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Larry T. Mercer, Ed.D., FACHESix Sigma Black Belt
Virginia HIMMSOct 4, 2006
Six Sigma
An Executive Overview
2
Agenda
• Background
• Voice of the Customer
• Project Team Roles
• Variation
• Key Concepts
• DMAIC
• Project Definition Phase
3
Why Six Sigma?
• Study by the Institute of Medicine titled,
To Err is Human: Building a Safer Health System
– 98,0000 people die each year as a result of preventable medical error in hospitals
• The estimated annual cost of preventable inpatient adverse drug events is $2 billion
4
What Is Six Sigma?
• Sigma () is:– The 18th letter of the Greek alphabet
– The symbol for standard deviation
– A measure of variation
• Six Sigma is also a:– Vision
– Philosophy
– Management System
– Problem Solving Methodology
5
Six Sigma Goals
• Improve Patient Safety
• Improve Operating Efficiencies
• Improve Patient Care
• Improve Financial Performance
6
Six Sigma – Where Did It Come From?
• 1984: Motorola Engineer Bill Smith originates the concept of six sigma.
• 1988: Motorola wins prestigious Malcolm Baldrige National Quality Award.
• 1998: American Society for Quality rolls out its six sigma training program.
7
Benefits Realized From Implementing Six Sigma
Company Industry Benefits
Diversified products
$5 Billion by 2000 (Since 1996)
Technology$1.16 Billion in 2000/2001
Technology$85 Million early 2000
Technology $1.5 Billion in 1999
Financial Services $2.5 Billion in 1999
Financial Services
$1.45 Billion since 1998
Diversed Manufacturer
Average of $600 M/year since 1995
Company Industry Benefits
Automotive$475 Million in 2001
Chemicals $700 Million
Chemicals$1.5 Billion (EBIT) by 2003
Products£110 Million in 2000
Mining and Metals $34 Million in 2000
Energy and Utilities
$3 Billion since 1995
Products $40 Million in 2001
GeneralElectric
*Source IBM
8
Imagine If… You could select one of your
biggest problems . . . ?
Assign one of your best people to work on it . . . ?
Provide that person with all the tools, resources, and management support needed to fix it . . . ?
And guarantee them uninterrupted time and focus to work on it . . . ?
9
Practical Solution
ControlControl
Statistical Solution
ImproveImprove
The Six Sigma DMAIC Process
Practical Problem
MeasureMeasure
Statistical Problem
AnalyzeAnalyze
Remember: the goal is the practical solution.
10
Why We Do Six Sigma
Intangible---Difficult or Impossible to Measure
• Re-inspection
• Lost or missing information
• Lost customer satisfaction
• Re-design of software
• Modifying service processes to correct deficiencies
• Redundant operations
Tangible---Measurable
•Inspection
•Warranty
• Rework
• Rejects
• Scrap
11
CUSTOMER FOCUS
• Voice of the Customer
• CT’s (Critical To …)– CTQ – Critical to Quality - GOOD
– CTD – Critical to Delivery - FAST
– CTP – Critical to Price - CHEAP
There are 3 key areas to Customer Focus.
12
Supplier Perspective(Theatre)
Management) Good
Popcorn No Sticky
Floors Clean
Restrooms Short Lines
Good, funny, entertaining movies
Customer Perspective(Movie Goers)
. . . So why do such differencesin perspective exist ?
Critical to Satisfaction Critical to Satisfaction Characteristics for Movie GoersCharacteristics for Movie Goers
Ticket Sales
Concession Sales
Labor/Work Force Costs
Profit Reports
Other...
13
Understanding Variation (Six Sigma)
LSL USL
Anything outside the specification limits
represents quality losses
Goalpost Mentality
Traditional Philosophy
LSL USL
Any deviation from
the target causes
customer lossesVariation is Evil!
Taguchi Philosophy
14
Variation
USLLSL
T
A standard deviation (s) is a measure of the amount of spread or dispersion about the
mean ().
Mean (m)Standard Deviation (s)Lower Specification Limit (LSL)Upper Specification Limit (USL)Process Target (T)
A three-sigma (3s) process
15
Basic Statistics and
Normal Distribution Probabilities
68%
95%
99.7%
Areas under the curve are probabilities.
16
Six Sigma. . . An Aggressive Goal
Sigma is a statistical unit of measure that reflects process capability. The sigma scale of measure is perfectly correlated to such characteristics as defects-per-unit, parts-per million defective, and the probability of a failure/error.
2 308,5373 66,8074 6,2105 2336 3.4
- Level(short-term)
- Level(short-term)
Defects per Million Opp.(long-term)
Defects per Million Opp.(long-term)
17
Can You Relate?
99.99966% Good (6 Sigma)
5,000 incorrect surgical operations per week
200,000 wrong drug prescriptions each year
1.7 incorrect surgical operations per week
68 wrong prescriptions per year
99% Good (2.8 Sigma)
18
Common Questions• What is so different about Six Sigma from Initiatives of
the past?– It builds an infrastructure with lines of accountability
throughout the organization
– It stresses breakthrough improvement
– Emphasis is placed on producing better, faster, and lower cost services than the competition
– Emphasis on measurable results
19
Roles
• The roles inside a Six Sigma organization:
–Executive
–Financial Representative
–Champions
–Process Owners
–Black Belts
–Green Belts
–Team Members
20
Typical Interaction During Phases
Analyze ControlMeasure ImproveRecognize Define Realization
Execs/Finance/ Champions/
Process Owners
BBs / GBs / Team Members
Process Owners / Finance/
Champions
Properly managing interaction of these circles can make or break the success of Six Sigma.
21
Executives & Deployment Leaders• Role
– Own the vision, direction, and results
• Responsibilities
– Determine the scope of deployment
– Identify financial, project, and training related goals
– Identify strategic priorities to which Champions will align projects
– Drive the use of 6 as standard problem solving methodology
• Training: 1 to 2 days
• Pitfalls: Without visible support, Six Sigma struggles
22
Six Sigma Core Team• Who are they?
– Multidisciplinary team of 10 or so leaders from key supporting functions of the organization including:
– Nursing
– Finance
– Human Resources
– Information Technology
– Training
• Responsibilities– Take the executive vision and make it a reality
– Create supporting infrastructure which enables long term success
• Training– 1-5 day
23
Six Sigma Champions• Who are they?
– Typically a Director
– Organizations can identify “hands-on” or “executive” Champions
• Role
– Own the financial results of projects
• Responsibilities
– Defines the projects
– Selects Black Belts
– Removes roadblocks to project success
– Report project activity to executive team
24
Six Sigma Champions - continued
• Training
– 1-3 days focused on high level understanding
of Six Sigma, the hows of project recognition
and definition
25
Process Owners
• Role– Owner of the solution delivered by Six Sigma team
– Could be Director, Manager
• Responsible– Implementation of the team solution
– Assist with culture change at departmental level
– Assist Champion with potential project identification
– Co-leads realization phase with Finance Rep
– Provides resources to serve as team members on projects
26
Team Members• Role
– Extend the reach of Six Sigma into the department
• Responsibilities– Assist Black Belts with data collection and tool application
– Provide invaluable process expertise to Six Sigma team
– Assist Process Owner with the long-term implementation of solution
• Training: 1-3 days
27
Team Members continued
• Training– Trained by Black Belts during team meetings
– 4 to 8 days
• Pitfalls– Teams that are too small or too large may prevent
project success
– Recognition of team member contribution is critical throughout the life of the project
– Black belt must seek out and get buy-in from Team Members
28
Green Belts
• Role– Carry the language of Six Sigma deeper into the
organization
– Accelerate number of employees positively affected by Six Sigma
• Responsibility– Become departmental advocate
– Part-time implementers of smaller scope projects with direct impact to daily non-Six Sigma duties
– Assist BB with team activities and tool application to project area
• Training: 5 -15 days
29
Black Belts
• Role– Practitioner of DMAIC Methodology
• Responsibilities– Ideally full-time facilitator / leader of Six Sigma project
team
– Team should discover and recommend project solution
– Executes 4 to 6 projects / year
• Training– 4 to 5 weeks of DMAIC training
– Personal and professional development for later leadership roles
30
Black Belts continued
• Pitfalls– The likely success of Six Sigma projects dramatically
decreases without the implementation of full-time Black Belts
– If BBs are not selected from amongst the best within an organization, it sends the wrong message
31
Master Black Belt
• Role– Varies from organization to organization
– Should make Champions life easier in mature deployment
• Typical Responsibilities– Instructor and / or mentor of Black Belts and / or Green Belts
– Training material developer
– Deployment assistant to core team and Champions
– Keeper of project backlog list
– Driver of project closure process
– Leader of larger scoped projects
• Training– Certified BB + additional course work and requirements
32
Typical Time Commitments During 1st Project Phases
Green Belt or Black BeltGreen Belt or Black Belt
Six Sigma Exec & Leader
Recognize
Define
Mea
sure
Analyze
Impro
ve
Control
Realiz
e
Lead
Review
Support
Finance Rep
Process Owner
ChampionChampion
Month 0 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6
Now, lets look at the interactions.
33
Project Selection Essentials
• Executives, Management, and Champions trained in
project selection
• Manageable number of projects to be launched
• Projects scoped properly
• Focus on both efficiencies and customer benefit
Project Scope -- “Common Mistakes”
• Most common: Scope too broad:– “Solving world hunger.”
– Symptoms: Many outputs, vague goals, poorly defined problem
– Solution: Divide problem into several, measurable projects
• Other mistakes:– Too easy. Problem is known. Solution: fix it!
– Policy issues do not make good BB projects
– Long term development project -- capital intensive
– Process or product re-design
35
Using S.M.A.R.T. For Project Objectives
SSpecific
MMeasurable
AAggressive yet Achievable
RRelevant
TTime-bound
36
Money Matters!
• Whenever possible, the financial benefits of a Six Sigma project should be calculated and tracked
• The typical financial Six Sigma project goal is > $175k in hard dollar savings
37
Reviewing Project Definition1. What is the Problem? 2. Who is the Customer?
3. Where is the problem taking place?
4. When is the problem occurring?
5. How Much? 6. How do you know this?
7. Define the Unit of Measure and the Defect.
8. What is the primary metric?
9. Baseline 10. Entitlement
11. Financial Impact 12. Strategic Link
As project Champions, you need these answers!
38
The DMAIC Process
Optimize & Refine
Solutions
Control X’s
& Monitor Y’s
Close & Hand-Off
Project
Control
Refine the Project
Process Maps &
Simplification
C&E for Variable
Reduction
Process Capability
MeasureFailure Modes
& Effects Analysis
ID Variation: Graphical Analysis
Plan for DOE
AnalyzeDesign &
Exec1ute An Experiment
Define Y=f(x)
RecommendedChanges
Improve
MeasurementCapability
ID Variation: Statistical Analysis
Data Collection Systems
39
Measure Phase Deliverables1) Refine the Project
– Confirm project scope and objectives with data & forecast
– Establish the key project metrics and track using Metrics.xls
2) Process Maps– Process flow diagram
– Detail process map (inputs / output detail documented)
3) Simplify the Process (lean techniques)
4) C&E Analysis for Variable Reduction– Fishbone
– C&E Matrix
5) Measurement and Process Capability– Measurement Systems Analysis
– Short-term and Long-term Sigma Level
6) Develop Data Collection System
7) Complete Phase Summary– Conclusions, Issues, & Next Steps
Refine the Project
Process Maps &
Simplification
C&E for Variable
Reduction
Process Capability
Measure
MeasurementCapability
Data Collection Systems
40
Measure Phase Tools
• Process Mapping– Macro Map
– Process Flow Diagram
– Detailed Process Map
• Cause and Effect Tools– Fishbone Diagrams
– C&E Diagrams
• Basic Statistics
• Capability Analysis
• Measurement System Analysis
41
Start With a Process Map
• Refer to a macro-map from an expense accounting example
Account Charge
Documentation Sent to Finance
Finance Personne
l Enter Charge
on System
Finance Distributes
Departmental Expense Reports
Departmental Heads
Request Change
Department Heads Review Report
42
• Create a simple fishbone from the Expense macro-process map.
Posting Corrections
error filling out fo
error reading form
error keypunching
computer clitch
bad forms
outdated guides
outdated procedures
different deptdefini
Personnel
Machines
Materials
Methods
Measurements
Environment
Cause-and-Effect Diagram
43
Analyze Phase Deliverables1) Describe Project
– Objective statement
– Metrics.xls charts
– Initial validated forecast2) FMEA
3) ID Variation: Graphical Methods
4) ID Variation: Statistical Methods
– Correlation & Regression
– Means testing
– Sigma testing
– Proportions testing
– Contingency tables5) Planning for DOE
6) Complete Phase Summary
– Conclusions, Issues, & Next Steps
Failure Modes & Effects Analysis
ID Variation: Graphical Analysis
Plan for DOE
Analyze
ID Variation: Statistical Analysis
44
The Analyze Phase
• What this phase delivers:– A list of input factors that significantly affect output
performance
– Evidence of the significance through the use of analytical tools on data
Analyze Phase tools:– Graphical Analysis
– Histograms, scatterplots, boxplots
– Hypothesis testing
– Tests for location, spread, and shape
– Failure Mode and Effects Analysis
45
Graphical Analysis - Example• Productivity seems to be consistent across Pullers
– Puller as a significant factor will not be considered further
• Productivity has changed across the months
– Time-related variables will be investigated
46
Did NotCommit Crime
Commited A Crime
Did
No
tC
om
mit
Cri
me
Correct Verdict
GuiltyGoesFree
Co
mm
ited
A
Cri
me
Innocent Person
Convicted
CorrectVerdict
True State of Nature
Ver
dict
Hypothesis Testing – An Overview
• Two hypotheses are offered:– Ho: Typically represents the status quo
–Assumed true unless the data
overwhelmingly shows otherwise
– Ha: Typically represents a change
–Proposes (posits) that an input
factor impacts an output factor
Example: – Ho: Defendant is Innocent
– Ha: Defendant is guilty
47
FMEA – An Example
Process Step with potentially critical inputs identified by process mapping and surviving the C&E filter
Risk Priority Number
Used to rank which process steps are
important
Process Step
Potential Failure Mode
Potential Failure Effects
SEV
Potential Causes
OCC
Current Controls
DET RPN
Make Calculations
Incorrect Calculations
Delayed Processing
Incorrect Refund 6 Math Error 7
Visual Check 9 378
Bad Inputs 4Visual Check 4 96
Severity x Occurrence x Detection = RPN
6 x 7 x 9 = 378
48
Improve Phase Deliverables1) Describe Project
– Objective statement
– Metrics.xls charts
– Review validated forecast2) Design & Execute an Experiment
– DOE
– Pilot Trials3) Define of Y = f (x)
– Main Effects
– Interactions
– Non-linearity4) Summary of Changes Recommended
5) Complete Phase Summary
– Conclusions, Issues, & Next Steps6) Present Next Project Description
Design & Exec1ute An Experiment
Define Y=f(x)
RecommendedChanges
Improve
49
Control Phase Deliverables1) Describe Project
– Objective statement
– Metrics.xls charts
– Review validated forecast2) Optimize the Outputs and Refine the Solution
– Implement Recommended Changes3) Control Xs, Monitor Ys
– Initiate Control Plan
– Develop Project Metrics Monitoring4) Close and Hand-off Project
– Execute Transition Plan
– Validate Final Financial Forecast
– Complete Final Report
Optimize & Refine
Solutions
Control X’s
& Monitor Y’s
Close & Hand-Off
Project
Control
50
Focus of Six Sigma Problem Solving
Y Dependent Output Effect Symptom Monitor
X1 . . . XN
Independent Input-Process Cause Problem Control
To get results, should we focus our behavior on the Y or X?
ff(X)(X)Y=Y=
51
Define
Measure
Analyze
Improve
Control
Realize
Recognize
Project Turnover and DMAIC
Project Turnover
52
Elements of successful turnover
• Pre-defined procedure is consistently followed
• Results are thoroughly communicated in impacted area
• Buy in is achieved and skepticism addressed
• The process owner is supported
• Two months or less in Control phase
• Vital inputs, Control Plan and Project Action Plan agreed upon
• Financial results communicated and clearly understood
53
Elements of Successful Turnover (continued)
• Clear plan and buy in for monitoring results
• Visibility for successful projects are provided quickly
• New project ideas are generated
• Black Belt is free to move on
54
Questions?