Professional Documents
Culture Documents
Course Objectives
The objectives of this workshop are: To explain the purpose of Six Sigma and the Six Sigma approach. To discuss Six Sigma implementation. To discuss the process for setting up Projects and deploying project teams.
Course Contents
1. Six Sigma Overviews
2. 3. 4. 5. The DMAIC Process Steps and Tools Six Sigma Implementation Collective Decision Making Define: Set Up Projects and Deploy Teams
Section 1
Six Sigma Overview
RESULTS
Improvement Tools
Comprehensive and Integrated Set of Effective Improvement Tools
Quality Principles
A Set of Sound Underlying Concepts
Results-Examples
Allied Signal
Turn around from weak financial position in late 80s. US$3.2B cost savings during 1996 and 1997.
General Electric
Achieve 40% increase in operating margin. Develop a better leadership for todays more competitive world.
1980s
1960s
Six Sigma Lean Manufacturing Business Process Reengineering ISO9000 Total Quality Management Just In Time (JIT)
2000s
1930s
TQC (Total Quality Control) SQC (Statistical Quality Control) Testing and Inspection
1981
1980s
Bill Smith discovered the correlation between market failures rate and manufacturing defects rate. At Government Electronics Group, under the leadership of Mikel Harry, experiments with problem solving through statistical analysis showed dramatic results. Mikel Harry began to formulate a methodology for applying statistical tools for problem solving. His work culminated in a paper titled The Strategic Vision for Accelerating Six Sigma Within Motorola.
1990
Robert Galvin asked Mikel Harry to start up and lead Motorolas Six Sigma Research Institute. The mission was to develop Six Sigma implementation strategies, deployment guidelines, and advanced statistical tools that would work in a variety of companies and industries.
General Electric
AlliedSignal
Motorola
1987 1992 1995
Motorola
AlliedSignal General Electric Sony
- Defect reduction
- Manufacturing processes - Operational excellence - Include non-manufacturing processes - Financial results - Design for Six Sigma (DFSS) - Leadership development
2000
- Management Quality
Define
Performance Measures
Champions
Dashboard Process Improvement (projects) Bottom Line Improvement
Data Measure +
Analysis
Black Belts & Green Belts M-A-I-C Tools
Financial Benefit
Objective
A CTQ 2
Sub CTQ 2
Sub CTQ 3 Sub CTQ 4
Project 2
Project 3 Project 4
Objective
Sales Orders
Production Output
Sales Lead Time On Time Delivery Order Fulfillment Customer Complaints Process Yield Down Time
New Products
Process Efficiency Time to Market Market Success Rate Design Changes Material Price Material Usage Rate
Profitability
Manage Cost
Lot Reject Rate WIP Rejects Material Rejects Electricity Water Gas
Teamwork
Coming Together Is A Beginning Keeping Together Is Progress Working Together Is Success
Henry Ford
Citibanks Regional Cash Product Management Unit in Asia Pacific improved the defect rate of its fund transfer process to 4.95 sigma level.
Responsibility
DEFINE
MEASURE ANALYZE IMPROVE CONTROL
Champion
Green Belt
Black Belt
Control
Process Map Brainstorming Dashboard CTQ Drill Down Cause & Effect analysis Pareto diagram Selection Matrix Project Charter
Pareto diagram Brainstorming Nominal group technique Scatter plot Box plot Stratification FMEA Process C&E matrix Interval Estimate Hypothesis Test Process mapping and analysis
Creativity Techniques Selection matrix Design Of Experiments Force field analysis Potential risks assessments Stakeholder analysis Process Capability
Control plan Documentation system Control charts On the job training Story board
D] LEAN
Value Stream Mapping Seven Major Wastes Flow-based Processing Kan ban System Set-up Reduction Mistake Proofing Visual Management Take Time Total Productive Maintenance
What is Sigma?
Sigma (Greek letter ) is a symbol for statistical unit of measurement
called standard deviation that measure the variability of data from the mean. In Six Sigma program, Sigma is an index for measuring the capability of process to produce defect free products or services. A defect is any mistake that results in customer dissatisfaction.
The higher the sigma level, the less likely a process will produce
defects. As sigma increases, costs go down, cycle time goes down, and customer satisfaction goes up.
Process Variation
Input Process Output
All businesses are a system of interconnected processes. Variations exist in all processes. Variations in processes result in process outputs variability. Understanding and reducing process variability is the key to improving the capability of a process to produce defect free products or services.
10
20
30
40
50
60 (minutes)
Defects Less variability means less defects will be produced. Less defects means better capability in meeting customer requirements.
Process Capability:Sigma
Process Sigma Defect Per Million Percent Good Competitiveness
2 3
308,538 66,807
69.2% 93.3%
Noncompetitive Companies
4
5 6
6,210
233 3.4
99.4%
99.98% 99.9997%
Average Companies
Activity 1
Activity 2
Activity 3
Re-do
Re-check
Re-do
Re-check
Re-do
Re-check
Lost Customer Goodwill
Re-check
Indirect Loss
20 25%
Of Sales
Opportunity For Increasing Profit Margin
Expediting Costs
Ad-hoc meetings Service Recovery Corrective Actions Lost Customer Goodwill Longer Cycle Time
(308538dpmo)
(66807dpmo)
(6210dpmo)
(233dpmo)
(3.4dpmo)
Sigma Level
Bulk of Fruits (~ 5 Sigma) Low Hanging Fruits (~ 4 Sigma) Ground Fruits (~ 3 Sigma)
Through Six Sigma management: - makes known the intention to achieve excellence, - provides the enabling skills and knowledge, - creates the supporting infrastructures and mindset, and makes breakthrough improvement possible.
Section 2
The DMAIC Process Steps and Tools
Step 1
2 3
Task
Identify Focus Areas / Key Performance Measures Set Up Project and Deploy Team Define Key Process Output Variable Develop Data Collection Plan Determine Process Current Performance
MEASURE
4 5
Step 6
7 8 9
IMPROVE
10
CONTROL
11
12
A tool that is commonly used for this purpose is the Tree Diagram
Increase Sales
Sales Orders
Production Output
Sales Lead Time On Time Delivery Order Fulfillment Customer Complaints Process Yield Down Time
New Products
Process Efficiency Time to Market Market Success Rate Design Changes Material Price Material Usage Rate
Profitability
Manage Cost
Lot Reject Rate WIP Rejects Material Rejects Electricity Water Gas
Alternatively, the SIPOC diagram is used. SIPOC is more suitable for non-profit organization or supporting departments.
SIPOC Diagram
[ Supplier Inputs Process Outputs Customers ]
Inputs
Process
Outputs Customers
Suppliers
Competitive Pressure
Issues of Concern
Project Charters
Project Charter
Project charter is a document created at the outset of a project to assign the project to the team.
It is an important tool for building committed project team.
A Team Charter should specify the followings: - Project title. - The process involved. - The business case and problem statement. - The goal statement. - Estimated financial benefits. - Name of Champion. - Team leader and members. - Project time line.
Right Result
Why is it necessary to measure the process output? To quantify the current performance level. To objectively evaluate the gap. To aid in the analysis of key input factors. To verify the effectiveness of the improvement solutions..
Proportion defective / Proportion resubmission Defect per unit / Error per unit / Callback per unit Process capability ratio (Cpk, Ppk) Cycle time / Turn around time / Service response time / Queue time On time delivery / Span Proportion of value adding activities Availability of personnel / material / facility
And Then
Minitab
A powerful data-analyzing software which can help us have a good knowledge of current performance
Identify possible causes using brainstorming and organize the information using cause and effect diagram
Customer Related
Customer Payment Policy Customer Location Customer Financial Position Customer Acct Payable Process
Invoice Related
Money Amount In Invoice Errors In Invoice
Product Quality Problem No Follow Up On Past Dues Relationship With Customers Customer Type
Invoicing Method
Others
Use structured discussion and teams collective knowledge to narrow the possible causes down to a few most probable causes. Team leader to facilitate this narrowing process. It is important for the team to gain a common understanding on the possible causes before starting the narrowing process.
Choose the most suitable tool for this purpose. ( Multi-voting, nominal group technique, selection matrix )
Think
- How to get it done. - Try and make it works. - We can convince them. - Lets see if there is a better way. - If we dont try, we dont know.
Using Force Field Analysis to evaluate in detail the idea of giving rebate if customers pay on time for those invoices with high dollar values.
Driving Forces + Increased cash flow of about $ xx. Contribute $ xx to financial benefits.
- Restraining Forces An estimated $ xx will be incurred as rebates. An estimated xx hrs of administrative efforts. An estimated total costs of $ xx will be incurred by the company
Irene
18May
Peter
30May
Adeline
30May
Project can be closed when: - The project phases have been completed. - Project documentations have been completed. - Improvement plan documented.
Share the lessons learned and knowledge gained with other related processes / areas.
Analyze Examine Current Process Look for flaws in current process. Examples of process flaws: - Waiting - Duplication - Nom-value adding activities - Unnecessary check / approval - Errors - Re-do
Analysis Summary
A] Waiting - Visual inspection does not start until laboratory tests have been completed. - Store supervisor waits for the test certificates before he can prepare the shipments.
B] Duplications - Packers record product names,lot numbers and quantities and send these information to store.Store supervisor key in the same information into the finished goods inventory system. C] Non-value Adding Activities - Unnecessary movements involved in sending information or documents around.
Improve Identify Improvement Solutions A] Reduce waiting - Laboratory tests and visual inspections to be performed concurrently. - Store supervisor prints test certificates from computerized workflow system. B] Reduce non-value adding activities & duplications - Packers key in product information into finished goods inventory system. - Reduce document movements by installing a computerized workflow systems. - Empower QA technicians to decide lots acceptance based on the specification.
A business unit in Johnson & Johnson employed Six Sigma to resolve a distribution channel problem and create an improved data management system for sales reporting process. Prior to redesign the process, the company estimated that sales reps spent approximately 15% of their time on reporting activities, diverting their attention from selling. After completing the project, the company cut the time spent by sales reps on reporting activities in half. Source: Corporate Executive Board A home appliance company was facing a high number of no-fault found problem. This occurs when a repair technician is send to look into a fault reported by a customer and found out that it is not a real fault.After collecting the data to understand the problem, an effective solution was found. The solution is to get the receptionists to filter out the non-fault problems. Thos involves training the receptionists to clarify the type of faults reported by the customers and be able to explain to customers on how to operate the appliance correctly over the phone.
Source : baldrigeplus.com
Human Resource
A business unit in Johnson and Johnson identified sales force turnover as a significant threat to sales productivity. Therefore it used Six Sigma method to track and analyze the rate and demographics of turnover in the current budget year compared to both the current year estimates, previous years turnover and data from other Johnson and Johnson companies to determine factors causing sales rep to leave the company.
Source: Corporate Executive Board
A large MNC with multiple manufacturing sites was having problem with high level of medical leaves consumed by its employees. It was believed that a high proportion of the medical leaves taken was not really necessary. This issue results in lost labor hours and higher medical expenses. From the data collected, it was found that a certain group of employees has a significantly higher count of medical leaves taken. Based on this information, some solutions (such as incentive-scheme and company approved clinics) was tried out. When the solutions were found to be effective,they were standardized by revising the medical leave policy.
An MNC set stretch goals on project financial benefits company wide and this includes the Human Resources dept. A team in HR examined the expenses in HR and Administration and discovered that one of the vital few high expense items was traveling expenses. Most of the traveling expenses incurred was air fares. There are about 50 engineers in the company who travel frequently to the company headquarter in the USA. The engineers traveled in business class. The team proposed giving an option to the engineers:While they can still travel in business class, alternatively they can opt for traveling in the economy class and receive an additional travel allowance of US$500. The team performed stakeholder analysis and potential risks assessment before they proposed this idea to the management. The idea was implemented and many engineers chose the second options resulting a saving of about US$50,000 annually.
Public Service
A government authority reviews and approves applications from the businesses. A high proportion of applications were suspended and the applicants need to resubmit the application. A suspended application means the time spent to review the application is a waste (cost of not going things right the first time), Some applications went through as high as 5 resubmissions before they are approved. A team was formed to measure the problem, analyze the reasons for suspensions and recommend countermeasures. As a result, the number of suspensions per application reduced significantly and the labor cost saving was about $35,000 annually. A hospital form a team to improve the patients discharge process. Many patients called back the hospital to clarify information on medication, follow-up appointment, etc. Each time a patient called,the nurses need to spent a substantial amount of time to retrieve the file, review the files and answer the enquiries. If the patient discharge process is done right the first time,the patients should not need to call back. Using Six Sigma methodology, the team reduced the number of call backs.
Section 3
Six Sigma Implementation
Most Companies
A vision that excellence performance is possible and is essential to success. New paradigms, outlook, mindset. New skills, tools and data.
Culture Change
2 Sigma
3 Sigma
4 Sigma
5 Sigma
6 Sigma
Champions
Master Black Belts and Black Belts Black Belts, Green Belts And Project Teams
AlliedSignal
Our Vision
We will be one of the worlds premier companies, distinctive and successful in everything we do.
Our Commitment We will become a Total Quality Company by continuously improving all our work processes to satisfy our internal and external customers.
Iomega
How did we decide on Six Sigma?
We recognize the need for a change in the way we pursue operational excellence.
To Increase Our Rate of Quality and Productivity Improvement Faster than Our Competitors!
General Electric
quality at GE will be taken to world-leading levels, providing us with yet another competitive differentiator. Our openness to learningas well as the generosity of Motorola and others in sharing their techniques with us, will bring GE to a whole new level of quality in a fraction of the time it would have taken to climb the learning curve on our own.
PASSION
ACTION
Champions Role
Lead the implementation of Six Sigma in their areas. Determine and track key performance measures (CTQs). Select and prepare Black Belt and Green Belt candidates.
Identify, set up and support projects. - Ensure the projects are properly set up. - Follow up on the projects progress. - Help teams to remove barriers.
Basic Level
Intermediate Level
Green Belt
Black Belts
Role Serve as an expert who has in-depth knowledge of Sis Sigma methodology and tools. Lead Six Sigma projects. Coach green belts on their projects. Trainers of certain Six Sigma tools. Profile University education, 5 years working experience. Respected by peer and management. Good interpersonal and analytical skills.
Green Belts
Role Serve as a trained personnel who is able to lead Six Sigma projects. Participate effectively in Black Belts project as team member. Profile Higher education level. 3 years working experience. Respected by peer.
Black Belt
Training Approach
Explain Practise Apply Describe / explain the techniques. Practise the techniques in class exercises. Apply the techniques in actual work environment through project.
Review
Finance Representative
Role Provides financial data for financial benefits calculation. Provides guidelines for calculating financial benefits. Verify actual financial benefits.
Human Resource
Role
Review and suggest appropriate incentive system for Six Sigma : Career advancement opportunity Recognition of efforts and contributions Monetary reward for achievements
Policies / Guidelines
Personnel Selection. Project Selection. Financial Benefits Calculation. Project Tracking System. Black Belt Certification. Incentive Scheme.
Projects Review
Objectives: 1. Ensure projects proceed as plan. 2. Present the findings of each phase. 3. Make sure the vigor of Six Sigma approach is maintained. 4. Discuss the barriers faced. 5. Check correct applications of tools.
Section 4
Collective Decision Making
Consensus (1)
A better decision will be made if People with good knowledge and experience on the subject matter participate in the process. Everyones opinions and thoughts are sought, clarified and considered. There is a structured process that enables the team to listen to each other and discuss their ideas.
Consensus (2)
Is: A search for the best decision through the exploration of everyones viewpoints. Everyone has had an opportunity to be heard. A decision that reflects the collective thinking of a team and that all the team members understand fully, can live with, and will actively support, and believe is workable. Is Not: A unanimous decision. Having everyone completely satisfied with the outcome. Necessarily everyones first choice.
Balance power.
Listen carefully. Check for understanding.
Be open to different ideas, but avoid playing nice guy to avoid disagreement. Encourage differences of opinions. Have someone plays devil advocate role.
Brainstorming
A tool for creating a wide range of options in an environment free of criticism. Brainstorming if useful when you want to generate a large numbers of ideas about - Issues to tackle. - Possible causes of a problem. - Corrective measures to take.
Brainstorming Steps
1. 2. 3. 4. 5. 6. 7. 8. Review the rules. Set a time limit. Assign a time keeper and idea recorder. State the topic. Collect ideas. Record ideas. Clarify each idea (after all ideas are recorded). Eliminate duplications.
Brainstorming Methods
A. Freewheeling - Share ideas simultaneously. - List all ideas as they areshouted out.
B. Round-Robin - Everyone takes a turn offering an idea. - Anyone can pass on any turn. - Continue until there are no more ideas. - All ideas listed as they are offered.
Multi-voting
A tool for short listing key ideas. To reduce a long list of items to a manageable number of items. Identifying the most popular or highest priority items to a group a people. Also called the Delphi Technique.
Multi-voting - Steps
1. 2. 3. 4. 5. Work from a large list. Assign a letter to each item. Vote individually. Tally the votes. Repeat where necessary.
Exercise
Use brain storming and multi-voting to decide what are the key reasons for ineffective meeting
Selection Matrix
A method for relating a set of ideas or options with specific selection criteria.
Used when the team needs to achieve a consensus on the best idea or option.
Selection Matrix-Steps
1. 2. 3. 4. 5. 6. 7. List the ideas or options to be evaluated. Decide the criteria for selecting the best idea or option. Create a table to relate the ideas / options with selection criteria. Determine the rating scale for the selection criteria. For each idea / option, all members individually decides the score for each criteria. Sum up the total score for each idea or option. Identify the best option based on total score.
2. 3. 4. 5.
For each main cause, identify other specific factors. Identify increasingly more detailed levels of causes. Analyze the diagram to identify causes that warrant investigation.
Example
Software
Faulty installation Faulty media Faulty design Lack of training Misuse
Users
Hardware
Environment
Section 5
Define: Set Up Projects and Deploy Teams
Competitive Pressure
Issues of Concern
Project Charters
6. Discuss the relationship between the causes (Xs) and the effect (Y) to identify vital few factors that drive the measures. For the vital few causes, identify project ideas that will move the effect (Y) to the desired level. 7. Apply project Assessment Matrix to prioritize the project ideas. 8. Scope the project and create Project Charter.
Sales Orders
Production Output
Sales Lead Time On Time Delivery Order Fulfillment Customer Complaints Process Yield Down Time
New Products
Process Efficiency Time to Market Market Success Rate Design Changes Material Price Material Usage Rate
Profitability
Manage Cost
Lot Reject Rate WIP Rejects Material Rejects Electricity Water Gas
Performance Driver
Inventory Order Fulfillment
Measure
Inventory Turns:
Monthly sales amount ( $ ) over inventory holding costs for that month.
Fulfillment Rate:
Number of ordered items delivered on time over total number of ordered items ( % ).
Lead Time
Cycle Time:
Time interval from order received to product / service delivery (days).
Exact Can be observed or measured. Detail but concise Clear, understandable, and unambiguous.
Step 3: Implement the Process for Collecting Data and Reporting the Measures.
Procedure Outline
Record
Clerk
Monthly meeting to review charts and previous actions Manager and officers 5th day of month
Clerk
00 01 02
M A
Timely feedback
Easy to understand Accessible
Step 4: Identify Gaps Between Goals and Current Baselines Prioritize Focus Areas for Improvement.
2003 Goal
M A M
J J A S O N
Others
Inventory Turn
Forecast Accuracy (70%) Inventory Control System
Quality (5% lot reject rate)
System
Supplies
Step 6: Discuss the relationship between the causes (Xs) and the effect (Y) to identify vital few factors that drive the measures. For the vital few causes. identify project ideas that will move the effect (Y) to the desired level.
Purchasing Others
Central Warehouse
Stock Count Accuracy (80%)
Time Line
Champion Name
Sign Date
Right Result
Right Project
Well selected - Address important business issue. Well scoped - Focus on specific problem or process.
Well defined - Comprehensive and clear instruction, not a vague idea.
Project Charter
Project Charter is a document created at the outset of a project to formally assign the project to the team. It is an important tool for giving clear instruction and getting commitment from the project team. A Project Charter provides the following information: - Project title. - The process to be improved. - The business case. - The problem statement and goal statement. - Estimated financial benefits. - Name of Champion, team leader and members. - Project time line.
Project Title
A brief description of the project. An idea on what the project is about
Examples: SB687 Mis-registration Reduction Order Fulfillment Process Cycle Time Reduction Loan Application Process Error Reduction
Process
The name of the particular process to be improved. Can be described using a high level process block diagram. Examples: Sales orders handling Multi-layer circuit board lamination Funds transfer transactions Pick and place process
Business Case
A broad statement on the business issue pertaining to the project. Provides the rationale on why the project should be a business priority.
Examples:
Competitors better quality product has reduced our market share. Lower product prices have reduced profit margin, therefore the need to reduce costs. Faster response time will generate more sales.
Examples:
Sales for product A has fallen by 20% since last year. The mis-registration defect rate has increased to 7% since last month. The turn-around-time of competitor A is 5 days faster than ours.
Goal Statement
A description on what is to be achieved.
Examples: To reduce the orders confirmation cycle time 2 days. To reduce the mis-registration defect rate from 5% to 1%. To increase the inventory turns by 50%. To improve the forecast accuracy to 90%.
Team Effectiveness
A group of individuals is not a team.
An effective team if characterized by members who are: - Committed to team goal. - Collective responsibility to project success. - Collaborate and support each other.
Financial Benefits
Better quality Lower cost Consistent delivery Shorter lead time More capacity Reduced floor space Improved cash flow Higher flexibility
Measure B] Project Reviews: Revised estimated figure based on new data where necessary. Analyze Improve
-------------------------------------------------------------
Control C] Project Closure: Confirm estimated figure based on actual improvement achieved.
Cost Reduction - Indirect Savings - Time savings for indirect employees - Reduced administrative effort