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Introduction to Six Sigma Define Measure l Analyse Improve Improve Control Week 1 Knorr-Bremse Group When you never… were forced to manufacture a product outside the process capability discussed with a customer about the measurement method sorted parts to fulfill the specification limits grumbled about too many failures reworks and checks grumbled about too many failures, reworks and checks discussed about late payments, wrong invoices, delayed hi t t l t it d d shipments, too less or too many items produced identified a cost reduction opportunity which you could not realized . . . than probably, you have Six Sigma already implemented Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 2/26 implemented

Javier Garcia - Verdugo Sanchez - Six Sigma Training - W1 Six Sigma Introduction

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Page 1: Javier Garcia - Verdugo Sanchez - Six Sigma Training - W1 Six Sigma Introduction

Introduction to Six Sigma gm

DefineMeasure

lAnalyseImproveImproveControl

Week 1

Knorr-Bremse Group

When you never…

were forced to manufacture a product outside the process capabilityp y

discussed with a customer about the measurement method

sorted parts to fulfill the specification limits

grumbled about too many failures reworks and checksgrumbled about too many failures, reworks and checks

discussed about late payments, wrong invoices, delayed hi t t l t it d dshipments, too less or too many items produced

identified a cost reduction opportunity which you could not realized

. . . than probably, you have Six Sigma already implemented

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 2/26

implemented

Page 2: Javier Garcia - Verdugo Sanchez - Six Sigma Training - W1 Six Sigma Introduction

Six Sigma is ...

...a structured methodology for

consistent and confident application of selected statistical methodsconsistent and confident application of selected statistical methods

in teams lead by specialists trained for it

to almost eliminate process variation and failures

by processing well-chosen projects within a defined time frame

in accordance with the company strategy p y gy

and deliver precisely defined and controlled financial contributions.

The goals of Six Sigma are:

• To fulfil customer needs completely and economically

• Breakthrough in process improvement and profitability

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 3/26

Breakthrough in process improvement and profitability

Six Sigma as a new Philosophy

SIX SIGMA

CustomerTeam work

TQMISO / QS 9000

FastnessSafety

QValue Based Selling

KVPyPerformance

EmployeesLean / Kaizen / JIT

EFQMInnovation R & D Programs

Company values and programs are unified in the Six Sigma Philosophy

Th h th l ill b f lKnorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 4/26

The way how the puzzle will be successful

Page 3: Javier Garcia - Verdugo Sanchez - Six Sigma Training - W1 Six Sigma Introduction

Make Existing with Six Sigma Successful

Zero defects ...Value up ...top+

The Six Sigma methodology supports the existing programs and values This gives all the and values. This gives all the quality initiatives the further framework to be successful

CustomerTeam workTeam workFastnessSafetyaf tyPerformanceEmployees

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 5/26

Innovation

Six Sigma & the DMAIC Cycle

ControlMaintain

DefineMaintain

ImprovementsSPC

Control Plans

Project charter (SMART)

Business Score CardQFD VOC

D Documentation QFD + VOC

Strategic GoalsProject strategy

C M

MeasureB li A l iImprove

AIBaseline Analysis

Process MapC + E Matrix

M t S tAnalyze

ImproveAdjustment to the

OptimumFMEA Measurement System

Process CapabilityDefinition of critical

InputsFMEA

S

FMEAStatistical Tests

SimulationTolerancing Statistical Tests

Multi-Vari StudiesRegression

Tolerancing

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 6/26

Page 4: Javier Garcia - Verdugo Sanchez - Six Sigma Training - W1 Six Sigma Introduction

Sigma; a Measure of Variability

20

σ σStandard Deviation

M

15

σ σ Meanen

cy Point of InflectionPoint of Inflection

10

Fre

qu

5

30272421180

3027242118

Measurement values of a process or product:

µ

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 7/26

e.g. delivery time, process time, length, pressure, speed, acceleration, volt, etc.

Six Sigma Means Customer Orientation Internal focus

30% Cost of poor quality 3σ Process

3σLow delivery quality, high inventories

Right First Time < 90%σσσ σσσ

DefectsDefects

σσσ σσσ

6σ Process

µ UpperSpecification

LowerSpecification

6σ• Customer oriented

• 7% Cost of poor quality

σσσσσσ

• 7% Cost of poor quality

• High delivery quality, low inventories

• Right First Time 99.9%g t st e 99 9%

• Integration of customers & suppliers

• Efficient processes and flows

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 8/26

µLSL USL

Page 5: Javier Garcia - Verdugo Sanchez - Six Sigma Training - W1 Six Sigma Introduction

“Three Sigma” ProcessThree Standard Deviations between Mean

and customer specification

D f tD f tσσσ σσσ

DefectsDefects

USLLSLµ

(Upper Specification Limit)(Lower Specification Limit)

The capability of a process can be characterized based on the metric Mean

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 9/26

µ and the amount of the Variation σ (Standard Deviation).

“Six Sigma” ProcessSix Standard Deviations between Mean und

customer specification

σσσσσσ

µUSLLSL

(Upper Specification Limit)(Lower Specification Limit)

The capability of a process can be characterized based on the metric Mean

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 10/26

µ and the amount of the Variation σ (Standard Deviation).

Page 6: Javier Garcia - Verdugo Sanchez - Six Sigma Training - W1 Six Sigma Introduction

Example: Tube Manufacturing Customer requirement: 994 1006 mm

LSL USL

994 - 1006 mm

What is the process capability measured in

Länge in mm1006100410021000998996994

capability measured, in terms of sigma?

Could you name reasonsCould you name reasons for the difference?

1006100410021000998996994

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 11/26

Länge in mmLength in mm

Sigma Score Comparison The number of the Standard deviations between the average

value and the customer specification

6

5

“Best in the class”

5

4

Sig

ma

3

2

The most companiesS

Si D f t /Milli D f t f

1

Sigma measure Defects/Million Defect free

Six Sigma 3.4 99.9997%

5 Sigma 230 99 977%5 Sigma 230 99.977%

4 Sigma 6,210 99.4%

3 Sigma 66 810 93%

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 12/26

3 Sigma 66,810 93%

Page 7: Javier Garcia - Verdugo Sanchez - Six Sigma Training - W1 Six Sigma Introduction

Benchmark Metric Sigma

The relation between Quality and Cost

30%

25% 2σ

Cost of Quality

25%

20%

15%

3σContinuous improvement

10%

5%4σ

Continuous improvement means cost reduction

Right First Time70 90 95 99 99.9 99.9997 %

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 13/26

The Cost Advantage of Optimized Processes

Conventional cost of poor quality and losses are easy to recognize but this is only the tip of the icebergrecognize, but this is only the tip of the iceberg …

ReworkWarranty

Inspection

Reject/ Compensation DiscountScrap

Additional Lost Sales

(Tangible) Compensation Discount

Technical Changes

Long Inventory Turn TimesFixed Capital

Lost Sales

Lost Opportunities

(Easy to overlook)

Cost forInadequate use

Late Delivery

Inadequate MaterialO d i / Pl i

Image Loss

Lost Opportunities

AdditionalPerformance Increase

Cost forPrioritization

of Company Assets Ordering / Planningg

Additional hidden cost due to poor quality

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 14/26

Additional hidden cost due to poor quality

Page 8: Javier Garcia - Verdugo Sanchez - Six Sigma Training - W1 Six Sigma Introduction

The Success of Six Sigma

The Six Sigma Elements

r nt n

Sal

es

ust

om

er

evel

op

men

Lo

gis

tic

rod

uct

io

Qu

alit

y

Fin

ance

Su

pp

lier

C De L

Pr F S

LEANINGDESIGNING MASTERING

Create valuableProducts & Performance

for the Customer

Efficient Processes without

Waiting Time

Eliminate Defects& reduce Variability for the Customer Waiting Time

Price On time SIGMA / DPMOCapableValue Lean

Optimized Products and Solutions

CapableValue Lean

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 15/26

Optimized Products and Solutions

Business Processes vs. Organization

FinanceMfg LogisticsSalesMaterials

MgmtCustomerService

Strategy, Business Plan, ObjectivesStrategy, Business Plan, Objectives

s s FinanceMfg LogisticsSalesMaterials

MgmtCustomerService

Strategy, Business Plan, ObjectivesStrategy, Business Plan, ObjectivesStrategy, Business Plan, ObjectivesStrategy, Business Plan, Objectives

s s s s FinanceMfg LogisticsSales MgmtService

Mea

sure

sM

easu

res

me,

m

e,

chas

ech

ase

sure

s su

res

iver

y,

iver

y,

stst

Application (Product) Development

fact

ion

FinanceMfg LogisticsSales MgmtService

Mea

sure

sM

easu

res

me,

m

e,

chas

ech

ase

Mea

sure

sM

easu

res

me,

m

e,

chas

ech

ase

sure

s su

res

iver

y,

iver

y,

ststsure

s su

res

iver

y,

iver

y,

stst

Application (Product) Development

fact

ion

r V

alu

e M

r V

alu

e M

st in

Tim

st in

Tim

e o

f P

urc

e o

f P

urc

ier,

Mea

sie

r, M

eas

tive

, Del

tive

, Del

ota

l Co

so

tal C

os

Order to Delivery

Produce Products mer

Sat

is

r V

alu

e M

r V

alu

e M

st in

Tim

st in

Tim

e o

f P

urc

e o

f P

urc

r V

alu

e M

r V

alu

e M

st in

Tim

st in

Tim

e o

f P

urc

e o

f P

urc

ier,

Mea

sie

r, M

eas

tive

, Del

tive

, Del

ota

l Co

so

tal C

os

ier,

Mea

sie

r, M

eas

tive

, Del

tive

, Del

ota

l Co

so

tal C

os

Order to Delivery

Produce Products mer

Sat

is

ust

om

er

ust

om

er

Jus

Jus

Sh

are

Sh

are

Su

pp

lS

up

pl

Def

ect

Def

ect

ToTo Produce Products

Credit and Collections Cu

sto

m

ust

om

er

ust

om

er

Jus

Jus

Sh

are

Sh

are

ust

om

er

ust

om

er

Jus

Jus

Sh

are

Sh

are

Su

pp

lS

up

pl

Def

ect

Def

ect

ToTo

Su

pp

lS

up

pl

Def

ect

Def

ect

ToTo Produce Products

Credit and Collections Cu

sto

m

CC

Fi i l P f MFi i l P f M

CCCC

Fi i l P f MFi i l P f MFi i l P f MFi i l P f MFinancial Success and

Financial Performance Measures Financial Performance Measures Net Income, Productivity, Cash FlowNet Income, Productivity, Cash Flow

Financial Success

Financial Performance Measures Financial Performance Measures Net Income, Productivity, Cash FlowNet Income, Productivity, Cash Flow

Financial Performance Measures Financial Performance Measures Net Income, Productivity, Cash FlowNet Income, Productivity, Cash Flow

Financial Success

Customer Satisfaction are strongly linked. Experience

shows that there is friction in

C t i t d th h B i P M t

Financial SuccessFinancial Success shows that there is friction in the daily business

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 16/26

Customer oriented through Business Process Management

Page 9: Javier Garcia - Verdugo Sanchez - Six Sigma Training - W1 Six Sigma Introduction

A Detailed View

Some of the elements are not yet fully developed

FinancesCustomer

Employees

VisionControl Processes

Metrics

Strategy

Analysis

Action

The DMAIC cycle includes all elements of the chain

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 17/26

The Reason for the Success of Six Sigma

Measurable

SuccessFinancesCustomer

Employees

ControlVisionControl Processes

Improve DefineMetrics

Strategy

Analysis

Action

MeasureAnalysis

Success through an integrated approach… Larry Bossidy

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 18/26

Success through an integrated approach… Larry Bossidy

Page 10: Javier Garcia - Verdugo Sanchez - Six Sigma Training - W1 Six Sigma Introduction

Example Automotive

Efforts to increase the capability of

processes are not new…

• The SPC stage

• The FMEA stage

• The cpk > 1.33 stage

Actual studies show:

60 % f l ll th 1 2• 60 % of cpk values are smaller than 1.2

• Most of the data sets are not normally distributed

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 19/26

y

Improvement Strategies

Innovation + CIP

... Steps back vs. Benchmark

InnovationBenchmark

CIP

Do nothing

Obviously improvement, but…

Structured proceeding and use of Six Sigma tools makes CIP more successful. The innovation steps are getting bigger and time intervals

tti ll t th ti

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 20/26

getting smaller at the same time.

Page 11: Javier Garcia - Verdugo Sanchez - Six Sigma Training - W1 Six Sigma Introduction

Cost Reduction Programs

Development of business sectorslit

y Protected!Assailable!

Pro

fita

bil

Monopolyposition I

ce a

nd

P position Incompetition

New player Rise in prices

Overcapacity Differentiation

Pri

c

Genetic engineering

Price war Consolidation

"Shakeout"

PCs

engineering

Maglevtrain

Time - years0 5 10

PCs

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 21/26

y

Cost Reduction Programs

Selling price1. At the beginning of the live cycle

Manufacturing cost Profit

Market price2 X Years later

Manufacturing cost Profit

Market price2. .... X Years later

Manufacturing cost Profit

Cost reductionL TPM K i Eff ti

Market price

Lean, TPM, KaizenSix Sigma

CIP

EffectiveFast

Big StepsManufacturing cost Profit

Big StepsLasting

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 22/26

Page 12: Javier Garcia - Verdugo Sanchez - Six Sigma Training - W1 Six Sigma Introduction

Cost Reduction Programs

Restructuring Approach

Product & Programarrangement

CostCost

Adjustment/Simplification

New businessarrangement

Product arrangement

Design to costDesign to

k t

pProduct-portfolio

Country specific

dj t t

New products

Product arrangement

Operative

marketComplexity reduction

SalesProcess optimization Sales increase

adjustmentsNew

applications

Sales

OperativeProgramsBurden

reduction

in ancestral areas

Restructured cost base

Baseline GoalCost base settlement is necessary for business growth

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 23/26

Cost base settlement is necessary for business growth

Cost Reduction Programs

The lever for cost reduction should be used always integrated

100%

Sales Design to cost•Variants•Complexity

Performance

Efficiency•Product cycle

Manufacturing

Materialcost Other factor

costS l C it l

R & D

Performancedifferences•Service life•Precision

y

Efficiency•Logistic cycle•Stock

•Salary, Capital

Admin Factor costProcess designProduct design

(Total cost in %)

New SituationActual Situation

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 24/26

(Total cost in %)

Page 13: Javier Garcia - Verdugo Sanchez - Six Sigma Training - W1 Six Sigma Introduction

Cost Reduction Programs

Where can you use Six Sigma for cost reduction?

Customer orientedvi

ty

hai

n

hai

n

on

kets

B i

od

uct

iv

pp

ly C

h

enu

e C

nn

ova

tio

w m

ark Business

improvements

Pro

Su

p

Rev In New

Culture change

Improvements in all areas will be achieved fast, lasting and effective through a Six Sigma structure

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 25/26

through a Six Sigma structure.

Successful Positioning

esom

er

pm

ent

stic

ctio

n

ity

nce lie

r

Sal

e

Cu

sto

Dev

elo

p

Lo

gis

Pro

du

c

Qu

al

Fin

an

sup

p

Technical Competence

Methodical Competence

Successful programs and j t d d t

Social Competence

projects need good team work and good coaching

Knorr-Bremse Group 02 BB W1 Six Sigma Intro 08, D. Szemkus/H. Winkler Page 26/26