Points to Plonder Upon

QUALITY FOUNDATIONS OF MODERN MANAGEMENT

PHILOSOPHIES SIX SIGMA : THE NAME SIX SIGMA : A MODERN DEFINITION SIX SIGMA LEVELS TECHNICAL DEFINITION OF SIX SIGMA SIX SIGMA GOLDEN RULES SIX SIGMA EXAMPLES DMAIC MODEL CASE STUDIES

Quality :-

Quality is conforming to specifications

-mr.crosby

Fitness for use

-mr.juran

Customer satisfaction

Quality is conformance to requirement-the totality of features & characteristics of a product or service that bear on its ability to satisfy stated or implied needs. -ISO 8402

Foundations of Modern Management Philosophies

Edwards Deming’s 14 Points Create constancy of purpose Reject defects Reject inspection Use quality criteria to award business Constantly improve Modernize training Modernize management Drive out fear Break down functional barriers Eliminate targets & slogans Eliminate numerical quotas Remove barriers from hourly workers Train vigorously Create a supportive management

structure

Joseph Juran’s 10 Steps Build awareness of the need and

opportunity for improvement Set goals for improvement Organize to reach the goals (have a

plan and an organizational structure) Provide training Carry out projects to solve problems Report progress Give recognition Communicate results Keep score Maintain momentum by making

annual improvement part of the regular systems and processes of the organization

μ

σ

What’s in a name?

Sigma is the Greek letter representing the standard deviation of a population of data.

Sigma is a measureof variation

(the data spread)

Is Six Sigma New?

The basic premise of Six Sigma started in 1600 B.C. by Egyptian physicians and is noted on the Edwin Smith papyrus. It essentially says:

Make no remedy without first understanding the cause.

Juran, Deming, Shewhart, and Crosby simply restated this principle.Juran, Deming, Shewhart, and Crosby simply restated this principle.

Six Sigma: A Modern Definition

Six Sigma is a philosophy that underlies efforts to improve business performance and customer satisfaction

– Using facts and data to eliminate waste and variation

– Eliminating activities that don’t add value

Six Sigma is. . .

A performance goal, representing 3.4 defects for every million opportunities to make one.

A series of tools and methods used to improve or design products, processes, and/or services.

A statistical measure indicating the number of standard deviations within customer expectations.

A disciplined, fact-based approach to managing a business and its processes.

A means to promote greater awareness of customer needs, performance measurement, and business improvement.

Measuring Process PerformanceThe pizza delivery example. . .

Customers want their pizza delivered fast!

Guarantee = “30 minutes or less”

What if we measured performance and found an average delivery time of 23.5 minutes?– On-time performance is great, right?– Our customers must be happy with us, right?

How often are we delivering on time?Answer: Look at the variation!

Managing by the average doesn’t tell the whole story. The average and the variation together show what’s happening.

s

x

30 min. or less

0 10 20 30 40 50

So, what is six sigma

In most organizations Six Sigma is viewed at three different levels:

As a metricmetric [3.4 DPMO]

As a methodologymethodology [profit growth, efficiency, customer focus]

Enabler for Culture ChangeEnabler for Culture Change [strategic planning]

D E F E C T S can drastically compromise the strength of your business

Sigma Levels

SigmaDefect per Million Opportunities (DPMO)

1 690,0002 308,537

3 66,807

4 6,210

5 233

6 3.4

Managing 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% 66,807

4 99.38% 0.62% 6,210

5 99.977% 0.023% 233

6 99.9997% 0.00034% 3.4

Technical Definition of Six Sigma

Technical Definition

6 to LSL 6 to USL

Cp=2 Cpk=1.67Cp=2 Cpk=1.67

Cp 2,Cpk 1

±1.5 LSL

3.4 DPMO

3.4 DPMO

USL

Cp=2 Cpk=2

Cp=2 Cpk=2

Yield99.98%

Yield99.98%

Yield69.2%

Six Sigma for results™ : Three Systems Approach

Technical System

ManagementSystem

Social System

The Three Systems of Six Sigma organizations

are the Social System (culture), Technical

System (tools and techniques), and the

Management System (DMAIC)

(Copyright by Frank Voehl, 2003. All rights reserved.)

The Three Systems of Six Sigma organizations

are the Social System (culture), Technical

System (tools and techniques), and the

Management System (DMAIC)

(Copyright by Frank Voehl, 2003. All rights reserved.)

The Three Systems Explained

Technical /TacticalTechnical /Tactical Cost savings Reduced cycle

time Bottom line

results Productivity

increase Improved

quality

Management /StrategicManagement /Strategic Design of systems Goals & Measures Process Capability Continuous

Improvement

Cultural/SocialCultural/Social Learning

Systems Expectations Collaboration Coaching Leadership

Development

Evolution of Six Sigma QualitySix Sigma

Product Quality – 1940s

ProcessQuality – 1980s

ManagementQuality - 1990s

Value Chain Quality: New Millennium

A Historical PerspectiveA Historical Perspective

The Six Sigma Golden Rules The quality mindset works - project after project, over time

Leadership is self aware and supporting learning

Teams are learning constantly how to outperform themselves

Organization culture is alive with learning & conscious evolution

There is confidence and self trust in learning from the action

Systems are both robust and evolving with the learning

Six Sigma as a MethodologyMethodology

Six Sigma is a business improvement methodology that focuses an organization on:

– Understanding and managing customers requirements

– Aligning key processes to achieve those requirements

– Utilizing rigorous data analysis to minimize variation in those processes

– Driving rapid and sustainable improvement to business processes

Examples of the Sigma ScaleIn a world at 3 sigma. . .

There are 964 U.S. flight cancellations per day.

The police make 7 false arrests every 4 minutes.

In MA, 5,390 newborns are dropped each year.

In one hour, 47,283 international long distance calls are accidentally disconnected.

In a world at 6 sigma. . .

1 U.S. flight is cancelled every 3 weeks.

There are fewer than 4 false arrests per month.

1 newborn is dropped every 4 years in MA.

It would take more than 2 years to see the same number of dropped international calls.

The Six Sigma Evolutionary Timeline

1736: French mathematician Abraham de Moivre publishes an article introducing the normal curve.

1896: Italian sociologist Vilfredo Alfredo Pareto introduces the 80/20 rule and the Pareto distribution in Cours d’Economie Politique.

1924: Walter A. Shewhart introduces the control chart and the distinction of special vs. common cause variation as contributors to process problems.

1941: Alex Osborn, head of BBDO Advertising, fathers a widely-adopted set of rules for “brainstorming”.

1949: U. S. DOD issues Military Procedure MIL-P-1629, Procedures for Performing a Failure Mode Effects and Criticality Analysis.

1960: Kaoru Ishikawa introduces his now famous cause-and-effect diagram.

1818: Gauss uses the normal curve to explore the mathematics of error analysis for measurement, probability analysis, and hypothesis testing.

1970s: Dr. Noriaki Kano introduces his two-dimensional quality model and the three types of quality.

1986: Bill Smith, a senior engineer and scientist introduces the concept of Six Sigma at Motorola

1994: Larry Bossidy launches Six Sigma at Allied Signal.

1995: Jack Welch launches Six Sigma at GE.

Six Sigma Companies

Six Sigma and Financial Services

What is Six Sigma Quality? Strategy includes:

– Measure– Analyze– Improve– Control

Improvement projects must be integrated with the goals of the organization.

Six Sigma uses a “divide and conquer” approach as opposed to Continuous Process Improvement.

Implementation is top-down. CEO drives, and executive management provides the Champion for each project.

GE’s implementation is often the de facto model for implementation.

Uses concept of “belts” for levels of competency in Six Sigma implementation:– MBB = Master Black Belt– BB = Black Belt– GB = Green Belt

Some Results…

Motorola – 10 years; $11 Billion Savings Allied Signal - $1.5 Billion estimated savings General Electric – started efforts in 1995

– 1998: $1.2 Billion less $450 Million in costs… net benefits = $750 Million

– 1999 Annual Report: more than $2 Billion net benefits

– 2001: 6,000 projects completed; $3 Billion in savings

Six Sigma according to GE

“A highly disciplined process that helps us focus on developing and delivering near-perfect products and services. The word Six Sigma is a statistical term that measures how far a given process deviates from perfection. The central idea behind Six Sigma is that if you can measure how many “defects” you have in a process, you can systematically figure out how to eliminate them and get as close to “zero defects” as possible. Six Sigma has changed the DNA at GE – it is the way we work – in everything we do and in every product we design.”

Six Sigma Process Steps

DMAIC: To improve any existing product or process.DMAIC: To improve any existing product or process.

Analyze

Measure

Improve

Control

Define

Define Select the appropriate response variable (the “Y”s) to be improved

Measure Data must be gathered to measure the response variable.

Analyze Identify the root cause of defects, identify defectives or significant measurement deviations, whether in or out of specifications. (the “X”s, independent variables)

Improve Reduce variability or eliminate the cause of defects

Control With the desired improvements in place, monitor the process to sustain the improvements.

Five Phase Five Phase Improvement CycleImprovement Cycle

Classic Six Sigma Roles…

No matter what form of Six Sigma you engage in, there is an infrastructure critical to its success

• CEO or President• Senior Executive Staff• Champions• Finance Partner• Master Black Belts• Black Belts / Green Belts• Team Members and Employees

Champions

Promote awareness and execution of Six Sigma within lines of business and/or functions

Identify potential Six Sigma projects to be executed by Black Belts and Green Belts

Identify, select, and support Black Belt and Green Belt candidates

Participate in 2-3 days of workshop training

Master Black Belts…

Master Black Belts have the highest level of Six Sigma knowledge, including statistical applications, statistical modeling, change management, and Six Sigma project management.

The Master Black Belts are qualified to train all aspects of Six Sigma.

The Master Black Belts provide direct project related support to Black Belts, Champions, and Senior Executives. They do this as internal consultants.

Master Black Belts are full time employees dedicated to Six Sigma. External consultants can be used until the organization acquires such skilled individuals.

Black Belts…

Black Belts have advanced knowledge of Six Sigma, including statistical applications, statistical modeling, change management, and Six Sigma project management.

Black Belts are qualified to train Green Belts and perform just-in-time project team training.

Black Belts provide direct project support to Six Sigma project teams, and they serve as the “Project Manager” for Six Sigma Projects.

Black Belts are full time employees and can support up to four Six Sigma project teams. Over time they can become Master Black Belts.

Green Belts… Green Belts have a working knowledge of Six Sigma, including a basic

understanding statistical applications, basic quality tools, and the Six Sigma process.

Green Belts provide project support to Six Sigma projects as team members. They can serve as the “Project Manager” for very simple none complex Six Sigma Projects.

Green Belts are full time employees with other duties in the organization. They generally do not support more than one project at a time and are not always working on a project.

Green Belts will spend approximately 20% of their time when assigned to a project, more if they are managing the project.

Team Members & Employees…

Team Members do not need to be Green Belts.

Team Members are selected to be part of a project because they have specific knowledge relative and important to the process being improved.

Team Members may not be part of the project start to finish, but may join the team for specific periods of time when needed. While on a team they will spend about 20% of their time working on the project.

Other employees may become involved as data is collected, field tests are performed, and solutions implemented.

It is very important that employees are kept informed of the progress and results of the Six Sigma program and how projects may impact their work life.

CASE STUDY

1.DABBAWALA IN MUMBAI

NUTAN MUMBAI TIFFIN BOX SUPPLIERS ASSOCIATIONABOUT NMTBSA

•History : Started in 1890 •Charitable trust : Registered in 1956 •Avg. Literacy Rate : 8thGrade Schooling •Total area coverage: 60 Kms to 70Kms •Employee Strength : 5000 •Number of Tiffin's : 2,00,000Tiffin Boxes i.e 4,00,000 transactions every day. •Time taken :3hrs

CODING

Error Rate : 1 in 16 million transactions•Six Sigma performance (99.999999)•Technological Backup : Nil.•Cost of service -Rs. 300/month ($ 6.00/month

Rs. 36 Cr. Turnover approx. [6000*12*5000=360000000 i.e Rs. 36 crore p.a.]•“No strike” record as each one a share holder •Earnings -5000 to 6000 p.m.•Diwali bonus: one month’s from customers

Some Achievements

•World record in best time management.

•Name in “GUINESS BOOK of World Records”.

•Registered with Ripley's “ believe it or not”.

CASE STUDY

Six Sigma at Wipro Technologies: Thrust on Quality

Wipro has one of the most mature Six Sigma programs in the industry ensuring that 91% of the projects are completed on schedule, much above the industry average of 55%.

Six Sigma provides the tools for continuous improvement on existing processes thereby helping sustain the SEI-CMM Level 5 and CMMi certifications.

2.WIPRO INDIA

20-30% higher productivity

On-time deliveries (93% projects completed on time)

Lower field defect rates (67% lower than industry average).

At Wipro, six sigma means:

(i) Have products and services meet global benchmarks

(ii) Ensure robust processes within the organization

(iii) Consistently meet and exceed customer expectations

(iv) Make Quality a culture within

Six Sigma projects at Wipro are (Exhibit 3): (i) Driven by business heads, also called

Champions for the projects. (ii) Led by Black Belts (BB) (iii)Assisted by Green Belts (GB)

Improvement Due To Six Sigma At WIPRO Improving performance through a precise quantitative understanding of the

customer’s requirements thereby bringing in customer focus

Improving the effectiveness in upstream processes of the software development

life cycle by defect reduction (software defects reduced by 50%) and cycle time

reduction (rework in software down from 12% to 5%).

Waste elimination and increased productivity up to 35%.

Cost of failure avoidance (installation failures down from 4.5% to 1% in hardware business).

Tangible cost savings due to lower application development cost for customer

Thank u….