Six Sigma in Indian industries

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TABLE OF CONTENTS
INTRODUCTION TO SIX SIGMA ................................................................................................................................. 3
HISTORY OF SIX SIGMA .............................................................................................................................................. 3
WHAT IS SIX SIGMA ...................................................................................................................................................... 5
WHY SIX SIGMA DEVELOPMENT ? .......................................................................................................................... 6
BENEFITS AND ADVANTAGES OF SIX SIGMA ..................................................................................................... 7
1. Improved Customer Loyalty ........................................................................................................ 7
2. Customer Satisfaction .................................................................................................................. 7
4. Business Results ......................................................................................................................... 10
5. ata !nalysis Before ecision "a#in$ .................................................................................... 10
%. &eam Buildin$ .......................................................................................................................... 1'
7. "easure (alue !ccordin$ to t)e Customer ............................................................................... 14
*. +ffective Supply C)ain "ana$ement ....................................................................................... 1%
,. esi$n and Redesi$n -roducts.Services .................................................................................... 1,
10. evelop Leaders)ip S#ills ...................................................................................................... 22
11. Inte$ration of -roducts/ Services and istri0ution .................................................................. 25
12. !li$nment 1it) Strate$y (ision/ and (alues .......................................................................... 2*
14. Supervisor &rainin$ ................................................................................................................. '1
15. 2enerates Sustained Success ................................................................................................... '1
1%. Set a -erformance 2oal for +veryone .................................................................................... '1
17. +n)ance (alue to Customers .................................................................................................. '2
1*. !ccelerates t)e Rate 3f Improvement ................................................................................... '2
1,. -romotes Learnin$ !nd 4Cross5-ollination4 .......................................................................... ''
20. +6ecutes Strate$ic C)an$es .................................................................................................... ''
DOS AND DONTS OF SIX SIGMA ........................................................................................................................... 33
KEY CONCEPTS OF SIX SIGMA .............................................................................................................................. 3
THEMES OF SIX SIGMA .............................................................................................................................................. 36
THE SIX SIGMA ROADMAP ....................................................................................................................................... !
SIX SIGMA "UALITY TOOLS AND TEMPLATES ................................................................................................. #
IS SIX SIGMA RIGHT FOR US NOW ? ...................................................................................................................... 3
WHEN SIX SIGMA IS NOT RIGHT FOR AN ORGANI$ATION ..........................................................................
SIX SIGMA TRAINING ................................................................................................................................................ 5
TRAINING THE ORGANI$ATION FOR SIX SIGMA ............................................................................................. 7
....................................................................................................................................................... 4*
LARGE ORGANI$ATIONS THAT HAVE ADOPTED SIX SIGMA ...................................................................... %
USE SIX SIGMA TOOLS TO MEET ISO %!!! RE"UIREMENTS ....................................................................... 5!
USE THE ISO %!!! FRAMEWORK TO ASSESS A SIX SIGMA SYSTEM .......................................................... 5!
SIX SIGMA AND "UALITY MANAGEMENT GLOSSARY ................................................................................... 5#
CASE STUDY & SIX SIGMA IMPLEMENTATION IN BHARTI BROADBAND ................................................. 57
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Introduction to Six Sigma
Sx Sgma s a statstca concept that measures a process n terms of
defects. Achevng "Sx Sgma" means your processes are deverng ony
3.4 defects per mon opportuntes (DPMO) - n other words, they are
workng neary perfecty. Sgma (the Greek etter ) s a term n statstcs
that measures standard devaton. In ts busness use, t ndcates
defects n the outputs of a process, and heps us to understand how far
the process devates from perfecton.
A sgma represents 691462.5 defects per mon opportuntes, whch
transates to ony 30.854% of non-defectve outputs. That s obvousy a
poor performng process. If you have a process functonng at a three
sgma eve that means you're aowng 66807.2 errors per mon
opportuntes, or deverng 93.319% non-defectve outputs. That's much
better, but we are st wastng money and dsappontng our customers.
The centra dea of Sx Sgma management s that f you can measure
the defects n a process, you can systematcay fgure out ways to
emnate them to approach a quaty eve of zero defects.
In short, Sx Sgma s severa thngs:
A statstca bass of measurement: 3.4 defects per mon
opportuntes
A phosophy and a goa: as perfect as practcay possbe
A methodoogy
A symbo of quaty
History of Six Sigma
Snce the 1920's the word 'sgma' has been used by mathematcans and
engneers as a symbo for a unt of measurement n product quaty
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varaton. (Note t's sgma wth a sma 's' because n ths context sgma
s a generc unt of measurement.)
In the md-1980's engneers n Motoroa Inc n the USA used 'Sx Sgma'
an nforma name for an n-house ntatve for reducng defects n
producton processes, because t represented a sutaby hgh eve of
quaty. (Note here t's Sgma wth a bg 'S' because n ths context Sx
Sgma s a 'branded' name for Motoroa's ntatve.)
(Certan engneers - there are varyng opnons as to whether the very
frst was B Smth or Mka Harry - fet that measurng defects n terms
of thousands was an nsuffcenty rgorous standard. Hence they
ncreased the measurement scae to parts per mon, descrbed as
'defects per mon', whch prompted the use the 'sx sgma' termnoogy
and adopton of the captazed 'Sx Sgma' branded name, gven that sx
sgma was deemed to equate to 3.4 parts - or defects - per mon.)
In the ate-1980's foowng the success of the above ntatve, Motoroa
extended the Sx Sgma methods to ts crtca busness processes, and
sgnfcanty Sx Sgma became a formazed n-house 'branded' name for
a performance mprovement methodoogy, .e. beyond purey 'defect
reducton', n Motoroa Inc.
In 1991 Motoroa certfed ts frst 'Back Bet' Sx Sgma experts, whch
ndcates the begnnngs of the formazaton of the accredted tranng of
Sx Sgma methods.
In 1991 aso, Aed Sgna, (a arge avoncs company whch merged wth
Honeywe n 1999), adopted the Sx Sgma methods, and camed
sgnfcant mprovements and cost savngs wthn sx months. It seems
that Aed Sgna's new CEO Lawrence Bossdy earned of Motoroa's
work wth Sx Sgma and so approached Motoroa's CEO Bob Gavn to
earn how t coud be used n Aed Sgna.
In 1995, Genera Eectrc's CEO |ack Wech (Wech knew Bossdy snce
Bossdy once worked for Wech at GE, and Wech was mpressed by
Bossdy's achevements usng Sx Sgma) decded to mpement Sx
Sgma n GE, and by 1998 GE camed that Sx Sgma had generated over
three-quarters of a bon doars of cost savngs. (Source: George Eckes'
book, The Sx Sgma Revouton.)
By the md-1990's Sx Sgma had deveoped nto a transferabe 'branded'
corporate management ntatve and methodoogy, notaby n Genera
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Eectrc and other arge manufacturng corporatons, but aso n
organzatons outsde the manufacturng sector.
By the year 2000, Sx Sgma was effectvey estabshed as an ndustry n
ts own rght, nvovng the tranng, consutancy and mpementaton of
Sx Sgma methodooges n a sorts of organzatons around the word.
That s to say, n a tte over ten years, Sx Sgma qucky became not
ony a hugey popuar methodoogy used by many corporatons for
quaty and process mprovement, Sx Sgma aso became the sub|ect of
many and varous tranng and consutancy products and servces around
whch deveoped very many Sx Sgma support organzatons.
Sx Sgma stems from the quaty movement that started after Word War
II. Sx Sgma was orgnay deveoped for Motoroa n 1986 by B Smth.
It was conceptuazed as a quaty goa at Motoroa because technoogy
was becomng so compex that tradtona deas about acceptabe quaty
eves were nadequate. In 1989, Motoroa announced a fve-year goa - a
defect rate of not more than 3.4 mon parts per mon - sx sgma.
What is Six Sigma
Frst, what t s not. It s not a secret socety, a sogan or a cch. Sx
Sgma s a hghy dscpned process that heps us focus on deveopng
and deverng near-perfect products and servces. Why "Sgma"? The
word s a statstca term that measures how far a gven process devates
from perfecton. The centra dea behnd Sx Sgma s that f you can
measure how many "defects" you have n a process, you can
systematcay fgure out how to emnate them and get as cose to "zero
defects" as possbe
To acheve Sx Sgma quaty, a process must produce no more than 3.4
defects per mon opportuntes. An "opportunty" s defned as a chance
for nonconformance, or not meetng the requred specfcatons. Ths
means busnesses need to be neary fawess n executng our key
processes.
The Sx Sgma can be defned n severa ways. It s a "hghy technca
method used by engneers and statstcan to fne tune product and
process". Its a way of measurng processes; a goa of near perfecton,
represented by 3.4 defects per mon opportuntes (DPMO); an
approach to changng the cuture of an organzaton. Most accuratey,
though, Sx Sgma s defned as a broad and comprehensve system for
budng and sustanng busness performance, success, and eadershp.
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In other words, Sx Sgma s a context wthn whch you w be abe to
ntegrate many vauabe but often dsconnected management "best
practces" and concepts, ncudng systems thnkng, contnuous
mprovement, knowedge management, mass customzaton, and
actvty based management.

Another defnton of Sx Sgma s that ts a goa of near perfecton n
meetng customer requrement. Ths s aso accurate, n fact, the term
"Sx Sgma" tsef to statstcay derved performance target of operatng
wth ony 3.4 defects for every mon actvtes or "opportuntes". Its
goa few companes or processes can cam to have achevement.
St another way to defne Sx Sgma s as a sweepng "cuture changes"
effort to poston a company for greater customer satsfacton,
proftabty and compettveness. Consderng the company wde
commtment to Sx Sgma at pace ke Genera Eectrc or Motoroa,
"cuture change" s certany a vad way to descrbe Sx Sgma. But ts
aso possbe to "Do" Sx Sgma wthout makng a fronta assaut on your
company cuture.
If a these defnton measure, goa or cuture change at east party but
not totay accurate, whats the best way to defne Sx Sgma? Based on
our experence or exampes set by the growng number of companes
seekng Sx Sgma mprovement we have deveoped a defnton that
captures the breadth and fexbty of Sx Sgma as a way to boost
performance.
Why Six Sigma Development ?
The goa of the Sx Sgma s to enabe you to understand what Sx Sgma s
( both a smpe and a compex queston ), why ts probaby the best answer to
mprove busness performance n years, and how to put t to work n the
unque envronment of organzaton. In our msson to demystfy Sx Sgma for
the executve and professona, we hope to show you that ts |ust as much
about a passon for servng customer and a drve for great new deas as t s
about statstcs and number crunchng, that the vaue of Sx Sgma appes |ust
as much to marketng, servce, human resources, fnance and saes as t does
to manufacturng and engneerng.
Sx Sgma s a comprehensve and fexbe system for achevng, sustanng and
maxmzng busness success. It s unquey drven by cose understandng of
customer needs, dscpned use of facts, data, and statstca anayss and
dgent attenton to managng, mprovng and renventng busness processes.
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Ths s the defnton that w provde the foundaton for our efforts to unock
the potenta of Sx Sgma for your organzaton. The types of "busness
success" you may acheve are broad because the proven benefts of Sx Sgma
"system" are dverse, ncudng
Cost reducton
Productvty Improvement
Market share growth
Customer retenton
Cyce-tme reducton
Defect reducton
Cuture change
Product/servce deveopment
and many more.
Benefits and Advantages of Six Sigma
There are numerous benefts of Sx Sgma as a way to address ssues and
probems. Among the benefts of Sx Sgma s the decrease n defects that are
aowed to reach the customer. You can get some sense of the benefts of Sx
Sgma by revewng some sx sgma pro|ects. Other benefts of Sx Sgma
ncude:
1. Improved ustomer !oyalty
Accordng to George Box "A modes are wrong, however some modes are
usefu". We beeve you w fnd ths mode (graphc) whch starts wth
customer satsfacton, customer oyaty and customer retenton usefu.
A arge factor n determnng the kehood of success and profts n an
organzaton s customer satsfacton. When there s customer oyaty the
customer retenton rate s hgh and busness resuts tend to foow.
". ustomer Satisfaction
There exsts an nteracton between the desred resuts and customer
satsfacton, customer oyaty and customer retenton. They may go by other
names such as patents, cents, buyers, etc. Wthout the customer t s
mpossbe for any busness to sustan tsef. Achevng the desred resuts s
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frequenty a resut of customer actons. Any busness wthout a focus on
customer satsfacton s at the mercy of the market. Wthout oya customers
eventuay a compettor w satsfy those desres and your customer retenton
rate w decrease.
There are severa eves of customers:
Dssatsfed customer--Lookng for someone ese to provde product or
servce.
Satsfed customer---Open to the next better opportunty.
Loya customer--Returns despte offers by the competton.
Dssatsfed customers are an nterestng group. For every one that
compans there are at east 25 who do not. Dssatsfed customers by
word of mouth w te eght to sxteen others about ther dssatsfacton.
Wth the web some are now teng thousands. 91% of dssatsfed
customers never purchase goods or servces from the company agan. A
prompt effort to resove a dssatsfed customer's ssue w resut n
about 85% of them as repeat customers dependng upon the busness,
new customer saes may cost 4 to 100 tmes that of a sae to an exstng
customer.
There has been ess research on satsfed customers to determne what t
takes for a satsfed customer to change. Why take a chance on mere
satsfacton? Loya customers don't eave even for an attractve offer
esewhere. At the very mnmum they w gve you the opportunty to
meet or beat the other offer. Mantanng oya customers s an ntegra
part of any busness.
One of the ways to hep obtan oya customers s by havng products and
servces that are so good that there s very tte chance that the
customer requrements w not be met
Of course one of the dffcutes s understandng the true customer
requrements. Even when you have the requrements n advance the
customer can and w change them wthout notce or excuse. Havng a
good recovery process for a dssatsfed customer s a necessty.
When I found ths t was attrbuted to Sam Waton founder of Wa-Mart.
A ustomer
o A customer s the most mportant person n any busness.
o A customer s not dependent upon us. We are dependent upon
hm.
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o A customer s not an nterrupton of our work. He s the soe
purpose of t.
o A customer does us a favor when he comes n. We aren't dong
hm a favor by watng on hm.
o A customer s an essenta part of our busness--not an outsder.
o A customer s not |ust money n the cash regster. He s a human
beng wth
feengs and deserves to be treated wth respect.
o A customer s a person who comes to us wth hs needs and hs
wants. It
s our |ob to f them.
A customer deserves the most courteous attenton we can gve hm. He s the
febood of ths and every busness. He pays your saary. Wthout hm we
woud have to cose our doors. Don't ever forget t.
Severa surveys have been done on why customers do not gve a busness
repeat busness. Reasons gven by customers for not returnng for repeat
busness:
Moved 3%
Other Frendshps 5%
Competton 9%
Dssatsfacton 14%
Empoyee Atttude 68%
These surveys woud ndcate that n addton to the technca tranng and |ob
sk tranng provded to empoyees, some effort amed at customer
satsfacton and empoyee atttude s approprate. Remember these may not
be the peope normay thought as "Saes Peope". For exampe Managers,
Supervsors, Secretares, Accounts Payabe, Engneers, Accountants,
Desgners, Machne Operators, Securty, Truck Drvers, Loadng Dock, etc. f
not hepng to cutvate Loya Customers are hurtng your customer
retenton. 68% of ost customers are due to one cause, empoyee atttude!
In order to know how you are dong n ths area there must be some
measurement. Data ndcate that ess than 4% of dssatsfed customers ever
bother to odge a compant. Most |ust take ther busness esewhere. Test ths
on yoursef. The next tme you get ess than what you consder dea at a
store, busness supper, restaurant, move theatre, hote, or any other
busness what do you do?
Cutvatng the customer reatonshp s key n achevng the desred busness
resuts. A passve system that depends upon your customers to nform you
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wthout effort on your part s not key to yed the nformaton necessary to
mprove customer retenton.
#. Business $esults
Every organzaton wants to acheve some eve of resuts. Unfortunatey too
often not everyone n the organzaton has the same resuts n mnd. Havng
agreement on the desred resuts tends to focus efforts. Even f they do agree
upon the basc descrpton of the resuts how to measure achevement of those
resuts s n dsagreement.
Understand what the desred resuts are. Some common resut areas:
Saes voume
Proft before tax
Market share
Earnngs per share
Repeat busness %
New customers %
Cash Fow
Cycle &ime
Patents ssued
Safety performance
Returns
Warranty cams
Envronmenta performance
Defect eve
Scrap
Frst pass prme
Cost per unt produced
Debt to equty
Many others
Agree on how to measure the resut area. Is the measurement system capabe
of producng numbers that are usefu for the ntended resut area? Do a of the
affected peope have confdence n the measurement system? Can numbers be
generated qucky enough to be usefu? Does the measurement depend upon
the eve of the resut?
Generay measurements over a contnuum (e.g. % competon) are more
usefu than yes/no (e.g. done/not done) type measurement.
%. Data Analysis Before Decision &a'ing
As part of the mode we expore nformaton and gap anayss and how that
nks a of the other peces together. See statstca data anayss graphc and
how t competes the mode. There are mutpe reasons for dong data
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anayss. Most are to do gap anayss between expected, a standard or the
competton..
Any organzaton that wants to be successfu must have a structured way of
gatherng data, anayzng data and dong gap anayss. A mportant areas
shoud have data coected and then turn that data though statstca data
anayss nto nformaton. Data n of tsef s reay not worth very much. It s
ony when the data s tortured by statstca data anayss to revea nformaton
that t becomes vauabe. Ths gap anayss can vary n compexty and
sophstcaton from some very smpe averages and hstograms to compex
regresson anayss.
Data coecton for gap anayss can be done for a number of reasons. In every
area we have dscussed thus far there shoud be data that s anayzed to
produce nformaton. Based on nformaton better decsons shoud resut at a
eves n the organzaton. A few of the uses of nformaton resutng from
statstca data anayss foow:
&onitoring :
Any number of thngs can be montored from market condtons,
performance of varous parts of the organzaton, compettor
actons/performance, etc. The gap anayss s to assure that on gong
performance does not vary too much from target. When done correcty,
gap anayss prompts acton n the the area beng montored. A of the
statstca process contro rues for speca cause varaton are exampes
of acton crtera from montorng. These rues make t easy to do gap
anayss and know when acton s requred. Demng aways warned
aganst tamperng -that s makng speca cause correctons for a system
that s n statstca contro. When a process s n statstca contro
common cause varaton s present and a system mprovement s
requred and entrey dfferent souton s needed. A busness strategy
w have a number of key performance areas each wth a number of
metrcs that are the eadershp wants to mprove. It s aways an
nterestng exercse n gap anayss to fnd out what s mprovement, or
whch drecton s good. Is there a targeted goa for each metrc and are
we on target for achevng that target. Mut-perod efforts that do not
meet the target and come as a surprse to management are a cue that
an adequate montorng system s not n pace and on gong gap anayss
s not n pace. Measurements and performance ndcaton shoud show f
progress s beng made or not. Sedom do efforts go for 11months wth
no change and then n the 12th month a of the benefts are reazed. On
gong gap anayss from the the pan can prevent some very ugy
surprses. Wth proper reportng and trackng the Sx Sgma pro|ects
shoud dever n the areas mportant to achevement of the Strategc
Pan.
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Benchmar'ing : A favorte too gap anayss. One of the eary steps n
any effort s to understand the current performance. We recommend
understandng the cyce tme for every one of your processes as we as
those best n cass. Ths can then be used as a Benchmark aganst other
organzatons that have a smar process that dfference s smpe gap
anayss. A Benchmarked pont s aso vauabe n determnng f actvtes
and efforts assocated wth a Sx Sgma pro|ect have had any mpact. A
cauton aganst usng a snge pont vaue for dong the gap anayss.
Frequenty there are cycc patterns, seasona effects and other
nfuences that shoud be consdered. At a mnmum we beeve you
shoud ook at the average over some perod and then compare that
average wth an average over a smar perod of tme after mpementng
a pro|ect. Of course the varaton shoud aso be consdered whe dong
gap anayss. Severa months of poor performance foowed by one
excepton month can easy yed the same average as the entre tme
perod at moderate performance eves, yet the nformaton from the gap
anayss s much dfferent. Some Benchmarkng has very structure
statstca gap anayss and other use a more quatatve gap anayss of
the data coected. In most organzatons there are severa areas that are
mportant. A common faw n Benchmarkng s to target a snge
performance metrc. Most organzatons do not have a cear
understandng of the nterreatonshps and can mprove one area to the
detrment of another. An exampe of ths s n the area of waste. It s
reatvey easy n many processes to change the waste from sod waste
to ar emsson or qud waste. Concentraton on ony one of these as a
metrc can often resut n no net change s the tota pounds to the
envronment. If the gap anayss s |ust for one type of emsson
msunderstandng can occur. The waste |ust changes form from a sod to
ar emssons or to qud and moves from one to the other wth no net
change n actua waste. The correct gap anayss s for each type of
emsson and aso gap anayss for tota emssons.
When benchmarkng for a Sx Sgma pro|ect coect data from mutpe
tme perods and for severa dfferent metrcs a gap anayss can be done
on each of the metrcs. At a mnmum, know the hstorca average
performance and varaton before attemptng to do any sort of gap
anayss.
Data Analysis : Other faws are the reorganzaton efforts that emnate
staffng especay n support functons wth arge cams of savngs. The
remanng peope n a dfferent cost center are st dong the work often
n a ess effcent fashon. Actvty Based Accountng can burst the bubbe
on many of these pseudo savngs efforts. When the Purchasng
Department s ratonazed and ne peope pck up the sack t s not
uncommon to fnd that productvty has decreased and the actua cost to
do the Purchasng actvty has ncreased rather than decreased as
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camed. Wthout a system to accuratey coect and anayze data
mstakes of ths type are common.
As a suggested gap anayss actvty to fnd out f ths s a probem n
your organzaton, go back fve years ago and fnd out the tota cost
structure for a busness. Then document a of the mprovement deas
and pro|ects durng that fve-year perod and the camed savngs (both
snge ponts n tme and those that were to carry forward). Use a smpe
tme vaue of money and do a gap anayss on your are actuay reazng
vs.the benefts camed from a of those pro|ects. In one case a VP of
Manufacturng camed that f a the benefts from pro|ects over a fve
year perod were rea he woud need no raw materas, no energy, no
payro and woud be abe to doube the producton.
Sx Sgma pro|ects can make ma|or mprovements n servce and staff
functons, |ust be sure that the measurements to do the gap anayss
capture what s reay happenng. It s easy to transfer costs from one
functon or ocaton to another. Make sure your pro|ects return the
beneft to the organzaton as a whoe.
(rediction : Another very vauabe use of data s make predctons. One
of the favorte toos s regresson anayss. In fact one of the man reason
for usng statstcs of any knd to gan some capabty to make
predctons. Many organzatons have very sophstcated
regresson modes for many facets of the busness. The computer foks
have added to our excon GIGO-Garbage In Garbage Out. Any
predcton mode s ony as good as the nputs. Senstvty anayss of any
mode s hgh recommended. In fact some peope have conducted
Desgned Experments on purchased propretary modes to gan a better
understandng of the factors and nteractons.
). *eam Building
Learn how word cass organzatons used team budng and empoyee
motvaton to become the eaders and stay there.
The essence of empoyee motvaton s deveopng eadershp sks. Wth
Adams Assocates effectve team budng and empoyee motvaton ft
together. Successfu organzatons are not nvoved n team budng as an end
unto tsef but rather because wth effectve team budng empoyee
motvaton ncreases and organzatona resuts are acheved. Effectve team
budng starts wth efforts that are agned wth the organzatona strategc
pan. Empoyee motvaton ncreases when empoyees are workng on rea
ssues for the organzaton. Sx sgma pus pro|ects have team budng
components and empoyee motvaton eements amed at mprovng we-
defned ssues.
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En|oyment n work ncreases team budng effectveness. Team budng s a
too for mprovng empoyee motvaton. A teams go through very predctabe
phases. Knowng and understandng these phases gves eadershp the
confdence to contnue n the team budng even when durng one of the
phases the empoyee motvaton appears to be decnng. When eadershp
understands ths s a norma phase they have confdence to contnue team
budng for word cass performance.
Assessments amed at understandng yoursef and others can speed team
budng. Understandng s the frst step n deveopng empoyee motvaton.
Wth an understandng of other empoyees' motvaton every ndvdua has the
opportunty to add to the synergy of the team.
+. &easure ,alue According to the ustomer
We are contnung to bud the mode and consder measurng vaue as
determned by the customer as evdence of customer satsfacton.
The graphc measurng vaue s strcty a customer satsfacton ssue. No
matter what the product or servce the customer determnes wth ther doars
the vaue proposton. It s possbe to change that understandng through
a varety of efforts on your part but make no mstake the customer's
satsfacton s the utmate vaue measure of what s offered. Sx sgma seeks
to understand that vaue from the vew of the customer and enhance the
vaue n a way that s advantageous to both the customer and to the
organzaton. Wth ncreased customer satsfacton the kehood of customer
oyaty ncreases.
Some organzatons because of unusua crcumstances fnd themseves n a
hgh saes envronment wth unusuay hgh margns. Not nfrequenty peope
can practce enough sef deuson to convnce themseves that the customer
satsfacton s hgh and customers agree that there s adequate vaue
nvoved, when the rea reason s some sort of market pace dscontnuty.
That s not to say that there s not a ot of money to be made durng these
tmes.
"Pet Rocks" were a nce fad that made handsome profts for some peope
but no one reay thought that the vaue was there for the prce pad. As a
fad t ded n a very short tme. If your busness seeks to captaze on ths sort
of market pace, |ust reaze that t s short ved and the vaue comes from
the unque dea, not from some underyng vaue or need n socety.
Any new dea or product s n the poston of tryng to baance the
true vaue and the "newness" component. A cassc of ths s the eary Ford
Motor Company. Henry Ford nssted on drvng the cost of cars down and
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makng them nexpensve so the market coud become bgger and bgger
rather that seng fewer cars at much hgher prces. Yet when the consumer
tastes evoved to wantng coors other than back that was seen as a fad that
woud ncrease the cost and woud soon dsappear. What amost dsappeared
was the Ford Motor Company. The changes n customer tastes can be
surprsngy fast, f your processes do not have the cyce tme capabty to
respond others are key to meet the changng customer desres.
Few organzatons can wat on the market pace to nform them of exacty what
the vaue of the product or servce, even the Ford Motor Company
barey survved a mss readng. Yet n many cases f too much tme s spent
on study and evauaton the proftabe opportunty may have passed. Sma
organzatons have the abty to react and change rapdy, yet a few arge
companes are abe to keep ther product ppene fed wth proftabe
nnovaton. 3M each year expects to have 40% of the saes revenue from
products that are ess than four (4) years od. In some busnesses t takes
that ong to get approva for mode changes of the same product. One of
the most mportant compettve advantages n the market pace today
s speed. Cyce tme reducton n addton to emnatng waste has the rea
beneft of provdng more opportuntes to earn. Every cyce s a earnng
opportunty. For those who earn n every cyce, f
they |ust compete the cyce one more tme than you n the same tme
frame, w n short order bud a huge compettve advantage because
they have earn and know more.
As can be seen from the graphc the customer vaue w drve re-
desgn and evouton of your products and servces. Ths Voce of the
Customer combned wth technca consderaton drve the product and
servce evouton. Those who are not stayng ahead of ths evouton w soon
suffer. Vdeos are a good exampe. The Beta Max from Sony were frst to
market and from what I am tod a superor technca product to VHS, yet
VHS wth nexpensve payers and
a marketng move to get a wder varety of moves drove the Beta Max from
the fed. One of the paces that we beeve sx sgma has great potenta,
that s argey untapped, s n the marketng functons of most companes.
When the marketng, desgn, manufacturng and desgn a become a team
focused on drvng customer vaue breakthrough has generay be acheved.
One method of measurng vaue s to consder the defects n the entre
process of devery to the customer. Lower defect eves w be of
hgher vaue. Wth sx sgma the concept of roed through yed s very
mportant. If defects occur n mutpe paces or stages before
reachng the customer they can a be added together to get the tota
number of defect per unt. Usng a Posson approxmaton the
Yed = e **-DPU.
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(Yed s equa to e wth the exponent of mnus the defects per unt). Note that
f you average 1 defect per unt the yed s 0.36788. Some have mutpe
defects and about 36.7% w make t through wthout any defects.
Where anythng that s ess than the expectaton of the customer s a defect.
Dong some smpe math 63.3% of the customer nterfaces w have a defect.
There are mutpe surveys that ndcate that ess than 4% of customers w
ever compan. 4% tmes 63.3= 2.532 or approxmatey 3%.
Whch means that f 3% of your customers (each transacton beng counted as
a unt) compan then you have a defect rate averagng 1 per unt.
In the December 2000 ssue of Ouaty Progress Gregory H. Watson suggests
that there are three ogca categores for faures or defects. Frst the product
or servce does not meet customer expectatons, second the prce s not
approprate for the customer to see suffcent vaue and thrd the devery n
not wth n the requred tme frame for the customer. The assumpton here s
that a defects are the same n the eyes of the customer.
Ths vew of measurng defects from the perspectve of the customer s
essenta f you are gong to move the mprovements through sx sgma
from ncrementa nterna mprovements to the dramatc customer focused
changes that are found wth Word Cass Performance. A of the non-
product reated defects are now consdered n the yed. Here our yed s
customer satsfacton.
The mpcatons of a 3% compant rate by customers are terrbe. Ony by
chance are you abe to produce defect free product or servce 36.7% of the
tme and a of the remanng products or servces have at east one defect
and some mutpe defects. Few busnesses can survve wth that eve of poor
performance.
Measurng vaue s more than |ust consderng the vaue of a product beng
devered to the customer as ntended. The vaue has to consder the tota
customer experence, ncudng a of the support servces such as ogstcs,
accounts recevabe, etc.
-. .ffective Supply hain &anagement
We add suppy chan management and the mpact of suppers s ncuded n
our graphc mode. Few products or servces exst that so not requre some
suppy chan management. The more suppers that are nvoved the more
compex the suppy chan management becomes. Even f the entre suppy
chan from basc raw materas that come from the earth or out of the mnds
and actons of peope, s not consdered there s st a suppy chan that must
be attended. Cyce tme of each step and process n the suppy chan sets the
mt on how fast the entre suppy chan can functon.
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There have been a number or phosophes about how to dea wth the suppy
chan management. Backward ntegraton, deveop as many suppers as
possbe to make the suppy tem a commodty, compettve bddng, snge
source, supper partnershps to name a few.
In genera the coser a product or servce s to a commodty tem by defnton
the more potenta suppers are avaabe. Ths can make the suppy chan
management extremey compex. Mantanng traceabty becomes much
more burdensome. For exampe n the US purchasng wheat s generay
consdered a commodty and there are thousands of wheat farmers seekng to
f the need. On the other hand Kashmr woo s not qute as ready avaabe
n the US and there are fewer provders. (Maybe n Inda t woud be a
commodty tem.) Tracng a specfc oad of wheat to a partcuar fed or
farmers can be an amost mpossbe task.
Take a reatvey new fed that has qucky become a commodty servce...web
ste deveopment. The number of peope dong that knd of work has grown
extremey fast. Yet I am tod that search engnes ndex ess than 13% of a
web stes. A ess commodty servce n ths area are those who not ony can get
your web ste ndexed by search engnes but who can do so wth phrases that
peope actuay enter and actuay drve egtmate traffc to a web ste. (If you
are nterested n ths area we have a strong recommendaton based on
performance and affaton.)
Commodty suppers are aways at the bottom of the economc food chan. The
prce they get for ther goods or servces s generay out of ther contro and
they are forced to take what a fary prce eastc economy offers. Ths s not to
say that there are not commodty suppers who have very successfu and
proftabe busnesses. They are aways seekng to be the owest cost producer
and have tte f any prce nfuence. They have to be extremey cost senstve
to a of the factors nvoved n ther system. Usuay you w fnd the successfu
commodty suppers seekng to dfferentate themseves from everyone ese n
some fashon. Faster devery, frender peope, easer credt terms, better
servce, consstency (ack of varaton) of product, ocaton, brandng and brand
aegance, customzng, varous packagng, ot szes, etc. are a ways that
commodty products and servces seek to move away from that pure
commodty mage to a more specazed and hgher prce but better vaue
product or servce.
Your suppers have a strong and mportant mpact on your products, servces,
work processes and dstrbuton. The od cch s "You can't make a sk purse
from a sows ear." It seems obvous that the quaty of the raw matera w
have an mpact on the quaty of the end product. There are many that attempt
to reduce ther cost structure at the pont of contact wth the supper and pay
tte attenton to the nterna processes and systems that use that raw
matera. There s a muttude of ways that the supper reatonshp can mpact
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beyond |ust the physca "quaty " of the raw matera.
Wth Sx Sgma Pus the goa s to meet the customer expectatons better than
any one ese and at a mnmum be abe to dever at a defect rate of ess than
3.4 PPM there are two basc approaches to do that.
One s to have you process centered as we as possbe at the target vaue.
Ths s the on target component. Cassc Sx Sgma aows for a 1.5 standard
devaton shft to compensate for the fact that few f any processes reman
stabe centered exacty on the target vaue. The second way to approach Sx
Sgma s to reduce the varaton n the process to the eve that even wth a 1.5
standard devaton shft the chances of a defect are ess than 3.44 ppm. The
ob|ectve s reay "On target wth mnmum varaton."
Suppers have the opportunty to greaty nfuence both of the ob|ectves. They
are at the begnnng of the chan of process steps for your product or servce.
Assume that you have fve process steps n your organzaton a of whch are
performng at better than a Sx Sgma eve, ets say 3ppm defect eve. Ths s
0.999997 good at each process step. For argument sake there s no nspecton
and sortng of the good from the bad, you are usng what the supper furnshes
and shppng to your customer. If your supper s at the same 0.999997
performance eve the defect rate for these sx steps ( 5 of yours pus the
supper )s
0.999997*0.999997*0.999997*0.999997*0.999997*0.999997=0.999982 or 18
ppm defect rate. Reazng ths has faed to meet you ob|ectve of ess than
3.4ppm defect rate you and a n your organzaton put n a ot of creatve and
hard work and reduce each of your process steps to 1ppm defect rate. Your
supper mpressed wth a 3ppm defect rate negected controng the process
and the defect rate from the supper cmbs to 13ppm. The overa
performance after a of your work and effort s now
0.999982*0.999999*0.999999*0.999999*0.999999*0.999987=0.999982.
Exacty the same pace you started wth 18ppm defect rate. I' eave the math
to you to prove that wth fve process steps at 0.999999 even f the supper
were perfect the best you can do s 5ppm defect rate.
These cacuatons demonstrate a number of mportant concepts. One s that
suppers can have a tremendous mpact on your products and servces.
Another s that t does not matter where n the sequence the defect rate s hgh
t w mpact the overa performance. Each step s a supper for the next
process step. Suppers do not have to be externa to your organzaton. Thnk
of a processes as a combnaton of a number of smpe three component
process steps. (supper to process to output ) . Ths part of the reason for
Demng's drve to reduce the number of suppers. Performance eve for one
supper s dffcut to mantan, as the number of suppers are ncreased the
varaton ncreases. There are two sources of varaton, that wthn each
supper and the varaton between suppers. Havng effectve suppy chan
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management can be an mportant part of any sx sgma defect reducton effort.
Those of you wth some math ncnaton w qucky reaze that the overa
process w aways perform at a eve ess than the worst snge process step.
A smpe strategy for mprovng performance s to emnate process (reducton
n compexty) aso done n cyce tme reducton. Back n the orgna exampe f
we ony had four steps pus the supper a performng at 0.999997 the end
resut s 0.999985 a 3ppm defect mprovement rate by emnatng one process
step.
Some organzatons that have started to reduce the number of suppers n
order to reduce some of the varaton, understand that t s not the number of
companes that they have as suppers that s mportant but rather the number
of processes that provde the product or servce. These organzatons w
quafy a supper on a process by process bass and nsst upon knowng f
there s any change to the suppy. Ths coud be a change n machnery, a
processng step, personne, storage condtons or anythng ese. It s not that
they want to run your busness but rather and understandng of |ust how tte
t takes eary n a process to have ma|or mpact at the end. Much ke the rppe
from a rock thrown n a pond, the dameter of the rppe |ust keeps gettng
bgger and bgger.
Understandng ths w drve you to focus your mprovements ncudng as far
up the suppy chan as you can get. Ths s contrary to the ntutve approach of
havng a defect n a product and ookng that the ast process step before the
defect was dscovered and attemptng to make the mprovements at that
process step frst. We contend the best approach s to document the varous
process steps nvoved and obtan data about the performance of each process
step. It w become apparent where the bggest opportuntes exst. If ths s
done wth cyce tme reducton and/or compexty reducton sometmes the
hghest defect producng process step can be totay emnated.
/. Design and $edesign (roducts0Services
We contnue to bud the mode and consder product desgn , redesgn and
products revews. Our mode ncudes product revews as an mportant
consderaton of the over a effort, wth customer surveys as a prme nput.
Most products or servces that do not change and evove w have mted
success n the market pace. The cyce tme for each mprovement s a crtca
measure of success. Wthout adequate customer surveys t s dffcut to
understand the product desgn features that are contrbutng to the
product/servce success or ack of success. On a reguar bass product desgns
shoud be evauated and reguar product revews conducted. Some such as the
auto ndustry have ocked themseves nto a cyce of a new mode every year.
Frequenty these are mnor or |ust cosmetc changes. Wth Sx Sgma Pus the
redesgn of Products and Servces shoud be based on the Measured Vaue
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from the Customers and Supper capabtes. If done correcty the Redesgned
Product and Servce shoud do a better |ob of meetng and exceedng
Customer expectatons than dd the orgna product or servce.
When Sx Sgma Pus s apped the economc return on nvestment shoud
mprove for the Busness Unt nvoved. Better products wth fewer defects,
cost reducton pro|ects, better understandng of the Customer, mproved work
fow, empoyee commtment, supper nvovement and reduced cyce tmes
are but a few of the consderaton n product revews. Changes n product
desgn shoud reduce compexty, have fewer defects, mprove reabty, and
offer the Customer functonaty not n the orgna product desgn or servce.
When these ob|ectves are met there s a drect cause and effect reatonshp
to mproved margns and arger market share.
Once your customers have deveoped a ow toerance for defects, you have a
unque marketng advantage over your compettors. Ths s true provded you
contnue to focus on the Customer Crtca Crtera and mprovement
processes. In these areas mentoned, t s gong to be very dffcut for a
compettor to match the eve of performance your customers have earned to
expect from your busness organzaton.
One of the nterestng areas of compettve advantage, acheved by some
organzatons, s to mprove ther support functons and reduce the defect
eves. One area that contnues to amaze s the technca support from
software vendors. The frst probem s the obvous defect that has been
aowed to get to the customer or there woud be no need for the technca
support. Yet the a too true |oke s " If you want offce musc a you need to do
s ca technca support and put your phone on the speaker functon". Whe
many fee they must have the atest reease of a software, there are a
number of organzatons that refuse to purchase the frst reease of any
software. Correctng bugs may cause other probems, but usuay by the
second or thrd reease most are sutabe for desgned use.
Smary many of us refuse to purchase the frst mode year of an automobe.
The number of defects and recas s generay pretty staggerng based on our
past experences.
Despte extensve market research, product desgn tras and numerous
product revews and other efforts, faure of new and re-desgned products
remans hgh.
One source attached to ths faure s often the customer surveys that are
conducted as part of the product desgn. A common and often poory
desgned actvty s customer surveys. In a 1998 Ouaty Progress Artce, Ken
Mer asks Are your surveys ony sutabe for wrappng fsh? Hs answer n too
many cases s yes. As Ken Mer wrtes, "The popuarty of customer surveys s
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on the rse. You can't go anywhere wthout beng asked to compete one. They
are n most every hote room and restaurant and on every arpane."
Mer dentfes the foowng common probems wth customer surveys:
The wrong peope are surveyed
The wrong questons are asked
The questons are asked the wrong way
The questons are asked at the wrong tme
Satsfacton and dssatsfacton are assumed to be equay mportant
Those who dd not buy or use the product/servce are not surveyed
Surveys are conducted for the wrong reasons
The resuts are generazed to groups not surveyed
Surveys are used as a substtute for better methods
The resuts do not drect mprovement actons.
If you are countng on ths knd of nformaton to hep shape the products
desgn your products and servces t s key they do no better, or even worse
than wthout the survey. Accordng to Ken Mer most customer surveys coud
be vasty mproved f they asked:
What was expected or wanted?
What was experenced?
What are you eve of satsfacton wth the product or experence?
What s the degree of reatve mportance of ths varabe?
Sx Sgma Pus focuses on the Customer Crtca Crtera (the mportant
varabes) that drve a successfu product desgn or servce. Understandng
what the voce of the customer s reay sayng s of vta mportance.
The product revews or servce revews usng customer surveys shoud do a
better |ob of meetng the dentfed Customer Crtca Crtera or address
customer concerns and ssues not met wth the orgna product desgn or
servce. Among those to be consdered are expanded functonaty, reduced
cost, mproved reabty, more attractve desgn, etc.
Ouaty Functon Depoyment (OFD) and the resutng "House of Ouaty" chart
s a too that s can be used to baance the often-confctng requrements.
Mutfunctona teams are used n the deveopment, and the resutng matrx
can serve as an mportant communcaton too. The Customer Crtca Crtera
are sted and ranked. Usuay a comparson between the exstng desgn and
compettors desgns s ncuded n the evauaton. Engneerng requrements
needed to meet the voce of the customer are comped. The reatonshps
between the customer requrements and the "engneerng how" are shown n
the reatonshp matrx. Ob|ectve measurements for each requrement are
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dentfed and technca dffcuty assgned. Postve and negatve reatonshps
between desgn requrements are determned aong wth reatve mportance
ratngs. We shoud utze ths study to dentfy mportant ssue(s) that can be
sent forward n yet another teraton concerned wth detaed desgn.
Drawbacks to OFD ncude the amount of tme and effort requred, survey
errors, and some of the sub|ectve assessments that are made. It s generay
for ths reason many peope choose to make a frst attempt by usng smper
approaches.
A smpe cause and effect matrx can often accompsh a good dea of the
desred resuts wth much ess effort.
The outputs of a process are assgned an mportance vaue such as: 1-ow 5-
medum 9-hgh and the customers of the process are asked to provde the
rankng.
Important process nputs are ranked on the same scae for mpact on each
output varabe. A team of process experts shoud acheve consensus on these
rankngs n a team meetng, ndependent of the customer rankngs.
When the two rankngs are then paced n a matrx, wth the process varabes
n the vertca coumn and the customer rankngs n the horzonta row. The
resutng product (mutpcaton of the row tmes the coumn) s paced n each
ce. Next add ces n each row and create a Pareto Chart. Ths w et you
know whch nput varabes have the bggest mpact on the customer.
Ths sort of matrx can be carred down another eve where the key process
varabe can be broken down nto attrbutes and the process broken down nto
the ndvdua steps. Ths aows for the process steps to be ranked accordng
to the mpact on the varous attrbutes.
We have found ths sort of stepwse anayss whch s easer for most team
members to understand and accept than a OFD matrx, aso t can be carred
out at severa deeper eves.
11. Develop !eadership S'ills
We are contnung to bud the mode and consder the mpact of eadershp
quates and eadershp sks. See the graphc eadershp quates.
Leadershp sks are needed at every eve n the organzaton. Consstent
tranng and approach from the executve eve through managers and
supervsors w hep a n the organzaton deveop ther eadershp sks.
Deveopment of eadershp sks and eadershp quates can start at very
eary ages. There are a arge number of youth groups that w assst young
peope wth eadershp tranng so they can deveop crtca eadershp sks.
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Too few aduts spend the tme to take eadershp sks eadershp quates
tranng to understand and work on deveopment of the eadershp sks and
eadershp quates earned n ther youth. Some chose to gnore much of the
eadershp tranng once they move out sde these organzatons. Opportuntes
to deveop eadershp sks and eadershp quates outsde work are not
mted to youth groups. Soca servce organzatons, church and oca
government offer a weath of opportuntes for those nterested n deveopng
eadershp sks. Even f you never have any ntenton of asprng to a
management poston n your organzaton opportuntes abound for the
appcaton of eadershp sks. Every organzaton needs peope wth
eadershp quates.
One of the prmary mechansms of management demonstratng eadershp
quates t has, s n strategc pannng. If Sx Sgma Pus s part of the strategy
there are many opportuntes to deveop eadershp sks and eadershp
quates at other eves n the organzaton.
In any organzaton eadershp quates can aways be expanded. Wth Sx
Sgma Pus one of the ob|ectves s to expand the concept of eadershp sks
beyond that of organzatona poston. Frequenty peope equate eadershp
wth some tte, poston, or rank. Those who have demonstrated eadershp
quates frequenty have these ttes. Unfortunatey there are cases where the
tte or poston has been granted before the eadershp sks have been
deveoped. Ths s an ndcaton of apse of eadershp responsbty by those
who pace an unprepared person n a roe requrng extensve eadershp sks.
Too often very successfu technca peope are paced n roes wth eadershp
requrement wthout beng prepared. The best engneer s made Engneerng
Manager or the best operator s made Supervsor. None of us woud aow
peope untraned n Cv Engneerng to desgn and bud a ma|or hghway.
Nether woud many of us wngy go nto surgery wth the person performng
the operaton havng no tranng n medcne. Yet many of our management
and supervsory postons are fed wth very competent technca peope wth
tte preparaton for management or supervsor dutes. In those cases there
are bascay two optons. One s to move aong and hope that nstnct and a
good support structure w be adequate. The second opton s begn
acceerated eadershp tranng amed at deveopng the eadershp sks and
knowedge base requred for a eadershp poston.
Sx Sgma Pus mpementaton offers an aternatve whe provdng ma|or
mprovements at the same tme. Leadershp sks are honed and ma|or
mprovements are made n the organzaton at the same tme. Those who wsh
to partcpate or ead ther organzaton n the appcaton of Sx Sgma Pus are
guty of professona mapractce f they do not enhance and contnue to
deveop ther persona eadershp sks. Champons and Back Bets have drect
and mmedate eadershp chaenges.
The Champons are charged wth nterfacng wth Senor Management and the
23/59
Back Bet organzaton. Ther abty to gather support, resources and
commtment from Senor Management w often mean the dfference between
success and faure of a Sx Sgma effort. If the Champons do not ead the
Back Bet seecton, educaton and deveopment of the ndvduas, odds for
success decrease dramatcay. One of the most crtca eadershp
responsbtes for the Champon s to assure that Back Bets who have spent
two years or so workng on mprovement pro|ects are moved back nto
responsbe postons wthn the organzaton. If ths key eadershp
responsbty s not actvey pursued then the organzaton w qucky see the
Sx Sgma Pus Back Bet as a career-endng move. The organzaton has
severey mted the effectveness of any Sx Sgma effort f Back Bets wth an
ncreased sk set and new eve of knowedge are not moved back nto the ne
organzaton where these sks can be everaged even more.
A short sghted approach s to vaue of the Back Bets n returnng vaue to the
bottom ne of the organzaton n very short perods of tme and wshng to
keep these peope contrbutng n ths fashon. An argument s the tranng was
expensve n both tme an money and we shoud keep Back Bets workng as
Back Bets even onger. Ths s a short-term vew that w eventuay keep the
best and brghtest from ever acceptng a Back Bet assgnment. Instead
consder the everage f a manager has the tranng, understandng and
experence of beng a Back Bet. Better pro|ect seecton, mpementaton and
retenton of the benefts of a Back Bet pro|ect w resut. Aso when t s cear
that Back Bet s a requrement for advancement beyond a certan eve then
the quaty of peope seekng Back Bet tranng and appcaton w ncrease.
Back Bets have a duty to ncrease ther eadershp sks whe workng on
pro|ects. Team seecton and budng offer the Back Bet exceent
opportuntes to deveop eadershp sks. Any Back Bet that s not ncreasng
ther knowedge and sk base n peope eadershp, pro|ect management and
understandng of the anguage of management (money) durng n each pro|ect
s cheatng themseves and the organzaton that has nvested n them. Back
Bets are not technca experts who have earned some statstcs and other
toos. They are nstead peope who have been gven an opportunty to add to
ther technca sk eve wth some very specfc tranng and an opportunty to
appy those sks on pro|ects n a very rapd fashon. Whe appyng those new
sks there s aso the opportunty to enhance the eadershp sks. Any Back
Bet or organzaton that has Back Bets and vews them as technca experts
ony s mssng the argest beneft of Sx Sgma Pus.
Senor Management that s not seectng ts managers from the ranks of those
who have been traned and practced the sks and knowedge of a Back Bet
does not understand the true benefts and everage of a Sx Sgma Pus
mpementaton. Wthn |ust a few years after startng a Sx Sgma appcaton,
no person shoud be moved to a management poston uness they have
competed Back Bet tranng and have demonstrated the mastery of
eadershp sks by successfuy competng severa pro|ects. Sx Sgma Pus
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must become the prmary management deveopment program wthn the
organzaton. If ths does not happen then the Senor Management has had an
unconsconabe apse n eadershp appcaton. Sx Sgma w not have the
opportunty to dever the knds of mprovements possbe. Not because the Sx
Sgma Pus process can not dever the mprovements but because of a ack of
eadershp and msappcaton of a very powerfu approach.
Management must assure that the Sx Sgma eadershp tranng and
deveopment afforded the Back Bets s approprate for the hgh performance
expectatons. Whe statstcs understandng and appcaton s very mportant
there are eadershp sks that are equay mportant. It s the synergstc
combnaton of the two that produces a successfu Back Bet.
11. Integration of (roducts2 Services and Distri3ution
More drect controabe factors n estabshng oya customers are your
products, servces, work fow and dstrbuton servces. Our graphc mode
ncudes products, servces, work fow and dstrbutons servces and ther
reatonshp to the other eements. These are a the way they are because that
s how the organzatona eadershp wants them to be. If the eadershp ddn't
want them to be how they are they woud have changed them or woud have
an actve effort n pace to change them. Any dssatsfacton wth these at the
top eadershp eve |ust means the pan they perceve requred for the gan s
not worth the pan of the change.
As part of the effort to mantan and bud oya customers product and servce
performance, work fow performance (cyce tme s one key measure) and
dstrbuton servces performance each have an mpact. These must be
consdered based on the mpact on the customer. Every product or servce has
some performance crtera. Every tme that performance crtera s not met t
s an error, defect, mstake, omsson, off-spec, non-prme, second, reportabe,
etc. what ever the termnoogy s for your product or servce. These hurt
customer oyaty, even f the customer never sees them because they were
caught, corrected, off graded, recyced, scrapped, reworked etc.
Changes the concept and eary desgn phases are much ess costy than at any
other tme. Cost go up exponentay as a product s moved from concept to
desgn to prototype to fed tra to fu producton and fnay to the hands of
the customer. Ths s not to say that mstakes whenever detected shoud not
be corrected, but rather that effort n emnatng the mstakes or probems at
the front end of the process s much more effcent.
Mstake proofng and Poke Yoke concepts apped to the engneerng and
desgn of a product pay unmagned dvdends ater n the process. Eary
consderaton on ways to make a product fa can resut n more robust desgns
and better performance n the hands of the consumer as these faure modes
are addressed. It s not unusua for a souton to exst that has essentay no
25/59
addtona cost or compexty. In fact reducton of compexty w generay be
an advantage. Functon Anayss can hep dscover paths to some of these
soutons.
Feed back of Reabty Engneerng data from smar components or products
n a vauabe resource. Cosng the oop from desgn to fed reabty shoud
be part of every desgn process.
It s obvous that there can be an mpact on the customer f the customer s
forced to suffer wth ess than the performance expected. Very many
occurrences and there s an EX customer.
Even when the defect does not get to the customer t hurts customer oyaty.
Every defect costs more than the good product or servce at the same pont n
the process. The same work, effort, raw materas and other resources are
consumed yet because of the defect t has ess end vaue. Ths means the
good product or servce must carry the burden of the bad product or servce.
At the very mnmum the customer s payng more for the product or servce
that s good or the margn of proft s ess than t coud be. The mpact of
defects s much deeper than ths smpe expanaton. Through put, nventory,
raw matera, dsposa, nspecton, energy are a mpacted by defects. Wth
Sx Sgma Pus a key actvty s to know what the defect rate s and what t s
costng. Ths seemngy smpe measurement can often be enghtenng.
Effcent and effectve work processes do not pace unreasonabe demands
upon the peope that have to use them. The steps are natura and there s
tte wasted moton effort or compexty. What s needed s done,
requrements are met wth confdence, and t |ust makes sense. Too often the
restrctve work practces are the resut of a probem wth a very sma number
of peope and to cover up rather than address and correct that ssue everyone
s made to suffer. It seems the arger the organzaton the more rues and
restrctons are n pace to cover the possbty that 1 or 2% of the empoyees
mght abuse an opportunty and a empoyees are forced to suffer wth the
"souton". Cyce Tme Anayss w usuay show where the unnecessary rues
and restrctons are gettng n the way of meetng customer expectatons. Key
work processes frequenty can be performed n 20%-50% of the orgna tme
wth no addton of resources and fewer defects by appyng the resuts of ths
knd of anayss.
A smpe exampe: At a reatvey remote ocaton the most convenent pace to
have unch s the company cafetera. In order to make t easy when meetng
wth customers on ocaton, egtmate busness unches coud be sgned off at
the checkout regster. Because of abuse by a very few ths was emnated and
now expense accounts must be fed for a busness expenses at the cafetera.
Not ony were the nnocent punshed, the guty were never chaenged and
addtona compexty was added to a smpe process addng tme and cost to
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a who use the cafetera for busness. Wth ths knd of thnkng the
compexty that s added to the "serous" work processes must be huge.
The best anaogy I know for an effectve and effcent work process s a arge
ba at the top of an ncne. It takes work to get t started but then gravty
takes over and t s easy to move the ba to the bottom of the ncne.
Contrast ths wth the work process that starts wth the ba at the bottom of
the ncne and t must be moved up. Gravty works aganst competng the
process. Any dstracton, nattenton, competng prorty or |ust a bad moment
and t s worse than startng at the begnnng. You have to go retreve the ba
from where ever t stoppng rong and get t back to the startng pont. Are
your and those n your organzaton hepng the ba down the ncne or
fghtng to push t to the top?
One of the ways that many have used to mprove work processes s through
Benchmarkng. In cassc Benchmarkng the search s to fnd the best n cass
at a gven work process or functon. To know whch Work Processes need
mprovement requres that your own Work Processes are understood at east
we enough to be abe to compare them to Word Cass Performance. Most
peope attempt to do Benchmarkng wthn ther own ndustry. The common
refran s: "Who has done ths n the n|ecton modng busness?" utty
busness? nsurance?" heath care? Peope seem to expect they can aways
fnd what they want n ther own ndustry. That |ust keeps you n the herd.
Compettors may be wng to share some nformaton but are not key to
share the thngs that woud brng your process up to ther eve.
Ma|or benefts come from ookng outsde your ndustry to fnd who s Word
Cass at the process or functon you are seekng to mprove. Most
organzatons that w share wth you are gong to expect somethng n return.
At a mnmum be prepared to answer about your own organzaton every
queston you ask those you benchmark.
Bndy copyng what others are dong w sedom gve the knds of gans
possbe from Benchmarkng. Beng abe to transfer concepts and practces
from one ndustry to another s where Benchmarkng has added vaue.
A cyce tme reducton effort propery apped s one way to make sgnfcant
mprovement n any mportant work processes. It aows you to work on your
own processes wth your own peope and provdes a cear performance crtera,
tme. An advantage over Benchmarkng s that you do not have to go out and
fnd the Word Cass performers and then make the necessary arrangements
for vsts and the exchange of nformaton. If the Work Process drecty touches
the Customer, tme to compete a process coud very easy be a very
mportant customer crtca measurement. Wth Sx Sgma Pus you want to
be sure that your process s so good that there s ess than 3.4 chances per
mon of not meetng that tme measure.
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In ether case a good understandng of the Work Process as t s currenty
beng done s requred. It s not unheard of to do both on the same Work
Process.
Dstrbuton servces can be as mportant as any eement n estabshng
customer oyaty. Dstrbuton has mpact n recevng orders, raw materas,
suppes, and uttes as we as gettng product to the customer. Many a
product has been though a the manufacturng process wth a the potenta
mscues there ony to fa the customer because of dstrbuton. Even f the
correct product, t can be ate, eary, at the wrong ocaton, contamnated,
damaged, wrong sze, wrong package, or fa to meet customer expectatons n
a varety of other ways. Wth an ncrease n |IT (|ust n tme) systems the
demands on the dstrbuton system can be a serous customer satsfacton
ssue.
Consder Wa-Mart when evauatng how mportant dstrbuton can be. They
manufacture nothng, have no one to wat on you n the store, treat ther
suppers harshy and yet are very successfu n arge part because of the
understandng and appcaton of dstrbuton technoogy.
Note: From some frends n Inda. "A Customer" attrbuted n an earer
newsetter to Sam Waton was orgnay propounded by Mohandas
Karamchand Gandh or Mahatma Gandh, (Indan - Father of the Naton). Ths
statement of hs s dspayed n a the branches of the argest bank n Inda
(over 12,000 branches), State Bank of Inda.
1". Alignment 4ith Strategy ,ision2 and ,alues
Our graphc mode adds SWOT anayss, strategc pannng, vson statement,
msson statements and busness pans.
In deveopng busness pans and dong strategc pannng goa settng some
very basc questons are addressed:
Why do we exst as an organzaton? our msson statement.
How do we do what we do? core processes.
Where are we now? SWOT anayss.
Where do we want to be? vson statement.
How can we get there? busness pans.
What woud te us f we arrved? metrcs.
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Trustng your organzaton to grow and deveop n a haphazard fashon s
takng a arge chance on the future. Better to have at east some genera deas
of where you want to take t and what s a desrabe drecton consderng
current condtons (SWOT anayss). Ths s the fundamenta reason for dong
strategc pannng . Gudance documents ncude the vson statement and
msson statements. Detas of how to ve the msson statement and reach
the vson are captured n the specfc busness pans.
Everythng n the word s created at east twce. Once n the mnd of the
creator and then as the actua product or servce. There may be
accommodatons or changes over tme but at some pont someone somewhere
had an dea of what woud be deveoped. Ths vson of what the future shoud
hod s essenta for any organzaton to contro ts destny. Wthout a vson
that brngs focus and drecton an organzaton s key to drft and wander
dependng upon the tdes and currents of events. For most that s not an
acceptabe aternatve and we prefer to have more contro over our
organzaton.
A vson statement s that cear future state or poston that offers the dea of
what we want our organzaton to become. For most t s somethng that can
never qute be acheved but s st worthy to strve n that drecton. For many
Sx Sgma s part of that vson. Achevng a performance eve that has ess
than 3.4 ppm defect or error rate may seen ke the Impossbe Dream for
some, yet for other's t has been acheved. Maybe not for every product or
servce but for at east some and they are on an mprovement path for even
more. One of the bggest hurdes to overcome s the reazaton that no matter
how good your organzaton s now t coud be better. Every defect or devaton
from the dea represents addtona costs and waste. To have a compeng
dssatsfacton wth those departures from dea and decdng to do somethng
about t s requred for Sx Sgma mpementaton. Once that decson s made
the toos, technques and approaches have been demonstrated by others and
hence can be earned wthn your organzaton.
Supportng any vson statement s a set of vaues for an organzaton. These
may or may not be wrtten down, none the ess they exst and most empoyees
have a frm understandng of what they are. When the wrtten and the actua
vaues dffer you can be sure that the empoyees know where there are
dfferences. The vaue system w have fundamenta nfuence on how
customers and empoyees are treated and how empoyees react to
management drecton and ntatves. For Sx Sgma to succeed there must be
a cuture of mprovement. If ths s not n pace creatng t s a ma|or
mpementaton step.
A msson statement s the purpose of the organzaton. It states who we are,
whom we serve what products and servces we provde and how we make
those products and servces avaabe to our customers, cents, or patents.
The msson statement tes what the organzaton was formed to do. Some ke
29/59
to ncude eves or performance n the msson statement. I contend that |ust
adds compexty. State what you are about and et the performance speak to
the eve or quaty.
Wth vaues, vson and msson understood a strategy shoud be deveoped. To
attempt to deveop a strategy before vaues, vson and msson are cear,
understood, and accepted s a mstake. Oute smpy strategy s the observabe
actons n the marketpace that ead to a compettve advantage. Keys are
observabe actons, marketpace and compettve advantage. If any one of
these s mssng there may be some nce soundng words, pretty pctures and
fowery tak but there s no strategy.
Common work n deveopng a strategy s a number of assessments both
nterna and externa to the organzaton. From every assessment strengths,
weakness, opportuntes and threats (SWOT anayss) are evauated. Once a
cear understandng s n pace specfc busness pans are deveoped. Ths
shoud be done at the Busness Leve. For arge organzatons wth many
busness unts, subsdares or dvsons each may be aowed to deveop ther
own busness pan. Wthout some oversght ths can resut n dvsons of the
same company hurtng each other. For nstance havng Pontac and Odsmobe
competng n a mutuay destructve fashon.
Once a Strategc Drecton s set there are some genera ob|ectves that shoud
be accompshed. From those ob|ectves, goas are deveoped meetng the
SMART crtera. (Specfc, Measurabe, Acton Orented, Reastc, Tme bound).
Each goa shoud have acton pan(s) to assure they are acheved. Frequenty
some of the goas from one eve become ob|ectves for the next eve down n
the organzaton. When ths happens t assures that goa orented acton pans
anywhere n the organzaton can be traced up the organzaton to
demonstrate they are n support of the top eve ob|ectves and strategy. When
there are gaps n that nkage t s common to have msunderstandngs and
efforts that are not agned and hence not as effcent nor as effectve as they
coud. Effectve team budng starts at the executve eve, ncudes
management tranng at a eves ncudng front ne supervsors and has a
eadershp sks deveopment tranng pan for every empoyee.
Sx Sgma can be an ntegra part of strategc pannng or a busness pan.. For
a strategy nvovng cost eadershp, Sx Sgma can be focused to mprove
nterna processes, yeds, productvty, emnate compexty, reduce cyce
tme and n genera hep gan or mantan ow cost supper poston for your
partcuar product or servce. If your strategy ncudes beng the owest prce n
the market your costs had better be the owest.
Sx Sgma aso shoud be an ntegra part of any customer oyaty strategy. One
of the keys to customer oyaty s provdng the customer wth products and
servces that meet or exceed ther expectaton every tme. Every transacton
and nteracton between a customer, or potenta customer, s an opportunty
30/59
to meet or fa to meet that specfc customers expectatons. Few systems are
good enough to offer the desred eve of product or servce on a consstent
bass to keep oya customers wthout some constant attenton and work. The
tremendous benefts from havng oya customers can not be overstated. |ack
Wech has been quoted as sayng that ony when GE's Sx Sgma efforts started
focusng on the externa customers dd they begn to reay see the benefts.
1#. Supervisor *raining
Many quaty managers have read about and seen the benefts of Sx Sgma
but are unsure how to approach ther senor eadershp about the opportunty
because they do not have a concse package of nformaton to convey.
Fortunatey, there s a seres of tred and true steps whch can be taken to se
management on the benefts of Sx Sgma. These are the steps bazed by
poneerng quaty professonas who successfuy sod management on the
methodoogy and eventuay depoyed an effectve Sx Sgma program.
1%. 5enerates Sustained Success
|ohn Chambers, CEO of Csco System, the networkng equpment powerhouse
thats been one of the fastest growng companes of the past decade, recenty
commented on the tenuous hod many companes have on ther success.
"There s the reazaton that you can be out of busness n there years". The
ony way to contnue doube dgt growth and retan a hod on shftng markets
s to constanty nnovate and remake the organzaton. The Sx Sgma creates
the sk and cuture for constant revva.
1). Set a (erformance 5oal for .veryone
In a company of any sze gettng everyone workng n the same drecton and
focusng on a common goa s pretty tough. Each functon, busness unt, and
ndvdua has dfferent ob|ectves and targets. What everyone has n common,
though, s the devery of products, servces, or nformaton to customers.
Sx Sgma uses that common busness framework - the process and the
customer - to create a consstent goa: Sx Sgma performance or a eve of
performance thats about as cose to perfect as most peope can magne. Any
one who understands ther customers requrements can assess ther
performance aganst the Sx Sgma goa 99.9997 percent "perfect"-a standard
so hgh that t makes most busnesses prevous vew of "exceent"
performance ook pretty weak. Beow fgure contrast the number of probems
that woud be found wth a goa of 99 percent quaty versus a goa of sx
sgma performance (99.9997 percent) the dfference s pretty startng.
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(erformance 5oals 6 What 7ou8d 5et
9or every :112111 letters delivered ;
Wth 99% Wth Sx Sgma
3000 mss deveres 1 mss devery
<ut of every %112111 computer restarts ;
Wth 99% wth Sx Sgma
4,100 crashes <2 crashes
9or %11 years of &onths and losings ;
Wth 99% wth Sx Sgma
60 Months woud not baance .018 woud not baance
9or every 4ee' of *, 3roadcasting =per channel >
Wth 99% wth Sx Sgma
1.68 Hrs of Dead ar 1.8 seconds of dead ar
1+. .nhance ,alue to ustomers
When GE began ts Sx Sgma effort, executve admtted that the quaty of the
companys products was not what t shoud be. Though ts quaty was perhaps
better than that of ts compettors, |ack Wech stated that "we want to make
our quaty so speca, so vauabe to our customers, so mportant to ther
success that our products become ther ony rea vaue choce." Wth tghter
competton n every ndustry, deverng |ust "good" or "defect free" products
and servce wont guarantee success. The focus on customers at the heart of
Sx Sgma means earnng what vaue means to customers (and prospectve
customers) and pannng how to dever t to them proftaby.
1-. Accelerates the $ate <f Improvement
Motoroas goa of "100X mprovement n 4 years" set an exampe for
mbbtons, drven organzaton to emuate. Wth nformaton technoogy
settng the pace by doubng ts performance to cost rato every 18 months,
the customer expectaton for mprovement gets ever more demandng. The
compettor who mproves the fastest s key to wn the race. By borrowng
toos and deas from many dscpnes, Sx Sgma heps a company not ony
mprove performance, but mprove performance.
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1/. (romotes !earning And ?ross@(ollination?
The 1990s show the brth of the "earnng Organzaton, a concept that appeas
to many but seems hard to put nto acton. Aed Sgna eaders have
commented that "Everyone taks about earnng; few succeed n weavng t
nto the fabrc of everyday fe for so many empoyees." Sx Sgma s an
approach that can ncrease and acceerate the deveopment and sharng of
new deas through out an organzaton. Even n a company as dverse as GE,
the vaue of Sx Sgma as a earnng too s seen as crtca. Sked peope wth
expertse n processes who to mange and mprove them can be shfted from,
say, GE Pastcs, GE capta, not ony wth shorter earnng curve but actuay
brngng wth them better deas and the abty to appy them more qucky.
Ideas can be shared and performance compare more ready. GEs vce
presdent for Sx Sgma, Pet van Abeeen, has noted that n the past, a manger
n one part of the organzaton coud dscount nput, counter part n another
area: "Your deas wont work, because I am dfferent." Ven Abeeen says Sx
Sgma emnates those defenses : " We, cry me a rver. The commonates
are what mater. If you make the metrcs the same we can tak.
"1. .xecutes Strategic hanges
Introducng new products, aunchng new ventures, enterng new markets,
acqurng new organzatons- what were once occasona busness actvtes are
now day events n many companes. Better understandng of your companys
processes and procedures w gve you a greater abty to carry out both the
mnor ad|ustments and the ma|or shfts that 21st century busness success w
demand.
Do8s and Don8ts of Six Sigma
Do - Base your mprovement pro|ect seecton on sod crtera.
Baance resut, feasbty, and organzatona mpact ssues. Good pro|ect
secton can be a key to eary success.
Do - Baance effcency/ cost-cuttng wth externay - focused, customer
vaue pro|ect.
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The "customer-focus" theme s a source of Sx Sgmas strength. Puttng
your energes nto short term savng ony sends the wrong sgna and
reduces your chance of boostng customer satsfacton and oyaty.
Do - Prepare for an effectve "handoff" to the mprovement team.
A technque ke the pro|ect ratonae can gve a good start to a pro|ect
defnng cear ssue and ob|ectve.
Dont - Choose too many pro|ect.
Improvement takes care and feeng on the part of eaders and "expert"
especay at the begnnng. Its temptng to overextend your resources
and capabtes.
Dont - Create "word hunger" pro|ects.
Even more common than "too many" s "too bg" better to get a too
sma pro|ect done more qucky as ong as the resut are meanngfu
than to have a too bg pro|ect drag on for months.
Dont - fa to expan the reasonng for the pro|ects chosen.
Everyone has probems they thnk shoud be top prorty. Ensurng
support for the one you choose means provdng a good ratonae for
your prortes.
Aey oncepts of Six Sigma
At ts core, Sx Sgma revoves around a few key concepts.
ritical to Buality; Attrbutes most mportant to the customer
Defect; Fang to dever what the customer wants
(rocess apa3ility; What your process can dever
,ariation; What the customer sees and fees
Sta3le <perations; Ensurng consstent, predctabe processes to mprove
what the customer sees and fees
Design for Six Sigma; Desgnng to meet customer needs and process
capabty Sx Sgma focuses frst on reducng process varaton and then on
mprovng the process capabty. Customers vaue consstent, predctabe
busness processes that dever word-cass eves of quaty. Ths s what Sx
Sgma strves to produce.
D9SS - (Desgn for Sx Sgma) s a systematc methodoogy utzng toos,
tranng and measurements to enabe us to desgn products and processes that
meet customer expectatons and can be produced at Sx Sgma quaty eves.
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D&AI - (Defne, Measure, Anayze, Improve and Contro) s a process for
contnued mprovement. It s systematc, scentfc and fact based. Ths cosed-
oop process emnates unproductve steps, often focuses on new
measurements, and appes technoogy for mprovement.
Six Sigma - A vson of quaty whch equates wth ony 3.4 defects per mon
opportuntes for each product or servce transacton. Strves for perfecton.
1. Buality *ools
Assocates are exposed to varous toos and terms reated to quaty.
Beow are |ust a few of them.
ontrol hart - Montors varance n a process over tme and aerts the
busness to unexpected varance whch may cause defects.
Defect &easurement - Accountng for the number or frequency of
defects that cause apses n product or servce quaty.
(areto Diagram - Focuses on efforts or the probems that have the
greatest potenta for mprovement by showng reatve frequency and/or
sze n a descendng bar graph. Based on the proven Pareto prncpe:
20% of the sources cause 80% of any probems.
(rocess &apping - Iustrated descrpton of how thngs get done, whch
enabes partcpants to vsuaze an entre process and dentfy areas of
strength and weaknesses. It heps reduce cyce tme and defects whe
recognzng the vaue of ndvdua contrbutons.
$oot ause Analysis - Study of orgna reason for nonconformance wth
a process. When the root cause s removed or corrected, the
nonconformance w be emnated.
Statistical (rocess ontrol - The appcaton of statstca methods to
anayze data, study and montor process capabty and performance.
Tree Dagram - Graphcay shows any broad goa broken nto dfferent
eves of detaed actons. It encourages team members to expand ther
thnkng when creatng soutons.
". Buality *erms
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Blac' Belt - Leaders of team responsbe for measurng, anayzng,
mprovng and controng key processes that nfuence customer
satsfacton and/or productvty growth. Back Bets are fu-tme
postons.
ontrol - The state of stabty, norma varaton and predctabty.
Process of reguatng and gudng operatons and processes usng
quanttatve data.
*B; ritical to Buality =ritical ?7?> - Eement of a process or
practce whch has a drect mpact on ts perceved quaty.
Customer Needs, Expectatons - Needs, as defned by customers, whch
meet ther basc requrements and standards.
Defects - Sources of customer rrtaton. Defects are costy to both
customers and to manufacturers or servce provders. Emnatng
defects provdes cost benefts.
5reen Belt - Smar to Back Bet but not a fu-tme poston.
&aster Blac' Belt - Frst and foremost teachers. They aso revew and
mentor Back Bets. Seecton crtera for Master Back Bets are
quanttatve sks and the abty to teach and mentor. Master Back Bets
are fu-tme postons.
,ariance - A change n a process or busness practce that may ater ts
expected outcome.
*hemes of Six Sigma
You are the Chef Learnng Offcer at XYZ Company. You are mpementng Sx
Sgma and youre ready. Youve gone to the experts, taked to vendors, and
put together a tranng strategy that shoud have your new Back Bets, Green
Bets, Master Back Bets, Champons, and managers up and runnng n no
tme.
Not ony w the teams be traned n Sx Sgma methods and statstca
technques, but they w aso get tranng n pro|ect management, busness
anayss, and team budng. Youve ooked at mentorng, staff deveopment,
and change management, and have but these eements nto your tranng
programs as we.
Months go by. The VP of Manufacturng for Asa Regon receves a 3-nch bnder
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wth the tte "Sx Sgma Recommendatons." He scans the report, cant fnd
anythng nterestng and gets nterrupted by hs Drector of Ouaty who says
that Lne A s down. The report sts on the VPs desk for a week and then gets
moved to a bookshef. Two months ater the COO cas hm, "I |ust got a report
from the CFO that says that your pants have gnored one of the crtca Sx
Sgma recommendatons outned n the report that you got a ong tme ago.
The CEO s furous, because t ooks ke we arent serous about change." He
wants to know why the VP of Manufacturng gnored the report.
In reaty, the recommendaton was hdden wthn the bnder. It was presented
n a way that woud have taken hm days to fgure out and onger to
mpement. And to understand t, he woud have had to aso "understand"
dozens of other recommendatons that he woud have found were totay
rreevant to hs area. He had tred scannng the document and had wanted to
fnd the nformaton that coud hep, but he coudnt get through the sea of
rreevant nformaton. Had he found it/ )e also 1ould )ave found t)at t)e recommendations
for improvement 1ere not presented in a 1ay t)at 1ould permit efficient implementation.
So, what coud possby be mssng from your Sx Sgma tranng strategy? The
chances are youve mssed one of the most crtca success factors for any
quaty or productvty ntatve: communcaton sks tranng. Sx Sgma, ke
ISO 9000 and TOM, w fa wthout a reentess organzatona focus on
nformaton and communcaton.
Adding Six Sigma to the ommunication &ix
Sx Sgma ntatves w requre you to sgnfcanty ncrease the quaty and
quantty of communcaton wthn your organzaton. But ets face t, most
organzatons are aready struggng wth communcatons that are unfocused
and dffcut to read, wth bured key ponts n endess nes of rreevant
nformaton. The number of poory wrtten e-ma messages, reports, and
proposas that come across ther desks each day aready overburdens
managers. And workers aready have dffcuty nterpretng a of the
compcated poces, processes and procedures they are supposed to foow.
Addng Sx Sgma deas, reports, proposas, soutons, pro|ect updates, and
process changes to the mx w ony add to the probem--uness they are
presented n a cear, effectve way that hghghts key ponts and aows
readers to qucky access and understand the nformaton they need.
Adoptng organzaton-wde communcaton standards, methods, and protocos,
and addng communcaton sks tranng to the Sx Sgma currcuum w hep
Sx Sgma teams communcate and se ther deas, pans, and soutons
nternay, w make fe easer for overburdened managers, and w
substantay ncrease a pro|ects kehood of success.
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ommunication and the *hemes of Six Sigma
Accordng to Sx Sgma experts Pande and Hopp n ther book "What s SIX
SIGMA?" there are sx themes of Sx Sgma. Each of the themes requres a
reentess focus on cear, concse communcaton.
*heme <ne; 9ocus on the ustomer

Savvy companes have proven over the past decade that exceence starts wth
an accurate understandng of customer needs and the abty and commtment
to meet those needs. Achevng ths ob|ectve n a Sx Sgma envronment
requres strong communcaton wth customers, as we as the abty of
saespeope, R&D, and marketng to ceary capture and communcate
customer needs and desres to others wthn the organzaton.
How good s your saes force at accuratey descrbng your products features,
benefts and mpementaton process to customers? How good s your saes
force at conveyng rea customer needs back nto your Company? How good s
your operatons group at communcatng out to the customer? If you are ke
most organzatons, youve spent very tte tme and effort thnkng about how
to mprove these communcatons, but a "Focus on the Customer" demands
more than "busness as usua" communcaton effectveness.
*heme *4o; Data@ and 9act@Driven &anagement
One of the prmary dfferences between Sx Sgma and other quaty ntatves
s the reentess focus on data. Much of the power of the Sx Sgma process
comes from ts avodance of specuaton and conversaton n favor of tests and
measurements. Graphs and charts are often touted as the anguage of Sx
Sgma - and they are mportant - but t s equay mportant that Sx Sgma
teams wrap ther charts and graphs n cear, effectve communcatons that
make sense of the data and ther nterpretatons and soutons. Ths resut can
ony be accompshed f the peope preparng the statstcs - and ther
managers - can communcate effectvey.
*heme *hree; (rocesses are Where the Action Is
Sx Sgma pro|ects usuay focus on key processes and how to mprove them. In
most companes, process, procedure and gudene nformaton s poory
wrtten. Snce processes typcay nvove many departments and many peope,
even a sma change can have a huge mpact on an organzaton. Provdng
cear, effectve communcatons about what s changng and why s essenta to
ensurng that pro|ect ob|ectves are met and changes are repcated
consstenty throughout the organzaton. Provdng communcaton sks
tranng that heps Sx Sgma teams and others throughout the organzaton
earn to communcate new poces, processes, and procedures ceary and
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effectvey w hep support your Sx Sgma ntatve and have a postve ong-
astng mpact on empoyee performance.
*heme 9our; (roactive &anagement
Sx Sgma produces many organzatona changes. Obvousy, you want the
rght changes to happen n both evoutonary and revoutonary ways. Change
nvoves varous eves of an organzaton and many dfferent functons. To be
successfu, the need for change and the type of change needs to be
communcated ceary. In short, there needs to be a focus on gettng the rght
nformaton to the rght peope at the rght tme n the rght form so that they
can make good decsons and take effectve acton. Cear, effectve
communcaton s essenta to successfu change management.
*heme 9ive; Boundary less olla3oration
Goba corporatons have ther mportant actvtes ocated throughout the
word. Processes often cross-organzatona as we as geographc boundares.
Sx Sgmas reentess focus on process and busness resuts forces staff to
work together across departments and organzatona boundares. Sx Sgma
teams are key to meet chaenges and resstance when they enter new
terrtory and nadvertenty "step on toes." Transaton can be a key ssue.
Transaton effectveness and cost s mproved wth we-structured
communcaton. The wrtten and spoken communcaton sks of your Sx
Sgma teams must be strong enough to break down organzatona was or
your Sx Sgma effort w fa.
*heme Six; Drive for (erfectionC *olerate 9ailure
It may sound easy to "drve for perfecton, but toerate faure," but t s not.
Faure s tough. It s often compcated and dffcut to expan n a non-
threatenng way. Poor communcaton around faures essens the opportunty
to prevent the faure from happenng agan. Teams must be abe to ceary
communcate what happened, why t happened, and what they can earn from
the experence to hep ensure that the next pro|ect s a success. Once agan,
wthout effectve communcaton sks, t can be dffcut to survve and thrve
n a perfecton-drven envronment.
ServceMaster Case Study: Improved Communcaton Fues Sx Sgma
ResutsThe ServceMaster Company provdes varous servces to resdenta
and commerca customers n the Unted States where t serves 10.5 mon
homes and busnesses each year. Core servce capabtes ncude awn care
and andscape mantenance, termte and pest contro, pumbng, heatng and
ar condtonng mantenance and repar, appance mantenance and repar,
ceanng and furnture mantenance and home warrantes. These servces are
provded through a network of over 5,400 company-owned and franchsed
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servce centers and busness unts. In 2001, ServceMaster commtted to
brngng ts quaty and customer servce to a hgher eve through Sx Sgma.
"We were servce eaders and wanted to contnue to ead n our chosen
markets" expans |ohn Bedry, Sr.VP of Contnuous Improvement and Sx
Sgma. We saw the opportunty to dfferentate our servces by mprovng the
processes that touch our customers every day. ServceMasters Sx Sgma
program s drven by 55 back bets and 6 depoyment champons. Ther |ob s
to drve each Sx Sgma souton across hundreds of ocatons. Mutpe
soutons add up to thousands of repcatons n ServceMaster and makes for a
formdabe communcatons chaenge. ServceMaster was havng dffcuty
actuay mpementng recommended process changes, because
documentaton regardng new processes was hard to understand and dffcut
to use. Staff was frustrated and t was takng too ong to reaze the expected
benefts from process mprovement. Wth CEO support and commtment for
the entre effort, ServceMaster recognzed that effectve communcaton was
essenta for true success. Lookng for a souton, ServceMaster dscovered a
research-based methodoogy caed Informaton Mappng that heped authors
to anayze, organze and present nformaton so that t was easer to
understand and use. ServceMaster adopted Informaton Mappngs
methodoogy as a standard n order to
ncrease the speed of repcaton of process mprovement
enhance the sharng of nformaton across departments and geographes
mprove the abty of our staff to qucky fnd nformaton and adopt new
processes, and
mprove the readabty of mportant documents.
The resut has been qucker mpementaton and a better return on Investment
from our Sx Sgma program. Informaton Mappng s now a core eement of the
back bet tranng currcuum and has become the standard for ALL Sx Sgma
soutons that w be communcated to the fed.
*he Six Sigma $oadmap
The dea Roadmap for estabshng the Sx Sgma system s as foows.
Identfy core processes and key customer
Defne customer requrements
Measure current performance
Prortze, anayze and mpement mprovements.
Expand and ntegrate the Sx Sgma system.
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Advantage of the Six Sigma $oadmap
The Roadmap s not the ony path to Sx Sgma mprovement; you w very
key need to ad|ust the order of these steps, or even start more than one of
the smutaneousy. In part we ook at ways to adapt the Roadmap, based on
your organzatons specfc needs and goa. What makes ths path "dea"
however, s that, taken n ths order, these actvtes bud up the essenta
foundaton that w then support and sustan Sx Sgma mprovement.
Specfcay, the Roadmaps advantages ncude:
A cear understandng of the busness as an nterconnected system of
processes and customer.
Better decson and uses of resources, to get the greatest possbe
amount of beneft out of Sx Sgma mprovements.
Shorter mprovement cyce tmes, thanks to better upfront data and
seecton of pro|ect.
More accurate vadaton of Sx Sgma gans - whether n doars,
defected, customer satsfacton, or other measures.
A stronger nfrastructure, to support change and sustan resuts.
Six Sigma Buality *ools and *emplates
Affnty Dagram
Branstormng
Cacuators
Cause & Effect / Ishkawa / Fshbone
Charters
Contro Charts
Contract Management Software
Creatvty / Out of the Box Thnkng
Desgn Of Experment
Document Contro
Fow Chart / Fow Chartng
FMEA / Rsk Assessment
Gossares
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Hstogram
Kano Anayss
Organzng Data
Onne Statstcs Textbooks
Pareto
Poka Yoke (Mstake Proofng)
Process Map / Process Mappng
Pro|ect Charters
Ouaty Functon Depoyment / House of Ouaty
Scatter Dagram / Pot
SIPOC Dagram
Software
Support and Restrant
Surveys (@)
Thnkng Out Of The Box
Few of the above s as foows
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Is Six Sigma $ight for Ds Eo4 ?
Assessing 7our Six Sigma $eadiness
In ts most ambtous appcaton, Sx Sgma can be a more fundamenta
change than, say, a ma|or acquston or a new system mpementatons,
because Sx Sgma affects how you run the busness. The depth of mpact on
your management processes and sks w vary, of course, wth how
extensvey you want to appy Sx Sgma toos and the resuts you are seekng.
The startng pont n gearng up for Sx Sgma s to verfy that you are ready to
or need to embrace a change that says "There s a better way to run our
organzaton." Ths shoud not be a rote, number crunchng based decson, but
there are a number of essenta questons and facts you w have to consder n
makng your readness assessment.
Assess the <utloo' and 9uture (ath of the Business
A frst step s a genera revew of the condton of your organzaton today and
ts outook for the future, both n the short and the ong term. Key questons
ncude:
Is the strategc course cear for the company?
Are our chances good for meetng our fnanca and growth goas?
Is the organzaton good at respondng effectvey and effcenty to new
crcumstances?
.valuating 7our urrent (erformance
Even f the "future s so brght you got to wear shades," exstng probems
ncrease the potenta vaue of a Sx Sgma effort. Sx Sgma makes t easer to
be more concrete n an assessment of where you are today; and the more you
can use hard data to answer the foowng questons, the better:
What are our current overa busness resuts?
How effectvey do we focus on and meet our requrements?
How effectvey are we operatng?
What the ans4ers mean ?
There are actuay severa concusons you can draw from ths current
performance assessment.
Is there enough room for mprovement to make Sx Sgma worthwhe?
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Where are the best opportuntes for mprovement?
How effectve are our customer knowedge and measurement systems?
$evie4ing Systems and apacity for hange and Improvement
A thrd ma|or factor n decdng whether to aunch Sx Sgma s the
organzatons exstng mprovement processes and ts abty to undertake a
new ntatve, Ouestons here ncude the foowng:
How effectve are our current mprovement and "change management"
systems?
How we are our cross-functona processes managed?
What other change efforts or actvtes mght confct wth or support a Sx
Sgma ntatve?
What the ans4ers mean ?
The purpose of ths thrd assessment eement s to test the tmng and
readness of the busness for a possbe Sx Sgma effort. Even f assessment
factors 1 and 2 make a strong case to ntate Sx Sgma, your busness may
aready be capabe of deang wth the chaenges. Or your peope, systems
and resources may aready be wrapped up n makng other efforts or changes
n whch case youd have troube makng the commtment of eadershp, tme,
energy and money that a Sx Sgma effort demands.
When Six Sigma is Eot $ight for an <rganiFation
Sx Sgma can be apped as a targeted approach, so a mted mpementaton
may aways be feasbe. Nevertheess, we can ook at the fpsde of the
precedng assessment to dentfy condtons n whch t probaby woud be best
to say "No thanks" for Sx Sgma efforts. Condtons that mght ndcate a "no-
go" decson on Sx Sgma ncude the foowng:
You aready have n pace a strong, effectve performance and process
mprovement effort. If there are systems and toos n pace to support
ongong probem sovng and process desgn/redesgn, Sx Sgma may not
add much vaue and mght even confuse peope.
Current changes aready are overwhemng your peope and/or resources.
An organzaton can hande ony so much turmo at once. Lumpng Sx
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Sgma on top of one or other ma|or busness upheavas coud prove to be
the proverba straw on cames back. However, beware of makng the "we
are too busy" argument - a copout for never dong the tough work t takes
to become a truy word cass organzaton.
The potenta gans are not there. Sx Sgma demands an nvestment. If
you cant make a sod case for future or current return, t may be best to
stay away at east unt you have fgured out exacty how and when t
mght pay off.
SummariFing the Assessment; *hree Aey Buestions
At the end of a revew of your busness, ncudng ts future and current state,
and ts organzatona factors, the ob|ectve s to decde "Shoud we take on or
at east serousy consder a Sx Sgma ntatve for our organzaton? we can
bo a the specfcs down to three questons, as foows:
Is change a crtca busness need now, based on bottom-ne, cutura or
compettve needs.
Can we come up wth a strong strategc ratonae for appyng Sx Sgma to
our busness?
W our exstng mprovement systems and methods be capabe of
achevng the degree of change needed to keep us a successfu
compettve organzaton?
If your answers are Yes, Yes and No, you may we be ready to expore further
how to adopt Sx Sgma n your organzaton.
Six Sigma *raining
Sx Sgma Tranng s one of the most mportant factors that contrbutes to and
heps modfy and shape an organzaton's cuture. Ths artce w hep dentfy
who n your organzaton s requred to be Sx Sgma traned and what type of
Sx Sgma tranng they shoud receve.
Who and What *ype of *raining ?
1. Senior &anagement
Senor Management, aso known as 'C-Leve Management' (CEO, CIO, CFO and
peers), are the ndvduas that set, communcate and drve the overa
busness ob|ectves. They are aso the ndvduas that are requred to
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ncorporate Sx Sgma ob|ectves nto ther operatona pans. Exampes of
ob|ectves mght ncude:
X% of empoyees through Sx Sgma tranng by a certan date
Y% reducton n defects for a customer vsbe processes by quarter end
$Z n back-offce pro|ects savngs by year end
Sx Sgma tranng for Senor Management shoud ncude a program overvew,
busness and fnanca benefts of mpementaton, rea-word exampes of
successfu depoyments, specfc appcaton to busness/ndustry, and the
requred Sx Sgma tranng and toos to ensure successfu mpementaton.
Dependng on Senor Management tme avaabty and ther desre to earn
the detas, Back Bet tranng s aso recommended.
". 9unctional 0 (rocess &anagers
Functona and Process Managers are the eve of management drecty
reportng to the Senor Management. Dependng on the sze of the
organzaton, they mght ncude functona managers from areas such as
human resources, fnance and tranng, and process managers from areas such
as assemby, producton and ca center.
These managers are sometmes referred to as 'sponsors' and 'champons'
because they are known to champon the cause wthn ther busness
organzaton. These champons transate Senor Management's strategc
drectons nto tactca ob|ectves and actons wth the hep of ther Ouaty
Leader and Pro|ect Leaders.
Sx Sgma tranng for Functona and Process Managers s more detaed than
that provded to Senor Management. Topcs woud ncude the Sx Sgma
concept, methodoogy, toos and requrements to ensure successfu
mpementaton wthn ther organzaton. Dependng on Functona / Process
Manager tme avaabty and ther desre to earn the detas, Back Bet
tranng s aso recommended.
:. Buality !eaders
Ouaty Leaders, aso known as Ouaty Managers and Master Back Bets, hep
Functona and Process Managers set and ead the Sx Sgma vson wthn ther
specfc areas. They mantan roed up budgets, track busness cost savngs,
ensure tranng goas are met, coach Functona and Process Managers, Pro|ect
Leaders and Empoyees, revew pro|ects at mestones, share best practces,
and ensure approprate use of toos and methodooges.
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Sx Sgma tranng for Ouaty Leaders ncudes detaed nformaton about the
concept, methodoogy and toos, as we as detaed statstcs tranng and
computer anayss too use. Dependng on the nstructor, the duraton s
usuay between three and four weeks.
#. (roGect !eaders
Pro|ect Leaders, aso known as Back Bets, mpement the Sx Sgma
methodoogy and toos wthn the busness. They ead the ntra- and nter-
functon pro|ects, mantan tme nes and budget, determne approprate too
use, perform anayses, and act as the centra pont of contact for specfc
process mprovement pro|ects.
Sx Sgma tranng for Pro|ect Leaders ncudes detaed nformaton about the
concept, methodoogy and toos. Dependng on the nstructor, the duraton s
usuay between two and four weeks, and may ncude one of more weeks n
between sectons. Statstcs s ncuded n the agenda, but typcay does not
ncude as much deta as that provded to Ouaty Leaders.
%. .mployees
Empoyees, aso known as Green Bets, may aso take Sx Sgma tranng
courses deveoped specfcay for part tme Pro|ect Leaders. Sx Sgma tranng
for Green Bets s smar to Back Bet tranng, but shorter n duraton because
ess deta on compex toos and statstcs s provded. Empoyees are nstead
tod to ask ther Back Bet for hep n specfc areas.
*raining the <rganiFation for Six Sigma
Sx Sgma s essentay a comprehensve yet fexbe system for achevng,
supportng, and maxmzng busness profts. It s a methodoogy drven by
understandng customer needs, and the dscpned use of data, facts, and
statstca anayss to mprove and renvent organzatona processes.
So what does ths reay mean? How s t depoyed? How can t be best
empoyed for maxmum advantage wthn your organzaton?
The Sx Sgma Tranng and Ouaty Tookt s desgned to hep address a
these ssues and more. It contans a whoe seres of resources to hep expan,
smpfy, and set you on the rght path to mpementaton of Sx Sgma.
1. *he Six Sigma Buality &anagement Ait
Each tem s of the hghest quaty, taor made to cover a dfferent aspect and
ssue. It ncudes presentatons, questonnares, fact sheets, gudenes.... a
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whoe range of materas specfcay put together to both ntroduce, and take
you through, Sx Sgma. Uness otherwse stated, each eement s provded n
MS-Word format for fexbty, contro and ease of use. The kt ncudes the
foowng:
". A Six Sigma Beginners 5uide
Ths s a comprehensve ntroducton to, and overvew of, Sx Sgma. It expans
the concepts, the statstca practcates, the tranng regme, and much more.
3. A M'(')*+*(, P-*.*(,',/0(
Ths PowerPont presentaton s desgned to expan the key concepts and
benefts to management/executves and provde gudance on how to avod the
common ptfas.

#. *he Six Sigma alculator
Ths smpe to use but powerfu Exce based cacuator aows you to enter
vaues nto ces and see the equvaent Sx Sgma resut.
%. *he Six Sigma 9act Sheet
Ths s a most concse summary of the Sx Sgma method and process and s a
handy reference gude for everyday use. It ncudes expanatons of: why t
exsts, the sgma ob|ectves, the statstca bass (n easy to understand
anguage), the certfcatons, and how to use t to mprove.
). *he Six Sigma *raining *utorial
Ths extensve document s nothng short of a fu tutora on the topc. Sectons
ncude: The Hstory of Sx Sgma; Sx Sgma Costs and Savngs; What s Sx
Sgma?; Crtca to Ouaty-CTO; Why s DMAIC Sgnfcant n Sx Sgma?;
Benefts of Impementng Sx Sgma; Who Are the Sx Sgma Practtoners?;
Desgn for a Sx Sgma Roadmap.

+. A $eHuirements *emplate
One of the most mportant aspects n undertakng any ma|or ntatve s to
understand what the requrements for the ntatve are. Ths exceent
tempate document s desgned specfcay to assst wth ths task.

-. *he Six Sigma I*op Do4nI Eote3oo'
48/59
Ths document s desgned to expan how to approach Sx Sgma wthn an
organzaton. It offers gudenes for a top-down approach, presented n a
coorfu and peasng manner.
/. A Six Sigma Wor'shop (resentation
Ths s a fu and detaed presentaton, gvng a detaed apprecaton of Sx
Sgma for the practtoner. It ncudes both speaker notes and exercses.

11. Six Sigma and I*I! =It Infrastructure !i3rary>
Wthn IT, ITIL has emerged to defne best practce through a detaed set of
processes. As there s sometmes seen to be consderabe theoretca
commonaty wth Sx Sgma, ths substanta document s ncuded for those
specfcay consderng IT.
As a bonus, an ITIL assessment kt s aso ncuded. Ths comprses a detaed
Exce questonnare and scorng mechansm.
!arge organiFations that have adopted six sigma
These are some the arge Indan and Internatona organzatons that
have used Sx Sgma. There are thousands more a over the word.
:&
AB Dic'
Adolph oors
Advanced &icro
Devices
Allied Signal
Alcoa
Aeropspace orp
A33otts !a3s
Apple omputer
Ban' of DSA
Beatrice 9oods
Bell Helicopter
Boeing
Bristol &yers
SHui33
ity of Dallas
amp3ell Soup
hevron
iticorp
lorox
Danon
Do4
9idelity
Intel
9ord
5eneral
Dynamics
5.
H(
Honey4ell
Aaiser
Aluminium
Infosys
Araft 5eneral
9oods
!ear Astronics
!oc'heed martin
&cDonnell
Douglas
&icrosoft
&otorola
EASA
Eorthrop orp
(entagon
(ar'vie4
Hospital
$oc'4ell Int
$ohm and Haas
III
HD9
Wipro
Seagate
Sony
Star Buality
*exaco
*exas
Instruments
*$W
DS Army
DS Air 9orce
Dnited
*echnologies
D(S
Jerox
Airtel
Bharti
*A*A
$eliance
*S
49/59
Dse Six Sigma *ools to &eet IS< /111 $eHuirements
One of the ma|or dfferences between both systems s that ISO 9000 s a she
of requrements wthout any toos, whereas Sx Sgma s a methodoogy
connectng toos and procedures for appyng these toos through a "red
thread." Requrements of ISO 9000:2000 are, for exampe:
Defne quaty management nformaton needs
Coect quaty management system data
Provde quaty management nformaton
Improve quaty management system
Toos provded by Sx Sgma to meet these requrements are, for exampe:
Dashboards as a set of key performance ndcators to montor a processes at
a reasonabe degree for a reevant managera eves.
Operatona defntons to descrbe exacty how, when, where, wth whch toos,
by whom, how often and how much data shoud be coected. Addtonay, Sx
Sgma provdes toos to address such questons as sampe sze and precson
as we as capabty, repeatabty and reproducbty of data coecton.
Data dspays to hep draw busness-reevant concusons and tests to |ustfy
the sgnfcance of concusons drawn from data coected.
D&AI; Defne-Measure-Anayze-Improve-Contro as a methodoogy for
process mprovement at a pro|ect eve, whch s - after necessary
customzaton - appcabe to a knds of processes.
Dse the IS< /111 9rame4or' to Assess a Six Sigma
System
Lookng at the new ISO 9000:2000 requrements and comparng these
requrements wth the sef-deveoped Sx Sgma gap-anayss shows the
possbty of connectng both approaches and systems wth each other. Sx
Sgma does not come wth the assessment too per se. Ths too needs to be
added after a certan tme frame n order to keep the ba rong and n order
to hep Sx Sgma get nto the company's boodstream. ISO 9000 s desgned to
assess companes based on both externa and nterna requrements and to
hep cose the gaps on a md-term and ong-term bass. By addng typca Sx
Sgma requrements to the ISO 9000:2000 nterna audt questonnares, a
company can make Sx Sgma part of ts quaty management system and
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mprove the effectveness and effcency of the Sx Sgma ntatve
sgnfcanty. A sde effect s that both approaches get agned and do not
compete for resources any onger. Snce the goas of the two approaches are
the same, there s a greater kehood of an ncrease n bottom-ne and top-
ne resuts on a ong-term bass to ncrease customer satsfacton and
empoyee commtment.
onclusion; Improve redi3ility and Sustaina3ility
It s a waste to have a quaty management system and process mprovement
approach exstng sde-by-sde wthout any ntegraton. Agnng ISO 9000 and
Sx Sgma can hep mprove the credbty of the ISO 9000 quaty
management system and the sustanabty of the Sx Sgma ntatve at the
same tme. It can save resources and nvestments; and t enrches the way to
manage the busness.
Six Sigma and Buality &anagement 5lossary
Many of these terms are very specfcay reated to Sx Sgma. Others are used
n a genera 'quaty management' context and aso n Sx Sgma. As aready
expaned, Sx Sgma tends to embrace many other methodooges. A few of
these terms are qute technca snce they occur n the statstca, engneerng
and mathematca aspects of Sx Sgma. The more compex mathematca
terms and acronyms are ncuded n ths gossary not to provde detaed
expanatons, but nstead to enabe nta recognton and a bass for further
nvestgaton, f you are so ncned. Ths sma gossary s not exhaustve
because t woud take about ten years to compe an exhaustve Sx Sgma and
Ouaty Management gossary. Ths s |ust a few hghghts, some ponts of
carfcaton, words of warnng, tems of md amusement, and terms of speca
note. The reay obvous STBO terms have not been ncuded. If you need a
more detaed stng try the one on the Sx Sgma webste whch coud keep
you occuped for days. If you wsh to nomnate an tem of Sx Sgma or Ouaty
Management termnoogy for ncuson here - especay an amusng or
ntrgung exampe - pease send to me. Despte beng competey fascnatng
of course, Sx Sgma s possby s one of the drest sub|ects I've ever
encountered and so w beneft from as much ght reef as you can suggest.
Acceptance2 and accepta3le Huality level =A!> - Acceptance has at east
two dfferent meanngs n Sx Sgma termnoogy, so be carefu to understand
whch one s beng referred to. Frsty, acceptance reatng to quaty s the
quaty expectaton of the customer, nterna or externa. Acceptabe Ouaty
Leve (ACL) means the same bascay, n more forma Sx Sgma-speak, and
whch w frequenty be expressed n terms of percentage defects. Secondy
acceptance refers to the buy-n or agreement of peope affected by proposed
actons and changes, notaby stakehoders. Whe not strcty part of the Sx
Sgma battery of supportng toos, I can strongy recommend Sharon Drew
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Morgans factatve communcatons concepts for anyone struggng wth
stakehoder acceptance (and whoesae organzatona change as we for that
matter.)
Activity report @ A smpe too whch enabes teams and team eaders to
manage pro|ect management tasks, responsbtes and tmescaes.
Affinity diagram @ A dagrammatc method of capturng, anayzng and
organzng ots of deas, eements, actvtes, etc., that together represent or
nfuence an overa category, such as a process or ssue. The branstormng
method s centra to structurng an affnty dagram, and 'post-t' or stcky
notes are commony used as a way of generatng and organzng data.
Commony used n branstormng soutons durng the Improve stage of DMAIC.
Analysis @ Anayss of a sorts of data s a crtca component wthn the Sx
Sgma mode, whch nvoves usng varous anaytca methods to dentfy and
quantfy the causes of quaty varaton and faure n specfc processes.
Varous anayss perspectves are adopted, for exampe:
Discrete - ookng at a partcuar faure or probem - eg., usng Pareto
('80:20') or pe-charts to show causes by percentage
contnuous - mappng performance varaton and types, etc., over tme, usng
dstrbuton graphs
(rocess @ creatng detaed fow-dagrams to understand what's reay gong
on n the process or sub-process
ANOVA, ANCOVA, MANOVA, MANCOVA - Despte frst mpressons these are
nothng to do wth Russan gymnastcs or ce-skatng moves. ANOVA s an
acronym for anayss of varance, a specazed varaton cacuaton method
concerned wth comparng means and testng hypotheses, best eft to
engneers and mathematcans. So are the reated methods, ANCOVA (anayss
of covarance), MANOVA (mutpe anayss of varance), and MANCOVA
(mutpe anayss of covarance). Uness you are an engneer or a
mathematcan you w amost certany have better thngs to do than get to
grps wth ths eve of statstca capabty. Terms such as these ustrate why
we need to work n mut-dscpned teams.
baanced scorecard - A sophstcated strategc anayss and mprovement
methodoogy deveoped by Kapan and Norton whch n ts own rght can st
outsde Sx Sgma, but whch can be ncuded wthn Sx Sgma methods, and n
any event mght be used or referenced n the context of quaty and
performance mprovement. The Ibaanced scorecard' dentfes, correates,
'baances', measures and drves mprovement across a wde varety of factors
that are deemed responsbe for overa organzatona effectveness, and for
meetng customer expectatons. The too essentay transates strategy nto
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operatona metrcs, and accordng to Motoroa (e., n a Sx Sgma context)
typcay features the perspectves of, vson, current ntatves, busness
processes, and busness resuts. 'Baanced Scorecard' became a generc
'brand' for busness mprovement n the 1990's, rather ke Sx Sgma, athough
arguaby not on such a grand scae.
Blac' 3elt - A specfc Sx Sgma term to descrbe a team eader and one who
has acheved accredted 'Back Bet' quafcaton va an approprate tranng
course.
Blac' noise04hite noise - Technca terms reatng to respectvey non-
random and random causes of varaton.
Business improvement campaign - A Motoroa Sx Sgma buzz-phrase,
whch represents a eadershp ntatve to mprove the busness's 'bg Y's'.
Business process management - A common generc expresson n ts own
rght, but aso a Sx Sgma term for the nta strategc eement of Sx Sgma.
Sx Sgma's strategc frst phase s desgned to deveop management's
commtment to Sx Sgma, and aso management's actve partcpaton n the
Sx Sgma process (whch suggests why a powerfu brand name for the
ntatve, e., Sx Sgma, s hepfu..). Ths amounts to dentfyng the key
processes wthn the organzaton that determne effectvey meetng customer
expectatons; then measurng the effectveness and effcency of the processes
(notaby measurng varaton n quaty and anayzng the causes), and then
ntatng mprovements n the weakest processes, whch shoud ogcay yed
the greatest resuts and return on effort.
ause@effect diagram - Aso known as the fshbone dagram, ths s a
generay used too for mappng and anayzng causa factors towards an end
output, so that contrbutng factors (and weaknesses can be more easy
dentfed). Used especay n Sx Sgma as a team branstormng anayss too.
Caed a fshbone dagram because the dagram pots contrbutng factors
aong parae dagona nes whch each |on a centra horzonta tme-ne (ke
the back-bone) whch cumnates at one end wth the man ssue or queston.
*B - Crtca To Ouaty - An eement wthn a process that has a ma|or
nfuence on the process quaty, and typcay the quaty of a crtca process,
or t woud be unkey to be recevng Sx Sgma attenton.
Defect - A vta and generc Sx Sgma term for any faure n meetng
customer expectaton (nterna and externa customers) - any faure wthn the
devery process.
D9SS - Commony used abbrevaton n Sx Sgma actvtes and
communcatons, t means Desgn For Sx Sgma, and descrbes the method of
usng toos, tranng, measurements, and verfcaton so that products and
53/59
processes are desgned at the outset to meet Sx Sgma requrements. A more
specfc verson s DMADV: Defne, Measure, Anayze, Desgn, and Verfy. Both
DFSS and DMAVD are concerned wth, and emphasse the mportance of, usng
Sx Sgma prncpes n product/process desgn, not |ust for remeda
mprovements - rather advocatng that preventon s better than cure. Thus, f
Sx Sgma capabty s but nto new organzatona systems and products
when they are desgned, so performance w be better, and the need for Sx
Sgma remeda effort w be reduced.
D&AI0D&AI* - Centra Sx Sgma process and acronym to ensure you
remember t: Defne, Measure, Anayse Improve, Contro, more recenty
extended to DMAICT by others n the Sx Sgma consutng and tranng
communtes, to Transfer (transfer best practce and thereby share earnng).
DMADV - An aternatve/substtute abbrevaton to DFSS (Desgn For Sx
Sgma), and ke DFSS DMADV s centra to Sx Sgma ntatves. DMADV more
specfcay descrbes a method comprsng nked steps; Defne, Measure,
Anayze, Desgn, Verfy, for ensurng that products and processes are desgned
at the outset to meet Sx Sgma requrements.
frequency dstrbuton/frequency dstrbuton anayss or checksheet -
Frequency dstrbuton and the checksheets and other frequency dstrbuton
measurement toos form an essenta aspect of Sx Sgma data anayss.
Identfyng frequency of varaton n processes s centra to Sx Sgma, snce
customers are partcuary senstve to varaton, arguaby even more than
soated faures. Therefore the sampng and coecton of data over many
operatons and extended tme perods, and the use of ths data to ndcate the
frequency (number of tmes) that a varaton occurs rather than the sze of
soated faures, s an essenta perspectve for truy understandng what's
happenng, and the causes, wthn any crtca devery process. Frequency
dstrbuton anayss s an exceent antdote for any temptaton to respond to
an soated faure wth a knee-|erk quck fx, such as shootng the messenger
or boockng the workers when somethng deeper n the process s awry.
5reen Belt - A Sx Sgma team member who has receved Green Bet tranng
and who works part-tme on Sx Sgma pro|ects under the gudance of a Back
bet team eader.
Kust in *ime =KI*> - |ust In Tme, commony abbrevated to |IT, descrbes
operatona or producton methods based on mnmsng stock eves, the am
of whch s to reduce capta empoyed n stock, whch aso has knock-on
benefts to reducng storage space, decreasng dependence on ogstcs, easer
suppy chan management, and better overa quaty. |ust In Tme s actuay a
capabty arsng from mprovements wthn a busness operaton, rather than
a cause of mprovement tsef. Introducng |ust In Tme methods wthout
mprovng effcency and reabty necessary to support t s not vabe. Snce
|ust In Tme methods enta reducng stock eves to absoute mnmum or even
54/59
zero, |IT aows no room for error. Tmng and predctbty are cruca. |IT
requres tota commtment to quaty and effcency or the suppy chan and
reated operatons break down, the costs and mpcatons of whch can easy
exceed any savngs from |IT stock reductons. The term and methodoogy were
deveoped by the |apanese durng ther post-war ndustra revva (second haf
of the 1900s) as a ogca progresson from 'materas requrements pannng'
(MRP). The |apanese orgna termnoogy s 'kanban', and s mportant wthn
'ean producton' methodoogy. The am of kanban s actuay zero nventory.
|IT features n hghy effcent manufacturng corporatons, and has more
recenty been sgnfcanty enabed by computerzaton, especay to anayse
and manage tmngs rather than stock eves. Noted authors to have covered
the sub|ect ncude Edwards Demng, Tach Ohno, and Yasuhro Monden. The
acronyms page contans a more amusng defnton of |IT.
&aster Blac' Belt - A hghy quafed Sx Sgma practtoner, typcay
concerned wth overseeng Sx Sgma actvtes from an organzatona
perspectve.
&aterials $eHuirements (lanning =&$(> - producton quaty management
methodoogy focusng on pannng stock (materas and components of a
sorts) eves and avaabty accordng to producton schedues.
(areto (rinciple2 (areto Diagram2 (areto Analysis - The Pareto Prncpe
s otherwse and more commony known as the 80:20 rue. The Pareto Prncpe
was named after ts orgnator Vfredo Pareto, (1848-1923) an Itaan
economst and professor of potca economcs at Lausanne Unversty, who
frst dscovered the 80:20 'rue' of 'predctabe mbaance', that (as far as Sx
Sgma s concerned) provdes a bass for focusng on the 20% of actvtes that
generate 80% of resuts, or the 20% of faures that are responsbe for 80% of
the waste, etc. Pareto frst made hs dscovery whe anaysng weath
dstrbuton among the Brtsh, n 1897. The Pareto Prncpe s aso known as
The Parato Law, The Prncpe Of Least Effort, and The Prncpe Of Imbaance,
whch n themseves provde an exampe of the Pareto Prncpe n acton
because despte a the optons, hardy anyone ever uses any other name than
'The 80:20 Rue'. More Pareto expanaton and exampes n use.
Process - The word process s worth mentonng because t s a fundamenta
cause of confuson (and not |ust n Sx Sgma, but that's another story). The
word process s used heavy n descrbng how Sx Sgma works, and t's aso
used heavy n referrng to the servce or producton actvtes (processes) on
whch the Sx Sgma methods (or processes) are drected. You see what I
mean... It s both the sub|ect and the ob|ect. Peope easy get confused by
termnoogy at the best of tmes, so t's worth takng extra care when usng
words ke process whch have at east two dstncty dfferent meanngs. For
exampe avod phrases such as "Sx Sgma s a process that uses processes to
mprove processes." It's true, but ts a oad of boocks. So, when usng the
word process, check that peope know what process you are actuay referrng
55/59
to, and then you w have a fghtng chance of not dsappearng up your own
backsde.
(rocess &apping - dagrammatca representaton of how processes work, as
coud be used and deveoped n team meetngs on a fp-chart, or other meda,
to enabe teams to understand processes, partcpants, and where and how
mprovements mght be made.
(roduction (lanning - generc term descrbng the over-archng methodoogy
used n managng the suppy process from recept (or forecast) of customer
requrements through to devery notes and nvocng. Producton pannng
therefore ncudes:
nterpretaton of customer orders/requrements
works orders
schedues and computer programs/ mpcatons
parts, stocks and materas
machnery, pant, equpment avaabty and aocaton
peope and teams
quaty and other targets - settng and montorng
stock and purchasng montorng and records
order processng, admnstraton and accountng
necessary nter-departmenta ason (e.g., saes, export, etc)
Producton pannng s typcay hghy moduarzed and computerzed snce
process reabty s cruca and s systematcay repeated, athough
producton pannng must aso aow for varaton n response to saes or other
changng demands and product specfcatons. Producton pannng s generay
a weeky and monthy requrement, as we as ncorporatng onger-term
commtments and consderatons. The partcuar saes envronment and
predctabty of the market and busness have ma|or mpacts on producton
pannng. Voate markets and unpredctabe saes obvousy make producton
pannng more dffcut. Costs and budgets, heath and safety, envronmenta,
and other ndrect consderatons or compances are of course reevant to
producton, but not drecty, and so are not ncuded as ntegra parts of the
process.
O x A = E - a natty tte formua advanced by Sx Sgma wrter George Eckes
for emphassng and assessng the need for Sx Sgma pro|ects to feature both
strong technca quaty (O), and strong acceptance by the stakehoders of the
pro|ect team's proposed soutons (A). E represents the exceence of the
resuts, athough why t shoud be E and not R rather defeats me. Whatever,
the dea s a sound one, n that A s a mutper and shoud aong wth O shoud
be assessed n smpe terms at the eary phase of a Sx Sgma pro|ect. Eckes
suggests scorng each of O and A out of 10, and that f E equas anythng ess
than 60 then the pro|ect s unkey to succeed, wth the mpcaton to return to
mprovng technca quaty and stakehoder buy-n.
56/59
Six Sigma - how ong have you got?.... at ts most basc Sx Sgma equates to
3.4 defects per mon opportuntes; at ts most sophstcated (dare one
suggest most hyped?..) Sx Sgma s an organzatona phosophy.
Soft S'ills - sks requred for managng peope, reatonshps, acceptance
and effectve communcatons. A potenta area of vunerabty n many Sx
Sgma mpementatons, because of the predomnance of Sx Sgma team
eaders wth strong process sks and attenton to deta, whch can sometmes
be at odds wth the abtes of ntuton, empathy, rapport-budng,
reatonshp-budng, and other 'soft' peope-sks.
Sta'eholder - vtay mportant aspect, ths one: stakehoders are not |ust
customers, stakehoders are a the peope who are affected by the soutons
dentfed wthn a Sx Sgma pro|ect, and a the peope wth some nvovement
n mpementng the soutons.
*ollgates - breaks for revew between Sx Sgma processes wthn any of the
DMAIC stages.
*ree Diagram - pctora representaton of how a broad am s broken down
nto detaed actons, and whch beong to named ndvduas or departments. A
mappng technque that promotes creatve thnkng towards detaed causes
and effects and accountabtes. Heps to avod tendences for actvtes and
accountabtes to be eft too vague.
X's/bg X's - Motoroa Sx Sgma-speak for factors or varabes that have the
greatest mpact on the 'bg Y's'.
Y's/bg Y's - Motoroa Sx Sgma-speak for the most mportant busness resuts
and measures that are nked to crtca customer requrements and
expectatons.
ase Study ; Six Sigma Implementation in Bharti
Broad3and
Bhart Broadband Networks (BBNL) s a eadng ntegrated broadband servce
provder operatng n the broadband, Internet and VSAT markets. It provdes
customsed and ntegrated soutons to corporate customers. The company had
a goa of deverng error-free servces to customers by dong the |ob rght the
frst tme, every tme.
Wth the quaty ob|ectve havng been decded, an executve commttee (EC)
comprsng nne offcas, ncudng the CEO, was formed. The commttee
studed varous other quaty toos and processes ke ISO and TOM n addton
to Sx Sgma. The choce for Sx Sgma was made as t was cosey agned wth
57/59
the outned quaty ob|ectve. Accordng to Ashok |une|a, CEO, BBNL, "We
reased that the teecom ndustry s undergong rapd change and so are
customer requrements. Sx Sgma met the requrements of ths changng
envronment." There were aready severa case studes of successfu Sx Sgma
mpementatons n arge companes ke GE, Motoroa, Wpro, TCS and Satyam.
&a'ing the customer a priority
Havng decded upon IGE as the consutant, the Sx Sgma ntatve was
formay aunched n |une 2003 wth the tagne: 'Sx Sgma-my customer, my
prorty'. The company has outned that mprovng customer satsfacton s the
busness ob|ectve for frst year of the ntatve. The executve commttee
dentfed the processes that were n con|uncton wth ths focus area.
In the frst phase, crtca busness processes were agned wth busness
ob|ectves. The crtca ob|ectves dentfed are customer satsfacton,
empoyee satsfacton, mprovng revenue and free cash. Frst, the pro|ects
wth processes mapped aganst these ob|ectves were to be undertaken. And
then the quaty mprovement pro|ects for exstng and new products were to
be undertaken. Amost 85 percent of Sx Sgma pro|ects at BBNL are based on
customer satsfacton.
A cross-functona team was formed to tacke each pro|ect. The team
comprses a sponsor, a eader and four to fve team members. The eader, aso
caed the 'Champon' can be ether a Green Bet or Back Bet. The duraton for
each pro|ect can range between three to four months. For the frst phase the
team chose 15 crtca pro|ects that offered substanta gans. Back Bets are
nvoved fu-tme n the quaty mprovement process whe Green Bets spend
around 8-10 percent of tme on quaty mprovement. A Back Bet can be
engaged n two to three dfferent pro|ects smutaneousy.
Each pro|ect foows a fve-phase methodoogy. These ncude defnng and
quantfyng the probem, measurng the defect rate, .e. the basene. Ths s
foowed by the anayss phase where anayss s done on when, where and
how the defects occur. The fourth step s mprovement, fndng probabe
soutons and appyng them. The fna step s contro n terms of sustanng the
mprovements. BBNL s appyng Sx Sgma to processes for tmey compant
resouton, tmey order mpementaton, tmey nvoce submsson and NOC
compant resouton.
When the teams started measurng crtca busness processes they found that
the basene was not as per customer expectatons. There were gaps of around
30-40 percent n some processes. The basene havng been measured, targets
were set for mprovng the processes. After anaysng defects, process
mprovement kcks n. Smpfyng the process nstead of changng the entre
process brngs n the mprovement. The too essentay requres fne-tunng
the process and emnatng those that do not add vaue. "When you are
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smpfyng the pro|ects productvty goes up wthn the same resources,
thereby eadng to optmum utsaton of the resources," says |une|a. One of
the ways of smpfyng processes s to use IT for automatng processes.
The executve commttee contnuousy montors the pro|ects. There are
monthy revews carred out by the Champon, Sponsor and IGE. A quaty
dashboard has aso been created, wheren every month performance s
reported. The CEO and the COO montor whether the ob|ectves are beng met.
Benefits
In sx months BBNL had acheved tmey compant resouton 66 percent from
the basene, tmey order mpementaton up 70 percent from basene, tmey
nvoce submsson up 51 percent from basene and NOC compant resouton
that was 49 percent from basene. The Sx Sgma process mprovements have
transated nto productvty enhancements, mproved customer satsfacton
and process effectveness. BBNL s targetng an estmated savng of around Rs
10 crore n the frst year of operaton.
The target was to acheve 99 percent (.e. approxmatey four Sgma eve)
('Frst Tme Rght') wth respect to respectve set norms by March 2004 on a
key crtca processes. Snce Sx Sgma s a contnuous mprovement ntatve,
the company w be undertakng another busness ob|ectve for the next
fnanca year. On the future roadmap are Sx Sgma for a processes and
hgher E-SAT (empoyee satsfacton) and C-SAT (customer satsfacton) ndex.
BBNL pans to get amost 90 percent of the empoyees to be Green Bets by
2005, wth amost 100 percent of the empoyees to be nvoved n the Sx
Sgma |ourney by the same tme.
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