Six Sigma

Introduction to Six SigmaSix Sigma is a highly disciplined

process that helps us focus on developing and delivering near-perfect products and services

Six Sigma is statistical measure which indicates standard deviations within customer expectations

Six Sigma promotes greater awareness of customer needs, performance measurement and finally business improvements

Six Sigma Methodologies

D - DefineM - MeasureA - AnalyzeI - ImproveC - Control

D - DefineM - MeasureA - AnalyzeD - DesignV - Verify

DEFINE MEASURE ANALYZE IMPROVECONTROL

Project CTQ

Business Case

Process Mapping

Change Management

No. Description Deliverables Tools

1 Project CTQ - Project Y

Identity an opportunity VOC (Voice of Customer)

Identity an customer

Define CTQ

2 Outline Business Case

Develop team charter Project Milestones

3 Process Mapping Define Project boundaries

SIPOC

STEP 1 – Define Project CTQ The 3 distinct deliverables are

◦ Defining and Opportunity The Opportunity has clear boundaries and measurable goals The opportunity is aligned with business-critical issue or

initiative The customer should feel the improvement Opportunity is divided in two segments

Internal improvement opportunity External improvement opportunity

◦ Identifying the Customer The Customer is the recipient of output from process, product

or service Customer are of 2 types

Internal Customer - They receive the output from a business process like operation team or the service team.

External Customer – They are external to the company like the customer who pays bills, loan borrower etc.

STEP 1 – Define Project CTQ…Contd Define CTQ(Critical to Quality) Parameters

◦ A CTQ is a product, process or service characteristic that satisfies a key customer requirement and /or process requirement.

◦ It is measurable like speed, accuracy, timeliness and cost◦ Some examples of CTQ are opening an account, cost of having

multiple accounts at the bank or wait time to receive the debit card, or patient wait time etc.

◦ The project CTQ has to be translated directly from Voice of customer (VOC) and should be unbaised

◦ The mathematical equation

Y = F(x)

Y = Customer CTQ or something that we need to improve F(x) = An internal process that directly affects the customer

CTQ

Determine the CTQ’sIdentify All Potential Customers

Collect Voice of the customer

Identify Customer CTQ’s

List all potential customers with appropriate segmentation

Decide what to collect and select VOC tools

• Organize all customer data and translate to a specific need• Identify and prioritize CTQ’s for each need.

Identify All Potential Customer◦ Define scope of project clearly defines the boundaries of

process and recipients of output

◦ Segmenting customers (based on profitability, risk, region and complexity) helps to prioritize their needs and expectations

For eg. Improving the turnaround time in radiology department, the patients, doctors and regulators should be treated equally by considering what to improve

VOC of each person should carry the same weight

The project goals and risks should help prioritize what customers to focus during the problem and solution identification stages

Milestone 1 : Determine the CTQ’s…contd

The four tools of VOC collection ◦ Surveys

◦ Focus groups

◦ Interviews

◦ Customer Complaints

If the above information is not available make you manage customer expectation appropriately◦ Select customers carefully

◦ Explain your reason for gathering the information

◦ Clarify your ability to act on the information gathered

◦ Communicate your next steps to the customers

VOC also helps◦ Decide what products and services to offer or eliminate

◦ Identify critical features for new or existing products and services

◦ Make process management a proactive system

◦ Decide where to focus your improvement efforts

◦ Get baseline measure of customer satisfaction through which to measure improvement.

Milestone 2 : Collect Voice of the Customer

Six Sigma tool used to organize and prioritize customer CTQ’s is called customer needs mapping

Milestone 3: Identify the Customer CTQ’s

Voice of the Customer

Service/Quality issue

Customer needs Output Characteristics

What did the customer tell ?

This should be the exact statement that the customer made

What is wrong in the eyes of the customer based on what the customer told is and / or the data collected

The team should agree on exactly what is the root cause of the customer unhappiness

If that is what is wrong, what does the customer need?

-Identify the need, not a solution-Provide clarification-Use measurable terms-Validate the need with the customer

A concise Statement of the customer need as it applies to your product, process or service

-Use measurable terms-Validate the output characteristics with project champion

Customer needs mapping example

Voice of the Customer

Service/Quality issue

Customer needs Output Characteristics

I am confused about how to sign up for online banking

Access to online banking unclear

Customer shows unhappiness

Simplified online sign-up process

Minimize number of steps required to sign up with proper instruction in each step

Identified and selected a central area of improvement

Your customersProject CTQ’s

Summary of STEP 1 – Define the Project CTQ

STEP 2 – Outline the Business case The Five robust components are

◦ Business case An explanation of why project should be pursued

◦ Problem and goal statements A description of the problem or opportunity The project’s objectives should be clear, concise and

presented in measurable terms◦ Project scope

Boundaries of the project/product/service that need improvement

Inscope and outscope well defined◦ Team roles

The resources, expectations and responsibilities are clearly laid out

◦ Financial benefits The expected financial benefits are calculated based on

expected improvements

◦ Problem statements The problem statement is an objective(quatifiable) description

of the pain experienced by the internal/external customers as a result of poorly performing process or service

Poor Problem statement“Our bank customers are angry with us, and they closed

their accounts and moved to other banks “

Improved version of the problem statement“ In the third quarter(when), 20% of the customer closed

the account and moved to other bank(what). The current attrition is up from 6% to 12%(magnitute). This has impacted the operating cash flow.

◦ Goal statements The goal statement should define the team’s targeted

improvements. Since the root cause of the problem is not clear, typically the

goal statement is ver high level and broad Goal statement will be more clear after the analyze phase

Problem and goal statements – Clear and measurable

◦ The Project scope defines the boundaries of the project ie. Start and end points of the process or service that needs improvement

◦ A well defined scope helps reduce the probability of scope creep

Project Scope

◦ Six Sigma project have five types of roles involved in it Project Champion Project Leader (Green belt or Black belt) Key stake holders Core cross-functional team Supplementary team

◦ Having team assigned to six sigma project Helps reduce the project execution timeline There will be more resources available to complete

tasks The probability of rework or errors will be reduced Ensures buy-in from various functional areas

Team Roles

◦ Some six sigma project do not provide significant financial benefits like compliance etc.

◦ Some project do have financial benefits and calculating the approximate value helps prioritize improvement opportunities and creates motivation for the team.

Financial Benefits

A clear defined problem and goal statementClearly understood defect and opportunity

definitionsA need for improvement related to

customer requirements Alignment of the project with business

strategyA manageable project scope Identifiable and measurable impactAdequate resources assigned to the projectAs data driven project

Summary of STEP 2 – Outline the Business case

STEP 3 – A High level Process Map The main benefits of high level process map

Outlines the overall flow of information and material, starting with supplier and ending with customer

Provides a graphical of steps, events and operations and relationships of resources

Helps everyone involved in the project understand how the distinct parts of the company combine to provide a service or product

Tools used are SIPOC – Stands for Supplier, Input, Process, Output and Customer

Benefits of using the SIPOC tool Provides macro overview of the process and interrelation within business Defines the process boundaries

S I P O C

Supplier Input Process Output Customer

SIPOC – An exampleBusiness case focusing in reducing the loan approval

cycle timeS I P O C

Supplier Input Process Output Customer

New or existing client

Sales Representative

Lease Document

Setup account in system

Complete packets

Verification

Prepare final documents

Completed loanApplicationPackage

Prospective borrower

Business needing leases

A High level “as-is” process map of the area being focused should be developed

The graphical representation of the process will ensure all the constituents are in agreement regarding the scope of the project, process and service involved

Clearly defining the customer, the existing process outputs, major process steps, inputs to the process and individuals or entities that supply the inputs will eliminate all the assumptions and ambiguities

Summary of STEP 3 – High level Process Map

Define the customer (Internal or External)Outline the customer’s critical to quality

(CTQ) parameterDevelop a business case – determine the

problem and goal statement, milestones, scope, resources and financial benefits

Define high level as is state of the business process

Gain consensus on the business case and mobilize the required resources.

DEFINE PHASE SUMMARY

Define the customer (Internal or External)Outline the customer’s critical to quality

(CTQ) parameterDevelop a business case – determine the

problem and goal statement, milestones, scope, resources and financial benefits

Define high level as is state of the business process

Gain consensus on the business case and mobilize the required resources.

Application of Six sigma case study – Define Phase Deliverables

Information Project Title : Improving

customer Response Time Champion : Sales Director Internal Leader : Green belt

expert Key Stakeholder : Operations

Manager, Sales Team Location: India Operations

Case Study Business case

Assignment Description Vision : 100% delivery of loan

documents to customer’s expectation date

Problem statement : Currently 30% of the loans are being delivered after the customer’s requested date, this has resulted in $25 million revenue loss.

Objective / Goals : Reduce variation in delivery of funds by 50% within six months

Financials: $ 28 million

CTQ’s and Data Business Issue: Sales are

declining and customer complaints are increasing

Process boundaries In Scope: Loan approval

process Out of scope: Collection

and Disbursement

Support and ResourcesCross Functional Resources

Lending Sales Manager : Outlines customer needs

Lending Sales Rep : provides customer data

Lending Operations Supervisor: Process Expert

Six Sigma : Six Sigma expert Other resources: IT Data Collection

team

1. What is Goal Statement?2. How does collection of VOC help?3. What is the purpose of Process map?4. When do we say we say a process has

achieved Six Sigma ? 5. What is difference DMAIC and DMADV?6. What describes the customers' needs and

their perceptions of your product of service?

Define Phase - QUIZ