
engineers and managers.
There have been many modifications to the original measures. Some
add an additional I emphasizing implementation of the identified
solutions; or a trailing L to emphasize the need to leverage the
results across the organization.
Others Follow
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Others Follow
In 1995, Larry Bossidy, AlliedSignals CEO,introduced the concept of Six Sigma to Jack
Welch, CEO of General Electric. Welch took the
methodology, made it a corporate requirement and
firmly deployed it throughout his organization
with great intensity and significant success. Hisresults are well documented, and the rest is history.
Six Sigma Companies
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Some Six Sigma Indian Companies
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Some Six Sigma Indian Companies
Historical Developments
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Historical Developments
Six Sigma is
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Six-Sigma is a philosophy:
........Of breakthrough improvement
Six Sigma is
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Six Sigma is
Management mandated and directed improvement
program focused on breakthroughsin financial
performance and customer satisfaction
A systematic project based method for process and
product improvement
A statistical measure indicating the number of standard
deviations within customer expectations.
A performance goal, representing 3.4 defects for every
million opportunities to make one.
Six Sigma is. . .
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Six Sigma is. . .
A Greek symbol for measuring performance variation
A approach using series of tools and methods used toimprove or design products, processes, and/or services.
Uses Champions, Black Belts and Green Belts to facilitate
change
A disciplined, fact-based approach to managing a business
and its processes.
A metric for evaluating performance quality
A standard of excellence
Six-Sigma Quality
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g Q y
Ensuring that process variation is half the design tolerance (Cp =
2.0) while allowing the mean to shift as much as 1.5 standarddeviations, resulting in at most 3.4 DPMO.
Six Sigma & Other Approaches
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Six Sigma & Other Approaches
There are many approaches to excellence in addition to Six
Sigma : Total Quality Management
Kaizen
Toyota Production System
Total Productive Maintenance Theory of Constraints
Lean Production
Six Sigma has some overlap with all these approaches. It is
particularly close to TQM and sometimes considered as aspecific approach of TQM.
Six Sigma & TQM
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S S g & Q
In some aspects of quality improvement, TQM and Six Sigma share thesame philosophy of how to assist organizations to accomplish Total
Quality. They both emphasize the importance of top-management
support and leadership. Both approaches make it clear that continuous
quality improvement is critical to long-term business success.
However, why has the popularity of TQM waned while Six Sigma'spopularity continues to grow in the past decade?
Six Sigma & TQM
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g QThe differences between TQM and Six Sigma are summarized below:
TQM Six Sigma
A functional specialty within the
organization.
An infrastructure of dedicated change agents. Focuses on
cross-functional value delivery streams rather than
functional division of labour.
Focuses on quality. Focuses on strategic goals and applies them to cost,
schedule and other key business metrics.
Motivated by quality idealism. Driven by tangible benefit far a major stockholder group
(customers, shareholders, and employees).
Loosely monitors progress toward goals. Ensures that the investment produces the expected return.
People are engaged in routine duties
(Planning, improvement, and control).
Slack resources are created to change key business
processes and the organization itself.
Emphasizes problem solving. Emphasizes breakthrough rates of
improvement.
Focuses on standard performance, e.g.
ISO 9000.
Focuses on world class performance, e.g., 3.4 PPM error
rate.
Six Sigma & TQM
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g QThe differences between TQM and Six Sigma are summarized below:
TQM Six Sigma
Quality is a permanent, full-time job. Career
path is in the quality profession.
Six Sigma job is temporary. Six Sigma is a
stepping-stone; career path leads elsewhere.
Provides a vast set of tools and techniques
with no clear framework for using them
effectively.
Provides a selected subset of tools and techniques
and a clearly defined framework for using them to
achieve results (DMAIC).
Goals are developed by quality department
based on quality criteria and the assumption
that what is good for quality is good for the
organization.
Goals flow down from customers and senior
leadership's strategic objectives. Goals and metrics
are reviewed at the enterprise level to assure that
local sub-optimization does not occur.
Developed by technical personnel. Developed by CEOs.
Focuses on long-term results. Expected
payoff is not well-defined.
Six Sigma looks for a mix of short-term and long-
term results, as dictated by business demands.
Six Sigma & TQM
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g QThe differences between TQM and Six Sigma are summarized below:
TQM Six Sigma
A functional specialty within the
organization.
An infrastructure of dedicated change agents. Focuses on
cross-functional value delivery streams rather than
functional division of labour.
Focuses on quality. Focuses on strategic goals and applies them to cost,
schedule and other key business metrics.
Motivated by quality idealism. Driven by tangible benefit far a major stockholder group
(customers, shareholders, and employees).
Loosely monitors progress toward goals. Ensures that the investment produces the expected return.
People are engaged in routine duties
(Planning, improvement, and control).
Slack resources are created to change key business
processes and the organization itself.
Emphasizes problem solving. Emphasizes breakthrough rates of
improvement.
Focuses on standard performance, e.g.
ISO 9000.
Focuses on world class performance, e.g., 3.4 PPM error
rate.
Six Sigma & TQM
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g QThe differences between TQM and Six Sigma are summarized below:
TQM Six Sigma
Quality is a permanent, full-time job. Career
path is in the quality profession.
Six Sigma job is temporary. Six Sigma is a
stepping-stone; career path leads elsewhere.
Provides a vast set of tools and techniques
with no clear framework for using them
effectively.
Provides a selected subset of tools and techniques
and a clearly defined framework for using them to
achieve results (DMAIC).
Goals are developed by quality department
based on quality criteria and the assumption
that what is good for quality is good for the
organization.
Goals flow down from customers and senior
leadership's strategic objectives. Goals and metrics
are reviewed at the enterprise level to assure that
local sub-optimization does not occur.
Developed by technical personnel. Developed by CEOs.
Focuses on long-term results. Expected
payoff is not well-defined.
Six Sigma looks for a mix of short-term and long-
term results, as dictated by business demands.
Six Sigma & TQM
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g Q
Key differences between TQM and Six Sigma can be summarized as:Project Focus and Duration: Six Sigma deployment revolves around Six Sigma
projects that concentrate on one or more key areas: cost, schedule and quality.
The duration is specified, normally three to six months time frame.
Organizational Support and Infrastructure: The deployment is led by
executive staff, who use Six Sigma to further strategic goals and objectives. It is
championed by mid and upper level leaders and the project is led by a black belt
Clear and Consistent Methodology: Standard methodology has been developed
for Six Sigma projects, i.e. DMAIC.
Top down Training: Deployment starts at the top with training of key
management personnel.
Summary
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y
The major differences in Six Sigma as compared to other
approaches: Project based improvement approach
Clear and direct linkage of projects to financial benefits
Projects sponsored by Senior Management
Careful selection of the best people to learn and implement Six
Sigma
Uses statistical tools to identify problems and find their solutions
Comprehensive training in Six Sigma (statistical) tools.
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C l i c k t o e d i t c o m p a n y s l o g a n .