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A Project Report On

SIX SIGMA IN INDIAN INDUSTRIES By Sagun Thakur (Registration No. 581112718)

A project report submitted in partial fulfillment of the requirements for the degree of Master of Business Administration of Sikkim Manipal University, INDIA

INSOFT, C 2 SECTOR 10, NOIDA 201 301 CENTRE CODE 1822

Sikkim Manipal University of health, Medical and technological science Distance Education wing Syndicate House, Manipal 576104

DECLARATION

I hereby declare that the project report entitled:

A Project Report on SIX SIGMA IN INDIAN INDUSTRIES submitted in partial fulfillment of the requirement for the degree of Masters of Business Administration to Sikkim Manipal University, India, is my original work and not submitted for the award of any other degree, diploma, fellowship, or any other similar title or prizes. Place: Noida Date: _________

(Sagun Thakur) Registration No. 581112718

Certificate

The project report of Sagun Thakur (Registration No. 581112718) A Project Report on SIX SIGMA IN INDIAN INDUSTRIES is approved and is acceptable in quality and form.

Internal Examiner

External Examiners (Mr. _________)

TABLE OF CONTENTS Page No Executive Summary Introduction Problem of the Study Objective Research Methodology Analysis Conclusions Recommendation 5 7 9 10 12 13 15 16

Bibliography Appendix

Executive Summary:
Six Sigma Projects can be described as a business management strategy, that many divisions of business industries may be utilizing extensively. The primary definition of this business strategy indicates that it is a procedure that could be able to radically reduce flaws during the manufacturing process. Further reports indicate that by identifying and removing flaws, it may be able to effectively streamline the manufacturing process as a whole. The success rate of this system requires strictly defined methods, implemented by a special infrastructure of highly qualified people. Each task implemented by a Six Sigma business, needs to follow a project charter, which is issued by the senior management, in a company. This charter, is a defined sequence of steps, with predetermined objectives and specific goal requisites. Management approval and support structures, combined with expert teams, who are properly trained for the tasks at hand, are all essential components of a successful system. A qualified task manager, knows as a Six Sigma Black Belt or Master Black Belt, working directly under senior management, is authorized to oversee the implementation of the project charter. The primary role of the project manager is to coordinate authoritative resource teams. These teams, composed of Six Sigma Green and Yellow Belts, manage and actualize the task deadlines, ensuring all aspects are completed in a timely manner. A project charter may contain relevant details of what a business may need, a comprehensive report for the product to be manufactured, market research data, manufacturing details and benefits or suggestions for processes, to be implemented or revised. The problem statement could be an important procedural requirement that may assist in the successful execution of larger projects. Components of the problem statement may consist of quintessential details directly relating to a specific task. The outlines of which, could be separated into smaller, more manageable tasks for maximum results. The principles of the Six Sigma maintain that certain features of the process are vital to business success. These features manifest in consistent systems, predictable processes, stringent management leadership, and the implementation of continuous goals and commitment from special infrastructure teams. The principles further emphasize the critical area of data verification, which may result in sustained quality improvement.

The Six Sigma business management strategy follows two primary sets of method systems. The first area, DMAIC, being implemented for the existing manufacturing and business sectors, in revising and improving systems. The second area, DMADV, being the creation and introduction of new product lines and production design. Individual phases for the two method systems are based on five feature phases each. DMAIC stands for define, measure, analyze, improve, and control. DMADV stands for define, measure, analyze, design, verify. Six Sigma Projects could be integrated into industry for achieving organizational objectives. The concepts of quality control improvement may be implemented into many spheres for the manufacturing and business sectors. The strategy pursues the establishment of comprehensive plans, management schedules, financial forecasts, and facilitation of resource teams. The primary objective for this kind of system integration may be to streamline manufacturing and production processes, resulting in high quality product output, and substantial fiscal returns.

Introduction:
Six Sigma is a statistical concept that measures a process in terms of defects. Achieving "Six Sigma" means your processes are delivering only 3.4 defects per million opportunities (DPMO) - in other words, they are working nearly perfectly. Sigma (the Greek letter ) is a term in statistics that measures standard deviation. In its business use, it indicates defects in the outputs of a process, and helps us to understand how far the process deviates from perfection. A sigma represents 691462.5 defects per million opportunities, which translates to only 30.854% of non-defective outputs. That is obviously a poor performing process. If you have a process functioning at a three sigma level that means you're allowing 66807.2 errors per million opportunities, or delivering 93.319% non-defective outputs. That's much better, but we are still wasting money and disappointing our customers. The central idea of Six Sigma management is that if you can measure the defects in a process, you can systematically figure out ways to eliminate them to approach a quality level of zero defects. In short, Six Sigma is several things:

A statistical basis of measurement: 3.4 defects per million opportunities A philosophy and a goal: as perfect as practically possible A methodology A symbol of quality

The goal of the Six Sigma is to enable you to understand what Six Sigma is ( both a simple and a complex question ), why its probably the best answer to improve business performance in years, and how to put it to work in the unique environment of organization. In our mission to demystify Six Sigma for the executive and professional, we hope to show you that its just as much about a passion for serving customer and a drive for great new ideas as it is about

` statistics and number crunching, that the value of Six Sigma applies just as much to marketing, service, human resources, finance and sales as it does to manufacturing and engineering. Six Sigma is a comprehensive and flexible system for achieving, sustaining and maximizing business success. It is uniquely driven by close understanding of customer needs, disciplined use of facts, data, and statistical analysis and diligent attention to managing, improving and reinventing business processes. This is the definition that will provide the foundation for our efforts to unlock the potential of Six Sigma for your organization. The types of business success you may achieve are broad because the proven benefits of Six Sigma system are diverse, including Cost reduction Productivity Improvement Market share growth Customer retention Cycle-time reduction Defect reduction Culture change Product/service development and many more.

Problem of the study:

Six Sigma Projects use a very analytical and data-driven approach to determining the problems that any business has with a process or product. It focuses on finding the source of the problem, why and how it is occurring, and then uses the data that is collected about the current process to determine what steps can be taken to achieve the optimal solution. Once you have determined these issues of what the problem actually is, you can then take the initiative to find a better solution and even test it out through the data analyses that you have made to determine how effective that solution will be. You cannot answer a question simply by knowing that it exists. You have to know exactly what the question is. The same is true for Six Sigma Process improvements. You cant very well fix something that is broken or ineffective without figuring out what needs fixed. If your production line breaks down at a critical point and causes a process malfunction, you cant just assume that you need to fix the whole line. You need to find the point where the problem came from and address that specific situation with Six Sigma Tools to get the best result. When the problem has been identified and defined, you can then take the time to figure out exactly what youre going to do to make the best of it in any situation. Six Sigma Projects will do all the work for you if you employ their tools properly. You can identify the problem, figure out when, why, and how it is occurring, and then look at the data that was gathered to come up with an effective and creative solution for process improvement. Its all about taking things step-by-step and never getting ahead of yourself. Trial-and-error practices or going on a gutfeeling are not effective means of problem solving, so dont waste your efforts. Six Sigma Projects will lay it all on the line, allowing you to see exactly what is going on based on the numbers. This will give you the best chances of coming up with the most effective solution, no matter how simple it might seem at first. You should never just guess at a solution to a problem because it will generally not work out in your favor and simply waste valuable resources. Use factual practices like Six Sigma to define the exact problem, including every detail about that problem, and then you can arrive at the right solution for your business.

Objectives
Six Sigma projects are meant to make the organization efficient. It is for this reason that one must ensure that the projects are efficient in themselves. One of the main criteria for a project to be efficient is that it must have well defined goals. Only once the goals are defined with clear articulation can plans be laid out to achieve them. Six Sigma projects have guidelines on defining the objectives of the project. There are three essential characteristics that the objective must possess. They are as follows:

Defining the Objectives

Valuable: The objective must be valuable. There are many things that are going on inside a mega corporation. There may be many places where there might be scope for improvement as well. However the organization has limited resources and needs to take only the most important projects first. Which projects are important are defined by the strategy of the organization. Hence one must ensure that the six sigma project is aligned towards the strategy of the organization and is hence valuable. Understandable: Six sigma projects are never executed in silos. The key stakeholders in every project are identified. Then the objectives of the project are communicated to the key stakeholders and an agreement is reached with them. It is critical that the team undertaking the six sigma project be able to clearly define what they intend to do in front of stakeholders like the people who actually implement the process. Hence the objectives must be defined in as simple terms as possible so that articulation is easy. Achievable: A good sigma project is not far-fetched. It is important to understand the range of the organizations capability. The project objectives must lie just beyond the current range. This will stretch the organization and make it more efficient. However, if you place the objectives of the project too far outside the limit of the organization, it is bound to fail. Failure in a six sigma project demoralizes the people who have been instrumental in implementing them. This jeopardizes the entire quality initiative. Make the objectives achievable at the start of the project to avoid turmoil at later stages.

Hypothesis
Conducting hypothesis testing is necessary because in most Six Sigma quality improvement projects, a lot of money is at stake and if unproductive changes are made, it could seriously affect both the companys finances as well as its productivity. To avoid such undesirable situations, businesses need to test the efficacy of the proposed changes with the help of hypothesis testing tools and techniques. Defining Test Parameters Hypothesis testing is not something based on gut feelings or is conducted manually. It is conducted with the help of advanced statistical tools because even a small fault in the proposed change can have severe implications on the business process where it is being implemented. Advanced statistical tools however, do not guarantee accurate results because a lot more depends on the defined objectives of the hypothesis testing and the various variables that need to be considered. If there are faults in the defined objectives and other testing parameters, it will become quite difficult to ensure the success of the proposed changes even if the test results are positive. Defining the correct testing parameters should therefore be the primary aim of Six Sigma project implementation teams. Authenticating Data Defining the correct parameters is certainly necessary, but it is not the only thing that needs to be done. After the parameters have been defined, the next task is to classify the collected data and also ensure that it is free from errors and inaccuracies. This is necessary because the test results will not reflect the real picture in case there are errors in the data itself. Only after all the above stated factors have been taken into consideration can the project team hope to ensure the effectiveness of the hypothesis testing initiatives.

Limitations
Hypothesis testing certainly helps in testing the effectiveness of proposed changes, but it is not something that can be used to certify the success of proposed process changes. This is because there are many other variable factors that can affect a business process such as employee dissatisfaction or changes in technology, all of which cannot be predicted and certainly cannot be tested with the help of hypothesis testing. All the analyst can do is to make adequate provisions for all these factors and then compare test results to find and select a proposed change that confirms to the suggested hypothesis. However, this type of hypothesis testing is not foolproof because it is very difficult to the determine the exact affects that a proposed change will have in the face of unforeseen events such as falling employee morale or technology changes. A company implementing Six Sigma for the first time may not have adequate talent or resources for conducting hypothesis testing. To make the best use of this tool, such companies can hire experts from outside or provide adequate training to existing employees. All this may cost the company a lot of money, but when we consider the stakes involved, the costs seem quite insignificant. Hypothesis testing is a necessity and should be conducted even if it costs top dollar.

Analysis and Findings: The Analyze Phase

Analyze gaps between current performance and target performance levels, explaining possible sources of variation. Include subtopics and subheadings that reflect your case. Include visuals, supporting analysis from various methods discussed in the course including cause-and-effect diagrams, stratification analysis, scatter plot analysis, correlation analysis, etc. In this section, you should discuss the relationships between your KPIVs and KPOVs. For example, you should discuss those variables that have a direct cause-and-effect relationship or those input variable settings (or range of settings) in which your KPOV(s) are robust. For most reports, your analysis will include both a qualitative and quantitative assessment. For a qualitative assessment, you might include a cause-and-effect diagram summarizing results, a process map, or simply a discussion of the results from brainstorming sessions or interviews with affected employees. For your quantitative analysis, you should provide some data analysis that demonstrates a more systematic and comprehensive assessment of your key output variable and/or the main causes for lack of performance. Please recognize that the purpose of the project is to solve a problem and not necessarily to use a specific quality analysis tool or method. Thus, try to use the tool/method that is appropriate to solving the problem even if the tool used is fairly simple analytically. In many cases, reports also should include analysis and results for insignificant or unimportant variables. For many projects, identifying variables or (variable settings) that do not affect your key Y variables provide additional opportunities for cost savings. For example, a project may discover that a certain part feature or process step may actually allow for a wider tolerance and still meet nextprocess customer requirements. Here, widening the tolerance for might yield an overall cost saving. Information that must be included in this section include: You must demonstrate your understanding of course concepts and tools by showing evidence of the use of at least one data analysis tool/ method discussed in this course. You should support this requirement by including at least one table, graph, or diagram within the main body of the text. (e.g., you might include a Pareto chart, stratification analysis table, causeand-effect diagram, scatter plot, correlation analysis, process control charts, experimental results, value stream map, value-add analysis, measurement systems analysis if your report involves improving a measurement system (Note: these tables and figures must be integrated into the main body of your report; additional background material may be included in the appendix).

` Note: We encourage the use of additional data analysis tools and may request re-submittal of a project to include additional analysis if appropriate.

Note: Some of the analysis tools used in the Analyze Phase may also apply in the Improve Phase. Feel free to include Six Sigma problem solving and analysis tools in either the Analyze Phase or the Improve Phase as appropriate to present your argument.

Conclusion
Briefly restate the problem addressed, the process followed to reach a solution, and the chosen solution. List the potential benefits to the chosen solution. Note: if your results or recommendations are incomplete or sensitive to your company, please try to discuss potential benefits in relative terms. (e.g., a 20% reduction in error rates or a 10% cost savings). If appropriate, explain any further action to be taken, including the responsible team members and schedule.

Recommendations: The Improve Phase

Identify alternative ways to improve performance. Try to evaluate how well alternatives will be able to meet target performance goals. Specify criteria for choosing a course of action. Present conclusions regarding alternatives and identify recommended solution. Consider presenting the material in the following subtopics with appropriate second-level headings. Alternative Solutions Considered Recommended Solution

Historically, improvement recommendations fall into a few general categories. These include (but are not limited to) recommendations to: train operators to more effectively perform tasks (e.g., to address customer concerns, or adopt best work practices) standardize procedures or processes make adjustments to settings of key process input variables Note: may require adding processes to collect data. redesign process flow (e.g., reorganize the flow of parts/ documents/information through your system) install new process monitoring or automatic defect detection system (e.g., install monitoring systems for either Xs or Ys)

Bibliography
1. Class A ERP Implementation: Integrating Lean and Six Sigma - by Donald H. Sheldon 2. www.wikipedia.org 3. www.sap.com 4. www.oracle.com 5. www.nasscom.com 6. www.google.com

Appendix
Use appendices to present information that is too bulky to be presented in the body of the report or that will interest only a few readers. For example, large diagrams or charts, computations, software package graphics, test data, and texts of supporting documents should appear in appendices. Appendices have the following characteristics: Titled "Appendix," not "Figure" or "Table." Usually lettered rather than numbered. Referred to at appropriate points in the body of the report so they are accessible to the reader who wants to consult them.

Only use an appendix when the data is not relevant to the report but might be of interest to some other readers. We expect most if not all of your tables and graphs to be in the main body of the report.