Introduction to

SIX - SIGMA

Presented by :
http://www.QualityGurus.com

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 Agenda

0750 - 0800 Participants introduction

0800 - 0930 Introduction to Six Sigma concept
Key Concepts
0930 - 0945 Tea / Coffee Break
0945 - 1200 Forms of waste
What is Sigma
Components of Six Sigma
1200 - 0100 Lunch Break
0100 - 0200 Selecting a Project
0200- 0300 Open session / Q&A

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 Participants
Introduction
• Your Name
• Department
• Your job profile
• Your exposure to Quality Management/ Six
Sigma

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 Ground Rules
• Program success depends on your participation. Actively
participate.
• Please avoid cross-talks.
• Observe specified timings.
• Please keep your mobile phones switched off.
• Feel free to ask question at any point of time.
- Restrict question to specific issue being discussed, while
general
questions can be discussed during Q & A session.
• Enjoy the program !

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Introduction to Six Sigma

Purpose of six sigma :

To make customer happier and increase
profits

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 Origin of Six Sigma

• 1987 Motorola Develops Six Sigma

– Raised Quality Standards

• Other Companies Adopt Six Sigma

– GE
•Promotions, Profit Sharing (Stock Options), etc.
directly tied to Six Sigma training.
– Dow Chemical, DuPont, Honeywell,
Whirlpool

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 Time Line

Allied Signal
Johnson & Johnson,
Ford, Nissan,
Motorola
General Electric Honeywell

1985 1987 1992 1995 2002

Dr Mikel J Harry wrote a

Paper relating early failures to
quality

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 Pilot’s Six-Sigma
Performance
Width of landing
strip 1/2 Width
of landing
strip

If pilot always lands

within 1/2 the landing strip
width, we say that he has
Six-sigma capability.

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 Current Leadership
Challenges
• Delighting Customers.
• Reducing Cycle Times.
• Keeping up with Technology Advances.
• Retaining People.
• Reducing Costs.
• Responding More Quickly.
• Structuring for Flexibility.
• Growing Overseas Markets.

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 Six Sigma— Benefits?
• Generated sustained success
• Project selection tied to organizational
strategy
– Customer focused
– Profits
• Project outcomes / benefits tied to
financial reporting system.
• Full-time Black Belts in a rigorous,
project-oriented method.
• Recognition and reward system
established to provide motivation.

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 Management involvement?
• Executives and upper management drive
the effort through:
– Understanding Six Sigma
– Significant financial commitments
– Actively selecting projects tied to strategy
– Setting up formal review process
– Selecting Champions
– Determining strategic measures

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Management Involvement?
• Key issues for Leadership:
– How will leadership organize to support Six
Sigma ? (6 σ council, Director 6 σ, etc)
– Transition rate to achieve 6 σ.
– Level of resource commitment.
– Centralized or decentralized approach.
– Integration with current initiatives e.g. QMS
– How will the progress be monitored?

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 What can it do?
Motorola:
– 5-Fold growth in Sales
– Profits climbing by 20% pa
– Cumulative savings of $14 billion
over 11 years
General Electric:
– $2 billion savings in just 3 years
– The no.1 company in the USA
Bechtel Corporation:
– $200 million savings with
investment of $30 million
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 GE Six Sigma
Economics
(in millions) 6 Sigma Project Progress
2500

2000

1500
Cost
1000 Benefit

500

0
1996 1998 2000
2002
Source: 1998 GE Annual Report, Jack Welch Letter to Share Owners and Employees - progress based upon
total corporation cost/benefits attributable to Six Sigma.

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 Overview of Six
Sigma
CHANGE
6 SIGMA AS A
THE
PHILOSOPHY
WORLD

TRANSFORM THE
ORGANIZATION
6 SIGMA AS
GROWTH
A PROCESS

COSTS OUT
6 SIGMA AS A
STATISTICAL TOOL
PAIN, URGENCY, SURVIVAL

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 Overview of Six
Sigma
It is a Process
– To achieve this level of
performance you need
It is a Philosophy to:
– Anything less than ideal Define, Measure, Analyse,
is an opportunity for Improve and Control
improvement
– Defects costs money
– Understanding
processes and
improving them is the It is Statistics
most efficient way to – 6 Sigma processes will
achieve lasting results
produce less than 3.4
defects per million
opportunities

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 Philosophy
• Know What’s Important
to the Customer (CTQ)
• Reduce Defects
(DPMO)
• Center Around Target
(Mean)
• Reduce Variation
(Standard Deviation)

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Critical Elements

• Genuine Focus on the Customer

• Data and Fact Driven Management
• Process Focus
• Proactive management
• Boundary-less Collaboration
• Drive for Perfection; Tolerance for failure

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 Data Driven
Decision
Y= f(X)
• Y • X1 . . . Xn
• Dependent • Independent
• Output • Input-Process
• • Cause
Effect
• Problem
• Symptom
• Control
• Monitor

The focus of Six sigma is to identify and control Xs

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 Two Processes
DMAIC DMADV

• Existing Processes • New Processes

• DFSS

• Define • Define
• Measure • Measure
• Analyze • Analyze
• • Design
Improve
• Verify
• Control

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Key Concepts

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 COPQ (Cost of Poor
Quality)- Inspection
- Warranty
- Scrap
- Rework Traditional Quality Costs:
- Rejects - Tangible
- Easy to Measure

- More Setups
- Expediting Costs
Hidden Costs:
- Lost Sales - Intangible
- Late Delivery - Difficult to Measure
- Lost Customer Loyalty - Lost Opportunities
- Excess Inventory
- Long Cycle Times - The Hidden Factory
- Costly Engineering Changes

Average COPQ approximately 15% of Sales

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 COPQ v/s Sigma
Level
50%
Cost of Quality % Sales

45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
2 3 4 5 6

Sigma Level

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 CTQ (Critical-To-
Quality)
• CTQ characteristics for the process,
service or process
• Measure of “What is important to
Customer”
• 6 Sigma projects are designed to improve
CTQ
• Examples:
– Waiting time in clinic
– Spelling mistakes in letter
– % of valves leaking in operation
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 Defective and Defect
• A nonconforming unit is a defective unit
• Defect is nonconformance on one of many
possible quality characteristics of a unit that
causes customer dissatisfaction.
• A defect does not necessarily make the unit
defective
• Examples:
– Scratch on water bottle
– (However if customer wants a scratch free bottle, then
this will be defective bottle)

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 Defect Opportunity
• Circumstances in which CTQ can fail to
meet.
• Number of defect opportunities relate to
complexity of unit.
• Complex units – Greater opportunities of
defect than simple units
• Examples:
– A units has 5 parts, and in each part there are 3
opportunities of defects – Total defect opportunities are
5 x 3 = 15

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 DPO (Defect Per
•
Opportunity)
Number of defects divided by number of
defect opportunities
• Examples:
– In previous case (15 defect opportunities), if 10 units
have 2 defects.
– Defects per unit = 2 / 10 = 0.2
– DPO = 2 / (15 x 10) = 0.0133333

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 DPMO (Defect Per Million
Opportunities)
• DPO multiplies by one million
• Examples:
– In previous case (15 defect opportunities), if 10 units
have 2 defects.
– Defects per unit = 2 / 10 = 0.2
– DPO = 2 / (15 x 10) = 0.0133333
– DPMO = 0.013333333 x 1,000,000 = 13,333

Six Sigma performance is 3.4 DPMO

13,333 DPMO is 3.7 Sigma

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 Yield
• Proportion of units within specification
divided by the total number of units.
• Examples:
– If 10 units have 2 defectives
– Yield = (10 – 2) x 100 /10 = 80 %
• Rolled Through Yield (RTY)
– Y1 x Y2 x Y3 x ……. x Yn
– E.g 0.90 x 0.99 x 0.76 x 0.80 = 0.54

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Forms of Waste

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 What are the forms of
waste?
1. Waste of Correction
2. Waste of Overproduction
3. Waste of processing
4. Waste of conveyance (or transport)
5. Waste of inventory
6. Waste of motion
7. Waste of waiting

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 1. Waste of correction
• Repairing a defect wastes time and
resources (Hidden factory) Hidden
Factory
Rework Rework

Failure Failure
Investigation Investigation

Operation Operation
Test Test Product
1 2

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 2. Waste of
Overproduction
• Producing more than necessary or
producing at faster rate than required
– Excess labor, space, money, handling

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 3. Waste of processing
• Processing that does not provide value to
the product
– Excess level of approvals
– Tying memos that could be handwritten
– Cosmetic painting on internals of equipment
– Paint thickness more than specific values

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 4. Waste of conveyance
• Unnecessary movement of material from
one place to other to be minimized
because -
– It adds to process time
– Goods might get damaged
• Convey material and information ONLY
when and where it is needed.

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 5. Waste of inventory
• Any excess inventory is drain on an
organization.
– Impact on cash flow
– Increased overheads
– Covers Quality and process issues
• Examples
– Spares, brochures, stationary, …

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 6. Waste of Motion
• Any movement of people, equipment,
information that does not contribute value
to product or service

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 7. Waste of Waiting
• Idle time between operations
• Period of inactivity in a downstream
process because an upstream activity does
not deliver on time.
• Downstream resources are then often used
in activities that do not add value, or worst
result in overproduction.

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 Some more sources of
Waste
• Waste of untapped human potential.
• Waste of inappropriate systems
• Wasted energy and water
• Wasted materials
• Waste of customer time
• Waste of defecting customers

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What is Sigma?

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 Have you ever…
• Shot a rifle?
• Played darts?

What is the point of these sports?

What makes them hard?

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 Have you ever…
• Shot a rifle?
• Played darts?

Jack

Jill

Who is the better shooter?

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 Variability
• Deviation = distance between
observations and the mean (or 8
average) 7
10
8
Observations Deviations 9

10 10 - 8.4 = 1.6 Jack

9 9 - 8.4 = 0.6
8 8 - 8.4 = -0.4

8 8 - 8.4 = -0.4
7 7 - 8.4 = -1.4

averages 8.4 0.0

Jill
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 Variability
• Deviation = distance between
observations and the mean (or
average)

Observations Deviations
Jack
7 7 - 6.6 = 0.4
7 7 - 6.6 = 0.4
7 7 - 6.6 = 0.4
7
6 6 - 6.6 = -0.6 6
6 6 - 6.6 = -0.6 7
averages 6.6 0.0 7
6 Jill
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 Variability
• Variance = average distance
between observations and the 8
mean squared 7
10
8
9
Observations Deviations Squared Deviations
Jack
10 10 - 8.4 = 1.6 2.56
9 9 – 8.4 = 0.6 0.36
8 8 – 8.4 = -0.4 0.16
8 8 – 8.4 = -0.4 0.16
7 7 – 8.4 = -1.4 1.96
averages 8.4 0.0 1.0
Jill
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Variance
 Variability
• Variance = average distance
between observations and the
mean squared

Observations Deviations Squared Deviations

Jack
7 7 - 6.6 = 0.4 0.16
7 7 - 6.6 = 0.4 0.16
7 7 - 6.6 = 0.4 0.16
7
6 6 – 6.6 = -0.6 0.36 6
6 6 – 6.6 = -0.6 0.36 7
averages 6.6 0.0 0.24 7
6 Jill
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Variance
 Variability
• Standard deviation =
square root of
variance
Jack

Average Variance Standard

Deviation
Jack 8.4 1.0 1.0
Jill 6.6 0.24 0.4898979
Jill

But what good is a standard deviation

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 Variability

The world tends to

be bell-shaped

Even very rare Fewer Most Fewer Even very rare

outcomes are in the outcomes in the outcomes are
possible “tails” occur in the “tails” possible
(lower) middle (upper)

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 Variability

Here is why: Even outcomes that are equally

likely (like dice), when you add
them up, become bell shaped
Add up the dots on the dice

0.2

0.15
Probability

1 die
0.1 2 dice

0.05 3 dice

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Sum of dots

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“Normal” bell shaped
curve
Normal distributions are divide up
into 3 standard deviations on
each side of the mean

Once your that, you

know a lot about
what is going on

And that is what a standard deviation

is good for
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 Causes of
Variability
• Common Causes:
– Random variation within predictable range (usual)
– No pattern
– Inherent in process
– Adjusting the process increases its variation

• Special Causes
– Non-random variation (unusual)
– May exhibit a pattern
– Assignable, explainable, controllable
– Adjusting the process decreases its variation

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 Limits
• Process and Control limits:
– Statistical
– Process limits are used for individual items
– Control limits are used with averages
– Limits = μ ± 3σ
– Define usual (common causes) & unusual (special
causes)
• Specification limits:
– Engineered
– Limits = target ± tolerance
– Define acceptable & unacceptable
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 Usual v/s Unusual,
Acceptable v/s Defective
Another View
Off-Target Large Variation

LSL USL LSL USL

On-Target

Center Reduce
Process Spread

LSL USL LSL = Lower spec limit

USL = Upper spec limit

The statistical view of a problem

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 More about limits
Poor quality:
defects are
common (Cpk<1)
Good quality:
defects are μ
target
rare (Cpk>1)
μ
target

Cpk measures “Process Capability”

If process limits and control limits are at the same location, Cpk = 1. Cpk ≥ 2 is exceptional.
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 Process capability

Good quality: defects are rare (Cpk>1)

Poor quality: defects are common (Cpk<1)
=
USL – x
= 24 – 20 =.667
3σ 3(2)
Cpk = min
=
x - LSL
= 20 – 15 =.833
3σ 3(2)

14 20 26
= = 15 24
3σ = (UPL – x, or x – LPL)
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A Six Sigma Process –

Predictably twice as good as what

the customer wants
LSL −6σ
USL
+6σ
6σ
1σ 1σ 1σ 1σ 1σ 1σ

1 2 3 4 5 6 7 8 9 10 11 12
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 3 σ v/s 6 σ

6 Sigma curve

LSL USL

3 Sigma curve

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

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 Process shift
allowed
1.5 SD 1.5 SD

LSL USL

SD = 1

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
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 Six Sigma
Measurement
Sigma

7
6
5
4 0.02
3 DPMO
3.4
On one condition :
Calculate the defects 233
and estimate the 6210
opportunities in the
same way... 66810

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 Six Sigma
Measurement 600,000
Sigma Defects 500,000
numbers per million

# of Defect per Million

400,000

1.5s 500,000 300,000

2.0s 308,300 200,000
2.5s 158,650
100,000
3.0s 67,000
3.5s 22,700 0
1.5 2.5 3.5 4.5 5.5
4.0s 6,220
# of Sigmas
4.5s 1,350
5.0s 233
5.5s 32
6.0s 3.4

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Components of Six Sigma

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 Components
Two components of Six
Sigma

1. Process Power

2. People Power
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Process Power

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 P-D-C-A

Act Plan
A P
Act on what Plan the change
was learned

Check C D Do
Check the results Implement the
change on a small
scale.

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Approach
Practical
Problem

Statistical
Problem

Statistical
Solution

Practical
Solution

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 DMAIC - simplified
• Define
– What is important?
• Measure
– How are we doing?
• Analyze
– What is wrong?
• Improve
– Fix what’s wrong
• Control
– Ensure gains are
maintained to guarantee
performance

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 DMAIC approach

D Identify and state the practical problem

Define

Validate the practical problem by collecting data

M
Measure
Convert the practical problem to a statistical one,
A define statistical goal and identify potential statistical
Analyze solution

I Confirm and test the statistical solution

Improve

C Convert the statistical solution to a practical solution

Control
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 Define

D VoC - Who wants the project and why ?

Define

The scope of project / improvement (SMART

M
Objective)
Measure

A Key team members / resources for the project

Analyze

I
Improve Critical milestones and stakeholder review

C
Control Budget allocation
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 Measure

D Ensure measurement system reliability

Define
- Is tool used to measure the output variable flawed ?

M
Measure

A Prepare data collection plan

Analyze - How many data points do you need to collect ?
- How many days do you need to collect data for ?
I - What is the sampling strategy ?
Improve - Who will collect data and how will data get stored ?
- What could the potential drivers of variation be ?

C
Control Collect data
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 Analyze

D
Define
How well or poorly processes are working
compared with
M - Best possible (Benchmarking)
Measure - Competitor’s

A Shows you maximum possible result

Analyze

I Don’t focus on symptoms, find the root cause

Improve

C
Control
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 Improve

Present recommendations to process owner.

D
Define
Pilot run
- Formulate Pilot run.
M
- Test improved process (run pilot).
Measure
- Analyze pilot and results.
A
Analyze Develop implementation plan.

I - Prepare final presentation.

Improve
- Present final recommendation to Management
Team.
C
Control
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 Control

D Don’t be too hasty to declare victory.

Define

M
Measure

A
Analyze How will you maintain to gains made?
- Change policy & procedures
I
- Change drawings
Improve
- Change planning
- Revise budget
C
- Training
Control
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 Omitting a step in
Step
DMAIC?
Consequences if the step is omitted
1. Define
2. Measure
3. Analyze
4. Improve
5. Control

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 Tools for DMAIC

Define Measure Analyze Improve Control

What is wrong? Data & Process When and where How to get Display
capability are the defects to six sigma key measures

 Benchmark  7 Basic Tools  Cause & Effect  Design of Statistical Controls

 Baseline  Defect Metrics Diagrams Experiments  Control Charts
 Contract /  Data Collection,  Failure Models &  Modelling  Time Series
Charter Forms, Plan,  Effect Analysis  Tolerancing Methods
 Kano Model Logistics  Decision & Risk  Robust Design Non Statistical
 Voice of the  Sampling Analysis  Process Map Controls
Customer Techniques  Statistical  Procedure
 Quality Function Inference adherence
Deployment  Control Charts  Performance
 Process Flow Map  Capability Mgmt
 Project  Reliability  Preventive activities
Management Analysis  Poke yoke
 “Management by  Root Cause
Analysis
Fact” – 4 What’s
 5 Why’s
 Systems
Thinking
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 Components
Two components of Six
Sigma

1. Process Power

2. People Power
Tell me, I forget. Show me , I remember. Involve me, I understand.

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 6 σ Training
Mentor, trainer, and coach of Black Belts and othe
Masterin the organization.
Black
Belt

Leader of teams implementing the six sigma

Black Belts methodology on projects.
Champions

Delivers successful focused projects usin

the six sigma methodology and tools.

Green Belts

Team Members / Participates on and supports

the project teams, typically
Yellow Belts in the context of his or her
existing responsibilities.

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 Six Sigma
Organization Master
Black
Belt
Champion

Black Black Black

Belt Belt Belt

Green Green Green Green Green

Belt Belt Belt Belt Belt

Yellow Yellow
Belt Belt

Yellow Yellow
Belt Belt

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 6 σ Training
Position in Six Sigma Expected Role
Typical
Organisation Post Training
Training

Senior Executive overview

2/3 Days Provide Leadership
Executives

Champions Champions
Champions /
Process owners
Training - I + Training –II
Process Mgmt. &
Project
2 days 3 days
champion
(Total 5 days)

Training / Master Black-Belt

Facilitation -As Trainer
Week Week Week Week
Black-Belt skills -Coach teams
1 2 3 4 -Facilitate
improvement projects
Black-Belt Project-work

- Part
of project teams
- Sometime lead the
Green Belt 1 Week Green-Belt Training Project work teams
- Generalprocess
Employees 1 / 2 Days core training on control &
(Yellow-Belt) Six-Sigma improvement
- Project Team
Member

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 Champion
• Plans improvement projects
• Charters or champions chartering process
• Identifies, sponsors and directs Six Sigma
projects
• Holds regular project reviews in
accordance with project charters
• Includes Six Sigma requirements in
expense and capital budgets

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 Champion
• Identifies and removes organizational and
cultural barriers to Six Sigma success.
• Rewards and recognizes team and
individual accomplishments (formally and
informally)
• Communicates leadership vision
• Monitors and reports Six Sigma progress
• Validates Six Sigma project results
• Nominates highly qualified Black Belt
and/or Green Belt candidates QualityGurus.com
 Master Black Belt
Roles Responsibilities
- Enterprise Six Sigma expert - Highly proficient in using Six Sigma
- Permanent full-time change methodology to achieve tangible business
agent results.
- Certified Black Belt with - Technical expert beyond Black Belt level
additional specialized skills or on one or more aspects of process
experience especially useful in improvement (e.g., advanced statistical
deployment of Six Sigma analysis, project management,
across the enterprise communications, program administration,
teaching, project coaching)
- Identifies high-leverage opportunities for
applying the Six Sigma approach across
the enterprise
- Basic Black Belt training
- Green Belt training
- Coach / Mentor Black Belts

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 Black Belt
Roles Responsibilities
- Six Sigma technical expert - Leads business process
- Temporary, full-time change improvement projects where Six
agent (will return to other duties Sigma approach is indicated.
after completing a two to three - Successfully completes high-impact
year tour of duty as a Black Belt) projects that result in tangible benefits
to the enterprise
- Demonstrated mastery of Black Belt
body of knowledge
- Demonstrated proficiency at achieving
results through the application of the
Six Sigma approach
- Coach / Mentor Green Belts
- Recommends Green Belts for
Certification

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 Green Belt
Roles Responsibilities
- Six Sigma Project originator - Recommends Six Sigma projects
- Part-time Six Sigma change - Participates on Six Sigma project
agent. Continues to perform teams
normal duties while participating - Leads Six Sigma teams in local
on Six Sigma project teams improvement projects
- Six Sigma champion in local
area

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 Yellow Belt
Roles Responsibilities
- Learns and applies Six Sigma - Actively participates in team tasks
tools to projects - Communicates well with other team
members
- Demonstrates basic improvement tool
knowledge
- Accepts and executes assignments as
determined by team

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 Financial Analyst
• Validates the baseline status for each
project.
• Validates the sustained results / savings
after completion of the project.
• Compiles overall investment vs. benefits
on Six Sigma for management reporting.
• Will usually be the part of Senior
Leadership Team.

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Thought of the day

• We don't know what we don't know

• We can't act on what we don't know
• We won't know until we search
• We won't search for what we don't
question
• We don't question what we don't measure
• Hence, We just don't know

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Project Selection

The first step to implement Six Sigma

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Sources of Projects

• External Sources:
– Voice of Customer
• What are we falling short of meeting customer
needs?
• What are the new needs of customers?
– Voice of Market
• What are market trends, and are we ready to
adapt?
– Voice of Competitors
• What are we behind our competitors?
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 Sources of Projects
• Internal Sources:
– Voice of Process
• Where are the defects, repairs, reworks?
• What are the major delays?
• What are the major wastes?
– Voice of Employee
• What concerns or ideas have employees or
managers raised?
• What are we behind our competitors?

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 Project Selection
• As a team List down at least 20 improvement
projects related to your work areas …….

A Problem Statement should be SMART:

 Specific - It does not solve world hunger

 Measurable - It has a way to measure success
 Achievable - It is possible to be successful
 Relevant - It has an impact that can be quantified
 Timely - It is near term not off in the future

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Harvesting the Fruit of Six
Sigma

Sweet Fruit
Design for Repeatability
Process Enhancement

Bulk of Fruit
Process Characterization
and Optimization

------------------------------------

Low Hanging Fruit

Seven Basic Tools

------------------------------------

Ground Fruit
Logic and Intuition

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 Types of Savings

• Hard Savings:
– Cost Reduction
• Energy Saving
• Raw Material saving
• Reduced Rejection, Waste, Repair
– Revenue Enhancement
• Increased production
• Yield Improvement
• Quality Improvement

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 Types of Savings
• Hard Savings:
– Cash flow improvement
• Reduced cash tied up in inventory
• Reduced late receivables, early payables
• Reduced cycle time
– Cost and Capital avoidance
• Optimizing the current system / resources
• Reduced maintenance costs

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 Types of Savings

• Soft Savings:
– Customer Satisfaction / Loyalty
– Employee Satisfaction

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 Cost of implementing
• Direct Payroll
– Full time (Black Belts, Master Black Belts)
• Indirect Payroll
– Time by executives, team members, data
collection
• Training and Consulting
– Black Belt course, Overview for Mgmt etc.
• Improvement Implementation Costs
– Installing new solution, IT driven solutions etc.
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 What Qualifies as a
Six Sigma Project
• Three basic qualifications:
– -There is a gap between current and desired /
needed performance.
– The cause of problem is not clearly
understood.
– The solution is not pre-determined, nor is
the optimal solution apparent.

How many projects out of 20 now

qualify as Six sigma projects?

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 Way forward

• Get Started
• Look for low hanging fruits
• Even poor usage of these tools will get
results
• Learn more about Six Sigma

QualityGurus.com