Six Sigma Awareness Training
Course Objectives
The objectives of this workshop are:
To explain the purpose of Six Sigma
and the Six Sigma approach.
To discuss Six Sigma implementation.
To discuss the process for setting up
projects and deploying project teams.
Course Contents
1. Six Sigma Overviews
2. The DMAIC Process Steps and Tools
3. Six Sigma Implementation
4. Collective Decision Making
5. Define: Set Up Projects and Deploy Teams
Section 1
Six Sigma Overview
Six Sigma: What & Why
Effective Approach + Proper Deployment
RESULTS
Six Sigma Approach — Key Components
Problem Solving Process Define—Measure—Analyze—Improve—Control
Improvement Tools Comprehensive and Integrated Set of Effective Improvement Tools
Quality Principles A Set of Sound Underlying Concepts
Results-ExamplesAllied Signal• Turn around from weak financial position in late 80’s.• US$3.2B cost savings during 1996 and 1997.
General Electric• Achieve 40% increase in operating margin.• Develop a better leadership for today’s more competitive
world.
Fort Wayne City• Saved or avoided the need to spend nearly $3 million.• Has made numerous changes that have meant better service
for city residents.
Evolution of Quality Practices
1930’s Testing and Inspection
SQC (Statistical Quality Control)
TQC (Total Quality Control)1960’s
Just In Time (JIT)Total Quality Management
1980’s ISO9000
Business Process Reengineering
Lean Manufacturing
Six Sigma2000’s
DFSS, Lean Six Sigma
The Origin of Six Sigma 1979
“ The Real Problem At Motorola Is That Our Quality Stinks ! ”
Art Sundry(Formerly Motorola’s Senior Executive)
“ Tenfold Improvement Over A Five Year Period ”
Robert Galvin
(Formerly Motorola’s President)
1981
1980’s
• Bill Smith discovered the correlation between market failures rate and manufacturing defects rate.
• At Government Electronics Group, under the leadership of Mikel Harry, experiments with problem solving through statistical analysis showed dramatic results.
• Mikel Harry began to formulate a methodology for applying statistical tools for problem solving. His work culminated in a paper titled “The Strategic Vision for Accelerating Six Sigma
Within Motorola.”
1990
• Robert Galvin asked Mikel Harry to start up and lead
Motorola’s Six Sigma Research Institute.
• The mission was to develop Six Sigma implementation
strategies, deployment guidelines, and advanced statistical
tools that would work in a variety of companies and industries.
Adoption of Six Sigma - Seagate
- Caterpillar
- 3M
- Dupont
- Citibank
- Bank One
- Fort Wayne City
- Sony
- Toshiba
- Shimano
- Matsushita Motorola
AlliedSignal
General Electric
1987 1992 1995 2000
Adaptation of Six Sigma: Purpose and Approach
• 1987 Motorola - Defect reduction
- Manufacturing processes
• 1992 AlliedSignal - Operational excellence
- Include non-manufacturing processes
• 1995 General
Electric
- Financial results
- Design for Six Sigma (DFSS)
- Leadership development
• 2000 Sony - Management Quality
Six Sigma As Improvement Management SystemBusiness Goals
Performance Measures
Dashboard
Process Improvement(projects)
Bottom Line Improvement
Mindset Skill Set
Champions
Black Belts
& Green Belts
Define
Measure
M-A-I-C
Data
+
Analysis
Tools
Financial Benefit
Performance Measure - Examples
Motorola• Sigma Capability / Defect Per Million Opportunities (DPMO)
AlliedSignal Laminate System• Capacity Utilization
• Cost of Poor Quality (COPQ) Reduction
• Process Yield
General Electric Aircraft Engine Services• Project Financial Benefits
• Order To Remittance
• Inventory Turns
• Span / On Time Delivery
Drill Down Process To Identify ProjectsBusiness Objective Deployment Approach:
Project 1
Project 2
Project 3
Project 4
Sub – CTQ 1
Sub – CTQ 2
Sub – CTQ 3
Sub – CTQ 4
CTQ 1
CTQ 2
Objective
A
Objective
B
Bu
sin
ess
Goa
l
Role & Responsibility:Executive Team Champion
Black Belts
Green Belts
Profitability Manage Cost
Increase Sales
ImproveWorkingCapital
Sales Orders
Production Output
New Products
Material Cost
Failure Cost
Utility Cost
Account Receivable
Inventory
Sales Lead TimeOn Time DeliveryOrder FulfillmentCustomer ComplaintsProcess Yield
Down Time
Process EfficiencyTime to Market
Market Success RateDesign Changes
Material Price
Material Usage Rate
Lot Reject RateWIP RejectsMaterial Rejects
ElectricityWaterGas
Example : CTQ Tree
Teamwork
Coming Together Is A Beginning
Keeping Together Is Progress
Working Together Is Success
Henry Ford
Six Sigma Benefits GE Capital’s railcar-leasing business achieved 62% reduction in
turnaround time at its repair shops.
Customer who once found themselves able to talk with a GE
Capital Mortgage associate only 76% of the time now have a 99%
chance of success on the first try.
GE Plastics added 300 million pounds of new capacity through
rigorous Six Sigma process work.
Citibank’s Regional Cash Product Management Unit in Asia Pacific
improved the defect rate of its fund transfer process to 4.95 sigma
level.
Six Sigma As Problem Solving Process
• Identify Performance Measures
• Create Projects
Phases
DEFINE
MEASURE
ANALYZE
IMPROVE
CONTROL
Key Tasks
• Establish Data Collection Plan
• Understand Current Performance
• Brainstorm Possible Causes
• Verify Root Causes
• Identify Improvement Solutions
• Validate Effectiveness
• Establish Control System
• Share Lessons Learned
Responsibility
Champion
Bla
ck B
elt
Gre
en B
elt
The DMAIC Toolkit
Process Map Brainstorming Dashboard CTQ Drill
Down Cause & Effect
analysis Pareto diagram Selection Matrix Project Charter
Define Measure Analyze Improve Control
Data Collection
plan Histogram Distribution Measurement
System
Analysis Descriptive
Statistics Run charts Control Charts Process
Capability
Pareto diagram Brainstorming Nominal group
technique Scatter plot Box plot Stratification FMEA Process C&E
matrix Interval Estimate Hypothesis Test Process mapping
and analysis
Creativity Techniques
Selection matrix Design Of
Experiments Force field
analysis Potential risks
assessments Stakeholder
analysis Process
Capability
Control plan Documentation
system Control charts On the job
training Story board
A] Soft Tools (Team Problem Solving)
— Brainstorming
— Affinity Diagram
— Nominal Group Technique
— Decision Matrix
— Effectiveness / Practicality Matrix
— Quality Function Deployment
— Failure Mode and Effect Analysis
— Force Field Analysis
B] Hard Tools (Quantitative Data Analysis)
— Graphical Tools
— Process Capability Study
— Measurement System Analysis
— Hypothesis Testing
— Design Of Experiments
— Control Charts
C] Work Process Redesign
— Process Mapping
— Non-value Add Analysis
— 7 Principles of Process Redesign
— Technology Enabler
— Process Streamlining
— “ Should Be ” Process Map
ProcessInput Output
D] LEAN
— Value Stream Mapping
— Seven Major Wastes
— Flow-based Processing
— Kan ban System
— Set-up Reduction
— Mistake Proofing
— Visual Management
— Take Time
— Total Productive Maintenance
Six Sigma Key Features
• Top down approach Goals Alignment
• Logical and systematic process Consistency
• Rigorous problem solving method Effective
• Data driven and fact based decision Scientific
• Question conventions Breakthrough Results
• Financial benefits oriented Bottom Line Focus
What is “Sigma”? Sigma (Greek letter Ơ) is a symbol for statistical unit of measurement
called standard deviation that measure the variability of data from the
mean.
In Six Sigma program, Sigma is an index for measuring the capability
of process to produce “defect free” products or services. A “defect” is
any mistake that results in customer dissatisfaction.
The higher the sigma level, the less likely a process will produce
defects. As sigma increases, costs go down, cycle time goes down,
and customer satisfaction goes up.
Process Variation
• All businesses are a system of interconnected processes.
• Variations exist in all processes.
• Variations in processes result in process outputs variability.
• Understanding and reducing process variability is the key to improving the capability of a process to produce “defect free” products or services.
ProcessInput Output
Process Output Variability
Cycle time for taking X-ray at a hospital
0 10 20 30 40 50 60 (minutes)
Process Variability &Process Capability
Defects
Process OutputVariability
Customer Requirements
Customer Requirements
• Less variability means less defects will be produced.
• Less defects means better capability in meeting customer
requirements.
Process Capability:Sigma
Process Defect Per Percent CompetitivenessSigma Million Good
2
3
4
5
6
308,538
66,807
6,210
233
3.4
69.2%
93.3%
99.4%
99.98%
99.9997%
Noncompetitive Companies
Average Companies
World Class Companies
Is Three Sigma Performance Acceptable?Example: GE Plastics before Six Sigma implementation• 95% compounded product first pass yield
=>3 million pounds of rework week.
• 90% on-time delivery…
=>1 missed shipment every 30 minutes.
• 98% billing accuracy….
=> 1 billing error every 3 hours.
• 98% capacity utilization…
=> 20 million pounds of lost opportunity.
• 95% meetings star on time(5%with a 10-minute delay)
=> 1,000 work-hours lost each day.
Variability and Cost of Poor Quality (COPQ)The Costs of Not Doing Things Right the First Time
Activity 1 Activity 3Activity 2
Re-do
Re-check Re-check Re-check
Re-doRe-do
Re-Scheduling Lost Customer Service RecoveryGoodwillAdditional
HandlingCorrective Actions
Ad-hoc Meetings
COPQ of an Average organization
Opportunity For IncreasingProfit Margin
4 – 8%Of Sales
20 – 25%
Of Sales
Direct Loss• Re-do
• Re-check
Indirect Loss• Expediting Costs
• Ad-hoc meetings
• Service Recovery
• Corrective Actions
• Lost Customer Goodwill
• Longer Cycle Time
Process Variability and COPQ
Correlation between an organization’s COPQ and variability
of its key processes
2 3 4 5 6 Sigma Level(308538dpmo) (66807dpmo) (6210dpmo) (233dpmo) (3.4dpmo)
40
30
20
10
CO
PQ
(%
of
Sal
es)
Why Six Sigma?Q: Is the goal of Six Sigma to achieve six sigma level of
quality?
Contrary to what some believe, the goal of Six Sigma is
not to achieve six sigma levels of quality. Six Sigma is
about improving profitability, although improved quality
and efficiency are immediate by-product of Six Sigma .
“Six Sigma”, Mikel Harry and Richard Schroeder
Six Sigma and Other Improvement Approaches
High Hanging Fruits(~ 6 Sigma)
Low Hanging Fruits (~ 4 Sigma)
Bulk of Fruits(~ 5 Sigma)
Ground Fruits(~ 3 Sigma)
Six Sigma Approach(DMAIC)
QCC & 7 Basic Tools
Common Sense &Intuition
Design for Six Sigma(DFSS)
What Is Six Sigma - Summary
A management approach aiming at improving processes to
achieve excellent performance level.
It provides a comprehensive methodology and tools on how to
effectively achieve sustainable breakthrough improvements.
Through Six Sigma management:
- makes known the intention to achieve excellence,
- provides the enabling skills and knowledge,
- creates the supporting infrastructures and mindset, and makes breakthrough improvement possible.
Section 2
The DMAIC Process
Steps and Tools
The DMAIC Process Steps (1)
Phase Step Task
DEFINE
1 Identify Focus Areas / Key Performance
Measures
2 Set Up Project and Deploy Team
MEASURE
3 Define Key Process Output Variable
4 Develop Data Collection Plan
5 Determine Process Current Performance
The DMAIC Process Steps (2)Phase Step Task
ANALYZE6 Brainstorm All Possible Causes
7 Shortlist Major Suspected Causes
8 Verify Root Causes
IMPROVE9 Identify and Evaluate Possible Improvement
Solutions
10 Confirm Improvement Solutions
CONTROL11 Standardize Improvement Plan
12 Close The Project
Step 1: Identify Focus Areas / Key Performance Measures
Purpose: Focus limited resources on important areas.• This usually entails a working session participated by the
management team (the champions) where they examine the various possible areas that impact the business results and then, using a structured collective decision making process, decide the critical areas to focus the improvement efforts.
• Examples of focus areas include line reject rate, on-time shipment, capacity utilization, inventory turns, response time and warranty costs / customer complaints.
Profitability Manage Cost
Increase Sales
ImproveWorkingCapital
Sales Orders
Production Output
New Products
Material Cost
Failure Cost
Utility Cost
Account Receivable
Inventory
Sales Lead TimeOn Time DeliveryOrder FulfillmentCustomer ComplaintsProcess Yield
Down Time
Process EfficiencyTime to Market
Market Success RateDesign Changes
Material Price
Material Usage Rate
Lot Reject RateWIP RejectsMaterial Rejects
ElectricityWaterGas
A tool that is commonly used for this purpose is the Tree Diagram
Alternatively, the SIPOC diagram is used. SIPOC is more suitable for non-profit organization or supporting departments.
SIPOC Diagram[ Supplier — Inputs — Process — Outputs — Customers ]
ProcessInputs Outputs
Suppliers Customers
Step 2: Set Up Project and Deploy TeamPurpose: To clarify the issue faced within the focus area and deploy
suitable team to tackle the issue.
• Here, the champion (usually with the help of his / her people) defines
the problem statement, decide the improvement goal, and select the
project team members.
• This helps to make sure that due thoughts are given to make sure
that the project is a valid one.
• The project should be scoped at she process level where specific
actions can be taken to realize the improvement in business results.
• The outcome of this step is an approved project charter.
Project Selection Process-OverviewProject Ideas Sources
Project Ideas Sources
Project Ideas Sources
Project Ideas Sources
Performance Voice of Cost ReductionGap Customer Initiative
Competitive Issues of ConcernPressure
ProjectCharters
Project Charter • Project charter is a document created at the outset of a project
to assign the project to the team.
• It is an important tool for building committed project team.
• A Team Charter should specify the followings:
- Project title.
- The process involved.
- The business case and problem statement.
- The goal statement.
- Estimated financial benefits.
- Name of Champion.
- Team leader and members.
- Project time line.
The 4 ‘Rights’ of Successful Project
• Right project
• Right team composition
• Right team process
Right Result
Notes on forming a team :
• There should be a management member (champion) appointed as the project
sponsor.
• Team members are to be selected based on the problem statement and the
process to be improved.
• Team members must have good working knowledge on the process to be
improved.
• Rule of thumb for the number of people in a team is 5 to 7 persons.
• The team leader should be trained on:
- Problem solving process steps
- Team facilitation skills
- Process improvement tools
Step 3 : Define Key Process Output Variable
Purpose : Define a measure for key process output variable.
Why is it necessary to measure the process output?• To quantify the current performance level.• To objectively evaluate the gap.• To aid in the analysis of key input factors.• To verify the effectiveness of the improvement
solutions..
Input Process Output
Examples of Key Process Output Variables:
• Proportion defective / Proportion resubmission
• Defect per unit / Error per unit / Callback per unit
• Process capability ratio (Cpk, Ppk)
• Cycle time / Turn around time / Service response
time / Queue time
• On time delivery / Span
• Proportion of value adding activities
• Availability of personnel / material / facility
Step 4: Develop Data Collection Plan
Purpose : To make sure the data accurately describes
the process output variation.
Components of Data Collection Plan:
- Definition of data to be collected (from step 3)
- Measurement method
- Sampling timeframe
- Sample size
- Sampling method
- Recording sheet
Measurement System Analysis
When instrument or visual inspectors are involved to collect the
data, make sure the measurement system is OK.
Important aspects of a measurement system:
• Accuracy Calibration System
• Precision Gage Repeatability and Reproducibility Study
• Linearity Regression Analysis
• Stability Control Charts
Step 5: Determine Process Current Performance
Purpose: Determine objectively how well the process is
performing now.
• Gather process output data according to data collection plan.
• Translate the raw data into useful process information:
- Use histogram to show the variation in process output variable
- Estimate the process average and process variation using
descriptive statistics
- Evaluate current process capability
- Evaluate process stability using a run chart or a control chart
Case Study 1 : Invoicing process
Problem Statement :
About 30% of payments are received later than 60 days after
invoices were issued.
Goal Statement :
To reduce the percentage of late payments to less than 5%.
Financial Benefit :
Successful completion of this project will result in an estimated
financial benefit of US$50,000.
Data Collection Plan
Critical To Quality: Payment received on time
Measure: Cycle time from date of invoice issued to date of
payment received (days)
Specification: Not more than 60 days
Process output unit: An invoice
Data source: Account department
Data collection method: Pre-exist data
Sample frame: Three months period from January to March
Sampling method: Random sampling
Number of samples: 60
And Then…
MinitabA powerful data-analyzing software
which can help us have a good knowledge of current performance
Step 6: Brainstorm All Possible Causes
Purpose: List all possible factors causing the process
performance gap.
• Team leader to facilitate the brainstorming process.• Leverage collective experiences of the team members.• Search thoroughly, do not leave out any possible cause.• Depending on the situation, choose the most suitable
tool for this purpose. ( Cause and Effect diagram, Process
FMEA, Process Mapping, Process C&E Matrix )
Identify possible causes using brainstorming and organize the information using cause and effect diagram
Why are Customers Late in Paying Invoices?
Customer Related Invoice Related
Invoicing Method Others
CustomerPayment Policy
Customer Location
Customer FinancialPosition
Customer Acct
Payable Process
Need for Currency
Payment Method
Frequency of
Exchange
Invoicing
Errors In Invoice
In Invoice
Money Amount
Don’t Match P.O.
Wrong Address
Wrong Amount
Product Quality Problem
Past DuesNo Follow Up On
Relationship With
Customers
Customer Type
Step 7: Shortlist Major Suspected CausesPurpose: Identify key suspects.
• Use structured discussion and team’s collective knowledge to
narrow the possible causes down to a few most probable causes.
• Team leader to facilitate this narrowing process. It is important
for the team to gain a common understanding on the possible
causes before starting the narrowing process.
• Choose the most suitable tool for this purpose. ( Multi-voting,
nominal group technique, selection matrix )
Step 8: Verify Root Causes
Purpose: Confirm the key suspects are actually root causes.
• Make sure the key suspect are actually root causes.
• Discuss and decide how to confirm the key suspects.
• The methods commonly used for this purpose are:
- Historical data analysis.
- Design of Experiments.
- Process observation and tracking.
Step 9: Identify and Evaluate Improvement Solutions
Purpose: Identify various possible solutions and evaluate their
strengths and weaknesses.
• With the root causes identified, brainstorm all possible improvement solution. The first solution is usually not the best solution.
• Without any constraints, generate a list of possible solutions. Choose the most suitable creativity techniques for this purpose.
• Evaluate and select the best improvement solution.
Challenging conventional thinking / assumptions:
Do not think
- It can’t be done.
- It will not work.
- They’ll never buy it.
- We’ve always done it this way.
- We’ve never try this before.
Think
- How to get it done.
- Try and make it works.
- We can convince them.
- Let’s see if there is a better way.
- If we don’t try, we don’t know.
Examples of tools for idea generation,evaluation and selection:
• Creative thinking techniques• Brainstorming• Effectiveness — Practicality Matrix• Lateral Field Analysis• Selection Matrix
Use Effectiveness – Practicality Matrix to evaluate each idea
Effectiveness
Practicality
D
C
A
G
F
B
E
Using Force Field Analysis to evaluate in detail the idea of giving rebate if customers pay on time for those invoices with high dollar values.
Driving Forces +• Increased cash flow
of about $ xx.• Contribute $ xx to
financial benefits.
- Restraining Forces• An estimated $ xx will
be incurred as rebates.• An estimated xx hrs of
administrative efforts.• An estimated total costs
of $ xx will be incurred by the company
Step 10 : Confirm Improvement SolutionsPurpose: Make sure solutions are effective before standardization.
• Decide and develop an action plan to check solution effectiveness
• Collect initial data to make sure the solutions are effective:
- Check data distribution,compute the descriptive statistics,
calculate new process capability.
• Perform Potential risk assessment and stakeholder analysis to
anticipate and address possible problems when implementing
the solutions.
Implementation Action Plan
Improvement
Action
Error proof the invoicing process.
Make arrangements with customer to use payment method other than cheque.
Develop and implement a rebate scheme
ResponsiblePerson
Completion Date
30May
30May
18MayIrene
Peter
Adeline
Step 11 : Standardize Improvement Plan
Purpose: Incorporate improvement solutions into process
control system.
• Transfer the solutions from the team to the process owners.
• Revise process control system / documents ( control plan,
procedure, work instruction, etc. )
• Train / brief staff on the revised process control system.
• Implement a continual monitoring system.
Step 12 : Close the project
• Get Champion’s approval to close the project.
• Project can be closed when:
- The project phases have been completed.
- Project documentations have been completed.
- Improvement plan documented.
• Share the lessons learned and knowledge gained with other related processes / areas.
Case Study 2: Orders Fulfillment Define
Problem Statement
The time taken from the moment production is completed to delivery is 2 days. Some urgent orders require products to be delivered in 1 day.
Goal Statement :
To reduce the turn-around-time time to 1 day.
The process :
Orders fulfillment process
MeasureMap Current Process
• Make the process visible by creating the process maps.
• Common process mapping methods:
- Linear flowchart
- Cross functional map
- Relationship map
• Validate the maps created by walking-through the process and collect the necessary data.
AnalyzeExamine Current Process
• Look for flaws in current process.
• Examples of process flaws:
- Waiting
- Duplication
- Nom-value adding activities
- Unnecessary check / approval
- Errors
- Re-do
Analysis SummaryA] Waiting - Visual inspection does not start until laboratory tests have been completed. - Store supervisor waits for the test certificates before he can prepare the shipments.
B] Duplications - Packers record product names,lot numbers and quantities and send these information to store.Store supervisor key in the same information into the finished goods inventory system.
C] Non-value Adding Activities - Unnecessary movements involved in sending information or documents around.
ImproveIdentify Improvement Solutions
A] Reduce waiting - Laboratory tests and visual inspections to be performed concurrently. - Store supervisor prints test certificates from computerized workflow system.
B] Reduce non-value adding activities & duplications - Packers key in product information into finished goods inventory system. - Reduce document movements by installing a computerized workflow systems. - Empower QA technicians to decide lots acceptance based on the specification.
Transaction Project ExamplesSales and Marketing• Motorola employed Six Sigma methodology to improve its prospect
success rate. The company tracked prospects and monitored marketing
activities received (emails, website, etc.). By keeping a database of
activities for each prospect, Motorola calculated the types of marking
efforts generating the best customer responses.
• 3M’s Marine and Recreational Vehicle business applied Six Sigma
within the sales organization to accelerate the conversion of sales.
Managers and directors rank the sales representatives in 25 areas
including product knowledge and combine this data with each sales
rep’s conversion of accounts and growth in market share. Through data
analysis, the company determines about 10 attributes that most impacted
the conversion of sales and design a training program based on these
attributes.
• A business unit in Johnson & Johnson employed Six Sigma to resolve a distribution channel problem and create an improved data management system for sales reporting process. Prior to redesign the process, the company estimated that sales reps spent approximately 15% of their time on reporting activities, diverting their attention from selling. After completing the project, the company cut the time spent by sales reps on reporting activities in half.
Source: Corporate Executive Board
• A home appliance company was facing a high number of “no-fault found” problem.
This occurs when a repair technician is send to look into a fault reported by a customer
and found out that it is not a real fault.After collecting the data to understand the
problem, an effective solution was found. The solution is to get the receptionists to filter
out the “non-fault” problems. Thos involves training the receptionists to clarify the type
of faults reported by the customers and be able to explain to customers on how to
operate the appliance correctly over the phone.
Banking and Finance
• Copeland Companies,which are distributors and record keepers of finance
service products, use Cross Functional Mapping and Process Redesign methods to
improve the accuracy and timeliness of statements (28 days to 15 days).
• Global Equipment Finance,which provides global financing and leasing services,
improved all steps’ cycle times from a customer places an order to product delivery.
The group also reduced the credit decision cycle by 67 percent, from3 days to 1 day.
• Private Bank – Western Hemisphere, which served wealthy individuals reduced
internal call backs by 80%,external call backs by 85% and credit process time by 50%
Source : baldrigeplus.com
Finance, Purchasing and Logistics
• A company in OEM business faced problems in paying its suppliers on time.
Delays in payment result in the suppliers holding back shipments causing the
company to re-schedule production, suffer line down and miss delivery dates
to its customers.
• A cross functional team consisting members from logistics, account, finance,
production planning and purchasing was form to solve the problem. The champion
was the finance director.
• The team created the cross functional process map, identified and verified key
issues in the process that result in delays. These issues include (1) incomplete / delay
in purchasing and shipping documents, (2) information that do not tally, (3)
disconnects in the process flow.
• The team identified and recommended the countermeasures needed to overcome
these issues. With strong backing from the champion,the team implemented the
countermeasures and achieved the project goal.
Human Resource
• A business unit in Johnson and Johnson identified sales force turnover as a
significant threat to sales productivity. Therefore it used Six Sigma method
to track and analyze the rate and demographics of turnover in the current
budget year compared to both the current year estimates, previous years’
turnover and data from other Johnson and Johnson companies to determine
factors causing sales rep to leave the company.
Source: Corporate Executive Board
• A large MNC with multiple manufacturing sites was having problem with
high level of medical leaves consumed by its employees. It was believed that
a high proportion of the medical leaves taken was not really necessary. This
issue results in lost labor hours and higher medical expenses. From the data
collected, it was found that a certain group of employees has a significantly
higher count of medical leaves taken. Based on this information, some solutions
(such as incentive-scheme and company approved clinics) was tried out. When
the solutions were found to be effective,they were standardized by revising the
medical leave policy.
• An MNC set stretch goals on project financial benefits company wide and this includes the Human Resources dept. A team in HR examined the expenses in HR and Administration and discovered that one of the vital few high expense items was traveling expenses. Most of the traveling expenses incurred was air fares. There are about 50 engineers in the company who travel frequently to the company headquarter in the USA. The engineers traveled in business class. The team proposed giving an option to the engineers:While they can still travel in business class, alternatively they can opt for traveling in the economy class and receive an
additional travel allowance of US$500. The team performed stakeholder analysis and potential risks assessment before they proposed this idea to the management. The idea was implemented and many engineers chose the
second options resulting a saving of about US$50,000 annually.
Public Service
• A government authority reviews and approves applications from the businesses.
A high proportion of applications were suspended and the applicants need to
resubmit the application. A suspended application means the time spent to review the
application is a waste (cost of not going things right the first time), Some applications
went through as high as 5 resubmissions before they are approved. A team was formed
to measure the problem, analyze the reasons for suspensions and recommend
countermeasures. As a result, the number of suspensions per application reduced
significantly and the labor cost saving was about $35,000 annually.
• A hospital form a team to improve the patients discharge process. Many patients
called back the hospital to clarify information on medication, follow-up appointment,
etc. Each time a patient called,the nurses need to spent a substantial amount of time to
retrieve the file, review the files and answer the enquiries. If the patient discharge
process is done right the first time,the patients should not need to call back. Using Six
Sigma methodology, the team reduced the number of call backs.
Section 3Six Sigma Implementation
The Six Sigma Leap
MostCompanies
• A vision that excellence performance is possible and is essential to success.
• New paradigms, outlook, mindset.
• New skills, tools and data.
Culture Change
2 3 4 5 6Sigma Sigma Sigma SigmaSigma
Six Sigma Implementation Stages
Executive Briefing & Initial AssessmentAlignment
CTQs & Project SelectionImprovement Priority
Black Belts & Green Belts TrainingImprovement Skills Development
The Six Sigma Implementation Roadmap
1. Executive Briefing
2. Six Sigma’s Objective Ascertained
3. Six Sigma Deployment Committee Formed
4. Deployment Plan Developed
5. Champions Trained
6. Performance Measures (CTQ) Identified
7. Projects Identified ( 1st. Wave )
8. Black Belts & Green Belts Trained
9. 1st. Wave Projects Completed
10. Cont. With Next Projects
Six Sigma Roles - Overview
Set direction and provide
resources
Plan and lead organization-wide
implementation
Set up projects and deploy
teams
Coach and support team leaders
Execute projects
Senior Executives
Deployment Committee
Champions
Master Black Belts and
Black BeltsBlack Belts, Green Belts
And Project Teams
Typical GE Six Sigma Organization StructureManaging Director
Finance Rep. Six Sigma Dept.Master Black Belt
DivisionManager
(Champion)
DivisionManager
(Champion)
DivisionManager
(Champion)
DivisionManager
(Champion)
Black Belt – Full Time Black Belt – Full Time
Engineer( Green Belt )
Engineer( Green Belt )
Officer( Green Belt )
Officer( Green Belt )
Senior Executives’ Role
• Understand what Six sigma is and how Six Sigma helps accomplish business objectives.
• Give directive for Six Sigma implementation.
• Provide the necessary resources.
• Be seen as an advocate and supporter.
• Follow – up on:
- results
- effectiveness of the approach
- extent of deployment
AlliedSignal
Our Vision
We will be one of the world’s premier companies,
distinctive and successful in everything we do.
Our Commitment
We will become a Total Quality Company by
continuously improving all our work processes
to satisfy our internal and external customers.
IomegaHow did we decide on Six Sigma? We recognize the need for a change in the way we pursue operational
excellence.
Why change the way we do it now?• To deal with a world of declining product prices.• To compete successfully with the best companies in the world.• To establish standard language and approaches across functions and
across businesses.• To develop the next generation of leaders.
To Increase Our Rate of Quality and Productivity Improvement Faster than Our Competitors!
General Electric
… quality at GE will be taken to world-leading levels,
providing us with yet another competitive differentiator.
Our openness to learning……as well as the generosity of
Motorola and others in sharing their techniques with us, will
bring GE to a whole new level of quality in a fraction of the
time it would have taken to climb the learning curve on our
own.
GE’s 1996 Annual Report
Guideline Principle for Leading Change
VISION
PASSION
ACTION
Guiding Principle for New Work Habit
• Want To Do.
- appreciate the purpose
- understand ‘what is in it for me’
• What To Do.
- approach framework / model
- role and responsibility
• How To Do.
- process
- tools
Six Sigma Deployment Committee
• Tasked by Senior Executives to implement
Six Sigma in the organization.
• Responsibilities:
- promoting - monitoring
- planning
- coordinating
- controlling - recommending
- evaluating
- reporting
Master Black Belts
Role
• Lead Six Sigma implementation committee.
• Adviser to senior executives team and champions.
• Instructor of Six Sigma training courses.
• Coach for Black Belts and Green Belts.
Profile
• Business / technical degree, management experience.
• Respected member of management.
• Master of Six Sigma principles and practices.
Champions’ Role
• Lead the implementation of Six Sigma in their areas.
• Determine and track key performance measures (CTQs).
• Select and prepare Black Belt and Green Belt candidates.
• Identify, set up and support projects.
- Ensure the projects are properly set up.
- Follow up on the projects’ progress.
- Help teams to remove barriers.
Six Sigma Skill Levels and “Belts”
Basic Level
Intermediate Level
Advanced Level
Yel
low
Bel
t
Gre
en B
elt
Bla
ck B
elt
~95%
~75%
~50%
Opp
ortu
nity
To
App
ly
( C
umul
ativ
e )
Efforts Needed To Acquire The Tools
Black Belts Role
Serve as an expert who has in-depth knowledge of Sis Sigma
methodology and tools.
• Lead Six Sigma projects.
• Coach green belts on their projects.
• Trainers of certain Six Sigma tools.
Profile
• University education, 5 years working experience.
• Respected by peer and management.
• Good interpersonal and analytical skills.
Green BeltsRole
• Serve as a trained personnel who is able to lead Six Sigma
projects.
• Participate effectively in Black Belt’s project as team
member.
Profile
• Higher education level.
• 3 years working experience.
• Respected by peer.
Executive 1 Day
Champion 2-3 Days Green Belt 8-10 Days (spread over 2 months period)
Black Belt 16-20 Days (spread over 4 months period)
Typical Training Duration
Training Approach
Describe / explain the techniques.
Practise the techniques in class exercises.
Apply the techniques in actual work
environment through project.
Review the effectiveness of applications.
Explain
Review
Practise
Apply
Finance Representative
Role • Provides financial data for financial benefits calculation.
• Provides guidelines for calculating financial benefits.
• Verify actual financial benefits.
Human Resource
Role Review and suggest appropriate incentive system
for Six Sigma :• Career advancement opportunity • Recognition of efforts and contributions• Monetary reward for achievements
Policies / Guidelines
• Personnel Selection.
• Project Selection.
• Financial Benefits Calculation.
• Project Tracking System.
• Black Belt Certification.
• Incentive Scheme.
Projects Tracking System
Information to be tracked:
• Total number of projects.
• The numbers of completed projects and
on-going projects.
• The status of each on-going project.
• Targeted financial benefits and actual
financial benefits to date.
Projects Review
Objectives:
1. Ensure projects proceed as plan.
2. Present the findings of each phase.
3. Make sure the vigor of Six Sigma
approach is maintained.
4. Discuss the barriers faced.
5. Check correct applications of tools.
Six Sigma Critical Success Factors
• The link of Six Sigma to business strategy is clear.• Recognize and manage Six Sigma as a change initiative.• Understand that Six Sigma is a management approach, not just a problem solving tool.• Identifying the right focus areas for Improvement.• Selection of key personnel.• Diligent and disciplined use methodology, fact and data.
Section 4Collective Decision Making
Why Make Decision Collectively?• A good decision has two basic components: quality and commitment.
• A quality decision takes into account all of the facts and viewpoints, and makes good use of that information.
• When decision is made4 on a collective basis, it pulls together the skills, knowledge, experience, and opinions of several people. This produces a decision that is usually better than the decisions made by individuals.
• Knowing how to make collective decision effectively is an
important skill to an organization.
Benefits of Collective Decision Making
• Fresh and diverse ideas.• Minimize misunderstandings and biases.• Increased learning and personal growth. • Better ownership.• Increased understanding of the big picture – better
buy-in.• Better decision – quality and commitment.
Collective Decision Making Process• Collective decision making is a process where a
group of people bring up, share, and discuss different ideas and viewpoints, and to select and agree on the best ideas.
• Effective collective decision making process is not something that will happen by nature.
• There are a set of tools that are developed to make the process more effective. Knowing these tools and the ability to apply them effectively is an important skill.
Collective Decision Making – General Steps• Define and clarify topic / objective.• Surface / generate ideas by stimulating discussion, using open questions, and brainstorming creatively.• Record all inputs on charts in full view.• Get everyone to understand each other’s ideas by reviewing inputs on the chart.• Group, combine, map or evaluate all inputs.• Make consensus decision by summarizing, eliminating, narrowing, or win-win negotiation to arrive at an agreement / consensus.
Collective Decision Making - ToolsLess Complex : - Brainstorming - Multi-voting - Nominal Group Technique - Selection Matrix (or Decision Matrix) - Cause and Effective Diagram
More Complex : - Quality Function Deployment (QFD) - Failure Modes & Effects Analysis (FMEA)
Collective Decision Making - Notes• The chance of everyone having exactly the same
idea or viewpoint about an issue are very slim.
• Letting the most powerful person make the decision
or by mean of majority rules are not effective
approaches.
• Good decisions require the team to pool information,
consider different viewpoints and arrive at an
agreement or consensus.
Consensus (1)A better decision will be made if…
• People with good knowledge and experience on the
subject matter participate in the process.
• Everyone’s opinions and thoughts are sought, clarified
and considered.
• There is a structured process that enables the team to
listen to each other and discuss their ideas.
• Consensus and buy-in from all participants are ensured.
Consensus (2)Is:• A search for the best decision through the exploration of everyone’s viewpoints.• Everyone has had an opportunity to be heard.• A decision that reflects the collective thinking of a team and that all the team members understand fully, can live with, and will actively support, and believe is workable.Is Not: • A unanimous decision.• Having everyone completely satisfied with the outcome.• Necessarily everyone’s first choice.
Collective Decision Making Process - Tips
• Have enough time, do not speed up the process.
• Balance power.
• Listen carefully. Check for understanding.
• Be open to different ideas, but avoid playing ‘nice guy’ to avoid disagreement.
• Encourage differences of opinions. Have someone plays devil advocate role.
Brainstorming
• A tool for creating a wide range of options
in an environment free of criticism.
• Brainstorming if useful when you want to
generate a large numbers of ideas about
- Issues to tackle.
- Possible causes of a problem.
- Corrective measures to take.
Brainstorming Ground Rules
• Active participation by all.
• No criticism, suspend judgment.
• Ideas build on ideas.
• Record all ideas.
• Set a time limit.
Brainstorming Steps
1. Review the rules.
2. Set a time limit.
3. Assign a time keeper and idea recorder.
4. State the topic.
5. Collect ideas.
6. Record ideas.
7. Clarify each idea (after all ideas are recorded).
8. Eliminate duplications.
Brainstorming Methods
A. Freewheeling
- Share ideas simultaneously.
- List all ideas as they are”shouted out”.
B. Round-Robin
- Everyone takes a turn offering an idea.
- Anyone can pass on any turn.
- Continue until there are no more ideas.
- All ideas listed as they are offered.
Multi-voting
• A tool for short listing key ideas.
• To reduce a long list of items to a manageable number of items.
• Identifying the most popular or highest priority items to a group a people.
• Also called the Delphi Technique.
Multi-voting - Steps
1. Work from a large list.
2. Assign a letter to each item.
3. Vote individually.
4. Tally the votes.
5. Repeat where necessary.
Multi-voting - Rule of Thumb
• Number of votes allowed = half the number of items
• Number of members Eliminate items with
5 or fewer
6 to 15 3 or fewer votes
more than 15 4 or fewer votes
2 or fewer votes
Exercise
Use brain storming and
multi-voting to decide
what are the key reasons
for ineffective meeting
Nominal Group Technique• A weighted ranking method that enables a team to
generate and prioritize a large number of options• A mechanism that
Gives everyone an equal voice. Neutralizes the domination of the loudest
person. However, it will interactions between team
members during ideas generation.
Nominal Group Technique-Steps1. Introduce and clarify subject.
2. Generate ideas individually (each idea on one post-it note).
3. Collect ideas.
4. Read each idea out loud. Clarify if needed.
5. Combine similar ideas.
6. Assign a letter to each idea.
7. Rank the ideas independently.
8. Add the ranking.
9. Prioritize items according to scores.
Selection Matrix
• A method for relating a set of ideas or options with specific selection criteria.
• Used when the team needs to achieve a consensus on the best idea or option.
Selection Matrix-Steps
1. List the ideas or options to be evaluated.
2. Decide the criteria for selecting the best idea or option.
3. Create a table to relate the ideas / options with selection criteria.
4. Determine the rating scale for the selection criteria.
5. For each idea / option, all members individually decides the score for each criteria.
6. Sum up the total score for each idea or option.
7. Identify the best option based on total score.
Cause and Effect Diagram
• A tool that helps identify, sort, organize and display possible causes of a specific problem or quality characteristic.
• It graphically illustrates the relationship between a given outcome and all the factors that influence the outcome.
• Also called an ‘Ishikawa diagram’ or a ‘fishbone diagram’.
Cause & Effect Diagram-Steps
1. Identify and clarify the effect to be analyzed.
2. Identify the main causes contributing to the effect.
3. For each main cause, identify other specific factors.
4. Identify increasingly more detailed levels of causes.
5. Analyze the diagram to identify causes that warrant
investigation.
• Quality characteristic
• Problem
• 5 M’s (man, machine, method, material, mother nature)
Example
MachineDown Time
Software Users
Hardware Environment
Faulty installation
Faulty media
Faulty design
Faulty component
Component failure
Power fluctuation
Misuse
Use wrong software
Lack of training
Corrosion
Mechanical shock
Humidity
Temperature
Section 5Define: Set Up Projects
and Deploy Teams
Project Selection Process-OverviewProject Ideas Sources
Project Ideas Sources
Project Ideas Sources
Project Ideas Sources
Performance Voice of Cost ReductionGap Customer Initiative
Competitive Issues of ConcernPressure
ProjectCharters
CTQ Drill Down — A General Framework
1. Clarify Business Goals and identify key performance drivers that impact the business goal.
2. Define measures for key performance drivers.
3. Implement the process for collecting data and reporting the measures.
4. Identify gaps between goals and current baselines -prioritize focus areas for improvement.
5. Brainstorm the causes that drive the measures.
6. Discuss the relationship between the causes (X’s) and the effect (Y) to identify vital few factors that drive the measures. For the vital few causes, identify project ideas that will move the effect (Y) to the desired level.
7. Apply project Assessment Matrix to prioritize the project ideas.
8. Scope the project and create Project Charter.
CTQ Drill Down-Example
Step 1: Clarify Business Goals and identify key performance
drivers that impact the business goal.
Examples of performance driver:
1. Capacity Utilization
2. Inventory Turns
3. Cost of Poor Quality
Profitability Manage Cost
Increase Sales
ImproveWorkingCapital
Sales Orders
Production Output
New Products
Material Cost
Failure Cost
Utility Cost
Account Receivable
Inventory
Sales Lead TimeOn Time DeliveryOrder FulfillmentCustomer ComplaintsProcess Yield
Down Time
Process EfficiencyTime to Market
Market Success RateDesign Changes
Material Price
Material Usage Rate
Lot Reject RateWIP RejectsMaterial Rejects
ElectricityWaterGas
Example : CTQ Tree
Step 2: Define Measures for Key Performance Drivers.
Examples:
Performance Driver Measure
Inventory Inventory Turns: Monthly sales amount ( $ ) over inventory
holding costs for that month.
Order Fulfillment Fulfillment Rate: Number of ordered items delivered on time
over total number of ordered items ( % ).
Lead Time Cycle Time: Time interval from order received to
product / service delivery (days).
Criteria of Good Measures
• Direct Relate directly to the characteristic being assessed.
• Exact Can be observed or measured.
• Detail but concise Clear, understandable, and unambiguous.
Step 3: Implement the Process for Collecting Data and Reporting the Measures.
• Determine data source.
• Create recording sheet / form.
• Decide reporting format.
• Develop a procedure for collecting, reporting
and review the information.
Example on a Procedure for Collecting and Reporting Data:
Operator— Collect Data Daily
— Submit by 2nd day of month
— Record Sheets
Clerk
— Collate Data
— Update charts
— Submit by 4th day of month
— Run Charts
Manager and officers
— Monthly meeting to review
charts and previous actions
— 5th day of month
— Meeting Minutes
— Actions Plan
Clerk— Post charts and actions
plan on dashboard
— Department
Dashboard
Responsibility Procedure Outline Record
Common Graphical Tools for Reporting Data:
• Data are reported in tables rather that graphs.
• Only the most recent data are reported.
• No comparative data are presented.
• Pie Chart
• Bar Chart
• Run Chart
• Histogram
• Pareto Diagram
• Control Chart
Common Mistakes in Reporting Data:
Example on Data Reporting Format:
RTY Inc
Logistics Div
Measure: Inventory Turns
Owner: Bruce McDonald
’00 ’01 ’02 J F M A M J J ……
2003 Goal
Characteristics of a Good Feedback System:
• Important and meaningful information
• Accurate information
• Timely feedback
• Easy to understand
• Accessible
Step 4: Identify Gaps Between Goals and Current Baselines — Prioritize Focus Areas for Improvement.
2003 Goal
J F M A M J J A S O N D
Step 5: Brainstorm the Causes that Drive the Measures.Fill the Cause and Effect Diagram with data ( if available ).
InventoryTurn
Purchasing Others
System Supplies
Safety Stock Policy
Stock Replenish Policy
Central WarehouseStock Count Accuracy (80%)
Material Storage
Housekeeping
Forecast Accuracy (70%)
Inventory Control System
Quality (5% lot reject rate)
Lead Time (30 days)
On – Time (95%)
Shipment Quantity
Step 6: Discuss the relationship between the causes (X’s) and the effect (Y) to identify vital few factors that drive the measures. For the vital few causes. identify project ideas that will move the effect (Y) to the desired level.
InventoryTurn
Purchasing Others
System Supplies
Safety Stock Policy
Stock Replenish Policy
Central WarehouseStock Count Accuracy (80%)
Material Storage
Housekeeping
Forecast Accuracy (70%)
Inventory Control System
Quality (5% lot reject rate)
Lead Time (30 days)
On – Time (95%)
Shipment Quantity
Step 7: Apply Project Assessment Matrix to the Prioritize Project Ideas.
Examples of Selection Criteria:
• Magnitude of impact
• Probability of success
• Estimated duration
• Effort Required
• Estimated cost
The 3 Conditions for a Six Sigma Project
• A gap exists between current and the desired performance.
• The cause of the problem is not clearly understood.
• The solution is not apparent.
Is it a problem to be solved or an action to be taken?
Step 8: Scope the Project and Create Project Charter.
Project Title
Problem Statement Business Case
Goal Statement Process
Team Leader
Members
Time Line
Financial Benefit (estimate) Champion Name Sign
Date
The 4 ‘Rights’ of Successful Project
• Right project
• Right team composition
• Right team process
Right Result
Right Project
• Well selected
- Address important business issue.
• Well scoped
- Focus on specific problem or process.
• Well defined
- Comprehensive and clear instruction, not a vague idea.
Project Charter• Project Charter is a document created at the outset of a project to
formally assign the project to the team.
• It is an important tool for giving clear instruction and getting commitment from the project team.
• A Project Charter provides the following information:
- Project title.
- The process to be improved.
- The business case.
- The problem statement and goal statement.
- Estimated financial benefits.
- Name of Champion, team leader and members.
- Project time line.
Project Title
• A brief description of the project.
• An idea on what the project is about
Examples:
• SB687 Mis-registration Reduction
• Order Fulfillment Process Cycle Time Reduction
• Loan Application Process Error Reduction
Process• The name of the particular process to be improved.
• Can be described using a high level process block diagram.
Examples:
• Sales orders handling
• Multi-layer circuit board lamination
• Funds transfer transactions
• Pick and place process
Business Case• A broad statement on the business issue pertaining to the
project.
• Provides the rationale on why the project should be a business priority.
Examples:
• Competitor’s better quality product has reduced our market share.
• Lower product prices have reduced profit margin, therefore the need to reduce costs.
• Faster response time will generate more sales.
Problem / Opportunity Statement• A description on the symptom of the issue faced.• More specific and focused than business case.• Contains quantitative figure.
Examples:
• Sales for product A has fallen by 20% since last year.• The mis-registration defect rate has increased to 7% since
last month.• The turn-around-time of competitor A is 5 days faster than
ours.
Goal Statement• A description on what is to be achieved.
Examples:
• To reduce the orders confirmation cycle time 2 days.
• To reduce the mis-registration defect rate from 5% to 1%.
• To increase the inventory turns by 50%.
• To improve the forecast accuracy to 90%.
The ‘Right’ Team Composition• Right Members. - Those familiar with the problem, issue, work process. - Those who are affected by related changes.
• Right Team Size - 5 to 7 members seem to function most effectively.
• Role of Team Leader - Clarify with champion/management on project objective. - Schedule and conduct team meetings. - Get the necessary resources (time, training, equipment, materials, people) .
Responsibility of Team Members
• Carry out team assignments (collect data,
prepare presentation materials, etc.).
• Participate actively in team discussions and
decision making.
• Share ideas and knowledge.
• Implement improvement actions.
Team Effectiveness
• A group of individuals is not a team.
• An effective team if characterized by members who are:
- Committed to team goal.
- Collective responsibility to project success.
- Collaborate and support each other.
• Team facilitation skill is necessary to create teamwork.
Project Set-up Guideline• Is the project aligned with the business goal?
• Is there a specific problem to be addressed or multiple problems?
• Is there a pre-determined solution?
• Is the project focused on specific area / process?
• Are the benefits of the project identified?
• Are the right persons in the team.
• Is the number of team members too many / few?
• Are the team members trained?
• Can the project be completed in 4 - 6 months.
Financial Benefits
• Better quality
• Lower cost
• Consistent delivery
• Shorter lead time
• More capacity
• Reduced floor space
• Improved cash flow
• Higher flexibility
The Purpose of Financial Benefit
• To quantify projects benefits financially.
• To help prioritize improvement projects.
• To evaluate the returns on investment from the Six Sigma program and improvement solutions.
Financial Benefit Reporting
-------------------------------------------------------------Define
Measure
Analyze
Improve
Control
-------------------------------------------------------------
A] Project Start Up: Rough estimatebased on project goal.
B] Project Reviews: Revised estimated figurebased on new data where necessary.
C] Project Closure: Confirm estimated figurebased on actual improvement achieved.
Saving Items - Examples
• Cost Reduction - Direct Savings
- Material saving
- Reduced concession / warranty
- Direct labor savings
- Reduced scraps and reworks
- Expedited freight cost reduction
• Cost Reduction - Indirect Savings
- Time savings for indirect
employees
- Reduced administrative effort
• Cost Avoidance - Investment avoidance as a result of increased productivity / capacity - Expense avoidance as a result of preventative measures
• Incremental Revenue - Increased sales volumes - Contribution margin enhancement
• Working Capital Reduction - Inventory reduction - Receivables reduction
Financial Benefit Guidelines• Guidelines are necessary for:
- Calculating the financial benefits in certain conditions
- Classify if a savings item has a direct impact to the profit (hard saving) or has an indirect impact (soft saving).
• Financial benefit guidelines should be determined by the finance department.
Thank You !!!