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An Introduction to Six Sigma
© 2008 InnoCentrix, LLC
Jeffrey T. Gotro, Ph.D.
Agenda
� What is Six Sigma?
� Why would a company adopt Six Sigma?
� What are the challenges?
© 2008 InnoCentrix, LLC 2© 2008 InnoCentrix, LLC 2
� What are the challenges?
� What are the rewards?
� How is Six Sigma implemented?
� Summary and Questions
Six Sigma has many meanings
� A Symbol
� A Measure
� A Benchmark or Goal
© 2008 InnoCentrix, LLC 3© 2008 InnoCentrix, LLC 3
� A Benchmark or Goal
� A Philosophy
� A Method
Six Sigma: A Symbol
� σσσσ is a Statistical Symbol for Standard Deviation
� Standard Deviation is a Measure
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� Standard Deviation is a Measure of Variability
Six Sigma: A Measure
� The “Sigma Level” of a process can be used to express its capability� How well it performs with respect to customer
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How well it performs with respect to customer requirements.
� Percent Defects, Cp, Cpk, ppm
Doing the math
6 Sigma = 3.4 defects per million5 Sigma = 230 defects per million 4 Sigma = 6,210 defects per million
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4 Sigma = 6,210 defects per million3 Sigma = 66,800 defects per million 2 Sigma = 308,000 defects per million 1 Sigma = 690,000 defects per million
Six Sigma: A Benchmark or Goal
� The specific value of 6 Sigma (as opposed to 4 or 5 Sigma) is a benchmark for process excellence.
Adopted by leading organizations as a goal
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� Adopted by leading organizations as a goal for process capability.
100K
10K
1K Purchased Material Lot Reject Rate
Payroll Processing
Journal Vouchers
Wire Transfers
Air Line Baggage
Order Write-up
IRS - Tax Advice (phone-in)
AverageCompany
Restaurant Bills
Doctor Prescription Writing
(6,210 ppm)
(66,800 ppm)
Defe
cts
per
Mil
lio
n
Op
po
rtu
nit
ies
Some Examples to Illustrate Typical Defect Rates
© 2008 InnoCentrix, LLC 8© 2008 InnoCentrix, LLC 8SIGMA (with ±1.5 Sigma Shift)
2 3 4 5 6 7
100
10
1
(230 ppm)
Lot Reject Rate
(0.43 ppm)
Air Line BaggageHandling
Best in ClassDomestic Airline
Flight Fatality Rate(3.4 ppm)
Defe
cts
per
Mil
lio
n
Op
po
rtu
nit
ies
Six Sigma: A Philosophy
� A vision of process performance
� Delivering nearly defect-free products and services
Focus on variation reduction
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� Focus on variation reduction
� A Guiding Management Principle
Six Sigma: A Method
� A well defined process and toolkit used for:
� Product/Service Design
Quality Control
© 2008 InnoCentrix, LLC 10© 2008 InnoCentrix, LLC 10
� Quality Control
� Quality Improvement
� Strategic Planning
Six Essential Themes
� A genuine focus on the customer
� Data and fact-driven management (using effective measurement systems)
� Process focus [Y = f (x)]
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� Process focus [Y = f (x)]
� Proactive management drives improvement efforts
� Boundaryless* collaboration (including customers, suppliers, and supply chain partners)
� A drive for perfection with a tolerance for failure (freedom to take risks, learning from mistakes, drive to try new approaches)
* Termed by Jack Welch, CEO of GE
DMAIC Approach
30
35
40
Sporadic Spike (Special Cause)
Define Measure/Analyze ControlImprove
De
fect R
ate
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0
5
10
15
20
25
-10 -8 -6 -4 -2 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40
Chronic Waste
Chronic Waste
De
fect R
ate
Time
Common Cause Variation
Define Measure Improve ControlAnalyze
• Project Scope
• Project Charter
• Business Impact
• Process Map
• Data Collection
• Control Charts
• Multivari Analysis
• Cause & Effect
• Brainstorming & Creativity tools
• Design of
• Statistical Process Control (SPC)
• Standard Operating
Six Sigma DMAIC Process
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• Business Impact
• Voice of the Customer (VOC)
• Affinity Diagram
• Kano Model
• CTQ Tree diagram
• Control Charts
• Pareto Charts
• Prioritization Matrix
• Measurement System Analysis
• Process Capability
• Yields (RTY)
• Cause & Effect Matrix
• FMEA
• Hypothesis testing
• ANOVA
• Noise Variables
• Scatter plots
• Design of Experiments
• Design of Experiments (DOE)
• Full Factorial
• Fractional Factorial
• Response Surface
• Pilot Trials
• Implementation Plan
• Standard Operating procedures (SOP)
• Data Collection & sampling plans
• Control Plans
• Measurement Systems Analysis (recheck)
• Project summary & lessons learned
All Work is a Process
SupplierProcess
Value-added Customer
Requirements Requirements
Inputs Output
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Value-added tasks
Feedback Feedback
S. I. P. O. C.
What is a process?
ControllableInputs(X’s)
Key ProcessOutputs
(Y’s)
Process
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(X’s) (Y’s)
Noise Inputs
Y = f (X)
Process Capability
LowerSpecification
Limit
UpperSpecificationLimit
LowerSpecification
Limit
UpperSpecificationLimit
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LowerSpecification
Limit
UpperSpecificationLimit
Capable Process
LowerSpecification
Limit
UpperSpecificationLimit
This process is not capable
Visualizing Process Capability
43210-1-2-3-4
0.4
0.3
0.2
0.1
0.0
Lower Spec. Limit
Upper Spec. Limit
Cust. Tolerance
86420-2-4-6-8
0.4
0.3
0.2
0.1
0.0
Lower SpecLimit
Upper Spec.Limit
Cust. Tolerance
© 2008 InnoCentrix, LLC 17Cp=1 Cp=2
Process CapabilityProcess
Capability
Process Drift
Cp = 1.33
Cpk = 1.331.33
0.4
0.3
0.2
0.1
Lower Spec. Limit
Upper Spec. Limit
Cust. Tolerance
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5.334.02.671.33-1.33-2.67-4.0-5.33 0
0.0
0
0.4
0.3
0.2
0.1
0.0
5.334.02.671.33-1.33-2.67-4.0-5.33
Lower Spec. Limit
Upper Spec. Limit
Cust. Tolerance
Cp = 1.33
Cpk = 0.830.83
Unstable Process
• Mean shifts present
• Excess variation (σchanges)
TimeFri
Unstable Process
LSL USL
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changes)
• Special causes of variation are present,
• Process output is not stable over time and is not predictable
Mon
Tue
Wed
Thur
Stable process:• Variation reduced (lower σ)• Process is centered in spec window• Mean shifts reduced
Stable Process
Time
LSL USL
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• Only common cause variationis present
• Process output is stable/predictable• The process is termed “in statisticalcontrol.”
History of Six Sigma
� Originated at Motorola in the early 80’s
� Doesn’t use “Quality” in the name
� Uses a modification of the Deming Plan-Do-
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� Uses a modification of the Deming Plan-Do-Check-Act (PDCA) cycle
� Adopted widely in the 90’s by major corporations including AlliedSignal (now Honeywell), GE, Kodak, and a growing list.
Six Sigma Strategy
� Implementation is top-down. CEO driven with executive management and Champions (process owners) leading the initiative.
� Improvement projects must be integrated with the goals of the organization.
� Six Sigma uses a “divide and conquer” approach. Find
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� Six Sigma uses a “divide and conquer” approach. Find and work on the most important key customer related projects.
� Uses several levels of competency in Six Sigma implementation:� Champions� Master Black Belt� Black Belt� Green Belt
Roles & Responsibilities
� Executive Team:� Provide continuous support to drive for results. Sets
strategic direction, identify core business process issues, prioritize
� Champion:
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� Champion:� Identifies high impact projects by combining the strategic
vision of the executive team & the key customer and process needs of the business.
� Facilitates successful project completion, coaches teams
� Master Black Belt:� Highly skilled & experienced in all aspects of Six Sigma
� Coach and mentor to Black Belts, works with Champion on project selection
Roles & Responsibilities
� Black Belt:� Project Leader
� Highly trained in Six Sigma methods and tools
� Influencer, team facilitator, project manager
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� Influencer, team facilitator, project manager
� Green Belt:
� Project team member
� Trained in Six Sigma methods and tools
Training for Six Sigma
� Executives� 8 hour Six Sigma overview and implementation roadmap
development.
� Champion � 30 hour course, overview of DMAIC, Tools overview� Focus on developing project selection skills
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� Black Belt� 160 hours of classroom� Required to have a project
� Class for 1 week (40 hours) and project work for 3-4 weeks� Total of 4 months to train
� Green Belt� 30-80 hours depending on training philosophy� May or may not have to complete a project
Projects Drive Six Sigma Success
Types of Six Sigma Projects� Manufacturing Quality Improvement (origin of Six Sigma
initiatives)� Design for Six Sigma (DFSS) for product development� Business process improvement (transactional Six Sigma)
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Some companies find much larger impact in transactional type projects:
� One company: � $150-250K for manufacturing improvement projects� > $500K for transactional projects
Process management methods rarely used for business process improvements
Transactional Six Sigma is a Huge Opportunity
Identifying Six Sigma Projects
Basic Project Criteria
• Problem in key business activity
• Large financial impact
• Can measure and quantify performance
Easy to Fix?yes
Quick Hit
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Solution Available?
Easy to Fix?
no
yes
no
Quick Hit
Other Initiative
Six Sigma Project
• Process focus
• Analyze Y = f(x)
• Reduce variation & defects
• Complex relationships
Project Focus
� Projects are chartered by Champions and business leaders
� Led by Black Belts
� Assisted by Green Belts
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� Each experienced Black Belt can typically handle between 4-6 projects per year
� Typical financial impact is approximately $175,000 per project
� Experienced Black Belt can generate about $1M in savings per year
Why adopt Six Sigma?
� Concept has been around for 16 years, proven track record at big companies.
� Has shown the most endurance and return on investment of any improvement initiative.
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� Starting to be implemented in small and medium-sized corporations.
� Provides a comprehensive set of philosophies, tools, methods, and fundamental concepts leading to quantifiable business results.
� Involves the entire organization; from CEO, CFO, Champions, Black Belts, Green Belts, and workers.
What are the Challenges?
� Takes careful preparation and a commitment to fundamental change efforts required.
� Training – key for all levels in the organization
� It is not a quick fix nor a “one-size-fits-all” approach.
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� Implementation tends to be uneven and lapses occur frequently.
� Tendency to work on too many projects at once. Resource limitations are real!
� Need to manage expectations on payback time, typically takes 9-12 months from roll-out to start seeing quantifiable financial gains.
What are the Challenges
� Not everything has to be Six Sigma; this was the downfall of reengineering efforts! Choose your projects carefully.
� Statistical analysis is not generally part of the engineering discipline in most companies.
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engineering discipline in most companies.
� Determine the role of DFSS and transactional Six Sigma in your organization
� Needs to focus on people issues and change management
� People must not fear giving “bad news” and continually require data-driven decision making.
What are the Rewards
� Increased value to the customers and shareholders.
� Improved reliability and predictability of products and services.
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and services.
� Significant reduction in defects.
� Institutionalization of a “process” mindset.
� Increased competitive advantage.
Some Results…
� Motorola – 10 years; $11 Billion Savings
� AlliedSignal - $1.5 Billion estimated savings
� General Electric – started efforts in 1995
� 1998: $1.2 Billion less $450 Million in costs… net
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� 1998: $1.2 Billion less $450 Million in costs… net benefits = $750 Million
� 1999 Annual Report: more than $2 Billion net benefits
� 2001: 6,000 projects completed; $3 Billion in savings
The Road to Six Sigma
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Usually has many twists and turns!
Six Sigma Implementation
CharterImplementation
Team
DevelopRoadmap
& Goals
Train Execs &
Champions
Develop Project Portfolio
ImplementBB & GB
Training
ProjectReviews &Support
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• Appoint an implementation team leader• Use a multifunctional team to lead roll-out• Work with Execs & Champions to develop a Six Sigma Roadmap• Establish quantifiable goals• Formulate an implementation plan• Develop a mechanism to coach black belts & teams• Implement project review and metrics tracking mechanism
Six Sigma Roadmap
� Identify core processes & key customers
� Define key customer drivers � Voice of the Customer (VOC)
� Critical to Quality (CTQ’s)
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� Measure and baseline current performance
� Prioritize, analyze, charter and kick-off key improvement projects
� Develop a diversified project portfolio (short and long term projects)
� Expand and integrate the Six Sigma system across the enterprise as experience grows
Costs to Implement
� Direct payroll (individuals dedicated full-time to Six Sigma)
� Indirect payroll (executives, champions, process owners, etc.)
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� Training and consulting costs (Champion, black and green belt, implementation and project reviews)
� Improvement implementation costs (cost to implement solutions found in BB projects)
Where Do You Start?
� Business Transformation� Full scale change initiative
� Strategic Improvement� Address a strategic weakness
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� Address a strategic weakness
� Used to build a core competency that is missing (such as VOC, or measurement systems)
� Problem Solving� Most popular starting point
� Focus on key short-term and long-term improvement projects to get maximum impact
What are your core processes?
� Product Development Process
� Order fulfillment process
� Customer service process
Support Processes
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� Support Processes
� Finance
� Administration (HR, legal, etc.)
� Information technology
Customer centric core process
Understand
Product Development Process
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UnderstandCustomer
Needs
DesignProduct
BuildProduct
Test Product
Sell Product
Customer centric core process
Develop
Order Fulfillment Process
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DevelopCustomer
Relationship
TakeOrder
BuildProduct
ServiceProduct
Bill Customer
Six Sigma Summary
� Disciplined & Systematic Approach� Process orientation, drive for variation reduction
� Focus on quantitative methods and tools
� Focus on control to hold the gains
Uses a new metric for defects (sigma, DPMO, ppm)
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� Uses a new metric for defects (sigma, DPMO, ppm)
� Results oriented management leadership, using data-driven decision making
� Significant training & organizational learning
Six Sigma Summary
� Success happens “one project at a time”
� Good project selection leads to large financial impact
� Implementation is hard work, not magic. Expect
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� Implementation is hard work, not magic. Expect bumps in the road, stay the course, results will happen
� Six Sigma is “A journey not a destination”
InnoCentrix, LLC
Jeffrey Gotro, Ph.D.
© 2008 InnoCentrix, LLC 44© 2008 InnoCentrix, LLC 44
Jeffrey Gotro, Ph.D.
949-635-6916
www.innocentrix.com
info@innocentrix.com
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