SIX SIGMA

PRACTICES
Presented By-
Pritam Pawar
Nishant Rai
HO-IT
 MEANING OF SIX SIGMA
 DEFINITIONS
 HISTORY OF SIX SIGMA
 IMPLEMENTATIN OF SIX SIGMA
 IMPLEMENTATION ROLE
 METHODS OF SIX SIGMA
 DMIAC
 DMADV
 CASE STUDIES
 LEAN SIX SIGMA
 CONCLUSION
 Sigma measures the capability of the process to perform
defect-free work. (how many defects company commits while
accomplishing a task)
 A defect is anything that results in customer dissatisfaction. For

a business process, the sigma value is a metric that indicates

how well that process is performing.
It is a new way of doing business that would eliminate the existing
defects efficiently and would prevent defects from occurring.

6 σ gives up to 99.99966% Effectiveness in

processes.
 s – Standard Deviation, a measure of variability
 Six Sigma – A quality improvement philosophy that
focuses on eliminating defects through reduction of
variation in a process
 Defect – A measurable outcome that is not within
acceptable (specification) limits
HISTORY OF SIX SIGMA

Motorola company that invented Six Sigma.

 The term “Six Sigma” was coined by Bill Smith, an engineer with
Motorola
 Late 1970s - Motorola started experimenting with problem
solving through statistical analysis
 1987 - Motorola officially launched it’s Six Sigma program
 Motorola saved more than $ 15 billion in the first 10 years of its
Six Sigma effort
 Financial – bank of America, GE Capital, HDFC, HSBC, American Express

 ITES- ICICI One source, Accenture, IBM Daksh

 Hospitality- ITC Hotels, GRT Hotels, Apollo Hospitals

 Manufacturing- GE Plastic, Motorola, Nokia, Microsoft, Ford, Nestle

 Telecom- Bharti Cellular, Vodafone

 IT- Wipro, Satyam,Acenture, Infosys, TCS, Birla soft

IMPLEMENTATION ROLE
 Define Your Opportunities

 Define Your Defects

 Measure Your Opportunities and Defects

 Calculate Your Yield

 Look Up Process Sigma

Calculation of Sigma
 σ =√(X- X̄ )2 /(n-1)
 Z score or Cp=min {(USL-Avg)/ σ,(Avg-LSL)/ σ}
n=no of processes
X=process metric(might be time, cost, energy etc)
X̄ =mean process (Benchmark Level)
USL=Upper Specification limit
LSL=Lower Specification Limit
 To calculate process sigma level from Z score Z-Table or
Process Sigma Calculator is used.
 At industry Level Deviation of (6-4.5=1.5) process
Sigma is assumed.
 SIGMA CALCULATOR
SIGMA LEVEL CALCULATOR - CONTINUOUS DATA

Instructions:

1) Enter Data in Gold Cells

2) Read Sigma Level in Blue Cells

3) At least one
Specification Limit
is required

Enter the Calculated Average, X-bar 3

Enter the Calculated Standard Deviation, s 1.414
Enter the Upper Specification Limit, leave blank if none 5
Enter the Lower Specification Limit, leave blank if none 3

Z score for the Upper Specification Limit 1.41

% of data greater than the Upper Specification Limit 7.86%
NOTE: These calculations assume that
Z score for the Lower Specification Limit 0.00 the process you are working with is
% of data less than the Lower Specification Limit 50.00% stable. Process stability can be
evaluated using process control charts.

% of output that does not exceed the Specification Limits (Yield) 42.14%

Defects per Million Opportunities (DPMO) 578,618.2605429900000

Process sigma Level 3.904920261

SIGMA LEVEL DEFECT RATE YIELD
1 691,500 dpmo 30.85%

2 308,770 dpmo 69.10000%

3 66,811 dpmo 99.33000%

4 6,210 dpmo 99.38000%

5 233 dpmo 99.97700%

6 3.44 dpmo 99.99966%

METHODS OF SIX SIGMA

 DMAIC APPROACH
THIS IS ORGANIZATIONAL BASED

THIS IS BASED ON CUSTOMER NEEDS AND
SATIFACTIONS
 It approach undertaken to improve existing business process

CONTROL
Are We
Building the
product
‘right’? DEFINE
IMPROVE
- Process
oriented

MEASURE
ANALYSE
1.Define high-level project goals and the current process.
2.Measure key aspects of the current process and collect relevant
data.
3.Analyze the data to verify cause-and-effect relationships.
Determine what the relationships are, and attempt to ensure that
all factors have been considered.
4.Improve or optimize the process based upon data analysis
using various tools
5.Control to ensure that any deviations from target are corrected
before they result in defects.
Define Phase
 Retail Project – Account Opening, Retail Credit, and Mortgage Process Improvement
 Objective:
to improve the customer experience and increase our ability to sell multiple products during a
customer interaction, while increasing the proportion of time we spend selling

Specific Goals:
 Reduce the time it takes to make a Credit Appraisal (E2E time)
 Define CTQ(Critical to Quality)
 Improve our cross-sell rate, appointment effectiveness
 Improve our customer conversion rate and loyalty
 Reduce admin time and down time
 Staff re-alignment
 Reduce rework
 Reduce and streamline documentation (more usage of Lon Docs Software)
What is a CTQ?

 Critical to Quality (CTQ ’s) are measures that critical to customer

–
Products Services

• Performance • Competence
• Features • Reliability
• Conformance • Accuracy
• Timeliness • Timeliness
• Reliability • Responsiveness
• Serviceability • Access
• Durability • Courtesy
• Aesthetics • Communication
• Reputation • Credibility
• Completeness • Security
• Understanding
 Sample Transactional Severities
Rankin
Effect Criteria: Impact of Effect Defined g

Critical Business May endanger company’s ability to do business. Failure mode affects process 10
Unit-wide operation and / or involves noncompliance with government regulation.

Critical Loss - May endanger relationship with customer. Failure mode affects product delivered
Customer and/or customer relationship due to process failure and/or noncompliance with 9
Specific government regulation.
High Major disruption to process/production down situation. Results in near 100% 7
rework or an inability to process. Customer very dissatisfied.

Moderate disruption to process. Results in some rework or an inability to process.

Moderate Process is operable, but some work around are required. Customers experience 5
dissatisfaction.
Minor disruption to process. Process can be completed with workarounds or
Low rework at the back end. Results in reduced level of performance. Defect is 3
noticed and commented upon by customers.
Minor disruption to process. Process can be completed with workarounds or
Minor rework at the back end. Results in reduced level of performance. Defect noticed 2
internally, but not externally.
None No effect. 1
Measure Phase
What is the present status of the process?
 Mapping of Banking Managers/Officers – daily activities
 Cross Sales Observations – Does the Cross sales conversation follow
the defined roadmap?
 Detailed Process Observations for account opening, Cross Selling,
Term Deposits, mortgage.
 Process flow diagram, Rework data for applications & High Value
Stream Map
 Interviews with Potentially Benefited Managers(PBM)
 Systems observation – which aspects can be improved?
 Labor Coverage – to see how busy the branch is on a typical day
Cause & Effects Relationship
Measure Phase:
Failure Mode Effects Analysis – Example from banking
Perception Vs Benchmark Vs Result

Credit Appraisal activities take up 42% vs. a 8% benchmark time. If this load is
reduced to a benchmark level, the freed up time can be used for Credit growth.
ANALYSE PHASE:
Example of Process Improvement in banking
Improve Phase - Process Output
Categories
Improve Phase:
Potential benefits from Six Sigma projects
 Control Phase:
Control Charts:
• Developed by Dr Walter A. Shewhart of Bell Laboratories
• Control Charts were designed as a methodology for indicating change in
performance, either variation or Mean/Median.
• Charts have a Central Line and Control Limits to detect Special Cause
variation.
 This approach is undertaken when there is a need to create new design or
product:

VERIFY
Are We Building
the ‘right DEFINE
product’?
- customer/
people oriented
DESIGN

MEASURE

ANALYZE
 Define goals that are consistent with customer demands and the enterprise
strategy.
 Measure and identify CTQs (characteristics that are Critical To Quality),
product capabilities, production process capability, and risks.
 Analyze to develop and design alternatives, create a high-level design and
evaluate design capability to select the best design.
 Design details, optimize the design, and plan for design verification. This
phase may require simulations.
 Verify the design, set up pilot runs, implement the production process and
hand it over to the process owners.
DMADV is also known as DFSS, an abbreviation of "Design For Six
Sigma”
 DMAIC
 Defines a business process.
 Measuring current process
 Identify root cause of the
recurring PROBLEMS
 Improvements made to
reduce defects
 Keep check on future
performance
DMADV
 Define customer needs
 Measure customer needs &
specification
 Analyze options to meet
customer satisfaction.
 Model is deigned to meet
customer needs
 Model put through
simulation tests for
verification
Lean Six Sigma
Lean Six Sigma combines the strengths of each system:

• Lean Six Sigma • Six Sigma

– Guiding principles based – Focus on voice of the

operating system Customer(VOC)

– Relentless elimination of all – Data and fact based decision

waste making

– Creation of process flow and – Variation reduction to near

demand pull perfection levels

– Resource optimization – Analytical and statistical rigor

Strength: Efficiency Strength: Effectiveness

LEAN SIX SIGMA APPROACH
Like Six Sigma, Lean focuses on process improvement but by eliminating waste(optimum
use of resources). It looks to eliminate wastes such as-
Corrections
Overprocessing
Conveyance
Motion
Waiting
 Inventory

Inventory is the liability of materials that are bought, invested

in and not immediately sold or used.

Examples are:

Transactions not
processed

Over-ordering materials
consumed in-house
Overproduction
OTHER CASE STUDIES
 Forbes has found 1 erroneous delivery out
of 6 million deliveries.
 Total 5000+members and 2 Lacs customer
with 1 dabbawalaa carrying approx. 40
tiffins per day.
Goal is to collect tiffins from homes and
delivering them to the respective
workplaces before time.
 Constraints are large geographical area,
Mumbai Local train schedule and crowd,
Weather conditions, Traffic etc.
THANK YOU