iir ss prsntn final no notes

8/3/2019 IIR SS Prsntn Final No Notes

1/29

1

1stMiddle EastSix Sigma Forum

Six Sigma A Strategy for Achieving

World Class Performance

7th to 9th December, Dubai

Sunil ThawaniManager Business Process Improvement

Union National Bank, Abu Dhabi

[email protected]


2/29

2

Purpose of PresentationPurpose of Presentation

Share concepts and application ofSixSigma with a case study;

Deployment ofSix Sigma as a strategyto achieve World Class Performance;

Integration ofSix Sigma with EFQM

framework;

Lessons Learnt


3/29

3

World Class PerformanceWorld Class Performance

With 99 %Quality

WithSix Sigma

Quality

For every 300000

letters delivered

3,000 misdeliveries 1 misdelivery

For every week of TVbroadcasting perchannel

1.68 hours of dead air 1.8 seconds of deadair

Out of every 500,000computer restarts

4100 crashes Less than 2 crashes

Source: The Six Sigma Way by Peter Pande and Others


4/29

4

Based on teachings of Dr. WalterShewhart,Dr. W. E. Deming & Dr. J. Juran.

Process Control;

Plan Do Check Act;

Common and Special Causes;

Improvement can be done project by project

Statistical tools

Hawthorne Plant Experiences Developed by Bill Smith at Motorola in 1980s

What is Six Sigma ?What is Six Sigma ?


5/29

5

What Is Six Sigma?What Is Six Sigma?

Degree of variation; Level of performance in terms of

defects; Statistical measurement of process

capability; Benchmark for comparison; Process improvement methodology; It is a Goal; Strategy for change;

A commitment to customers to achievean acceptable level of performance

WWWW

Sigma is a letter

in the Greek

Alphabet


6/29

6

S

ixS

igma DefinitionsS

ixS

igma Definitions

Business DefinitionA break through strategy to significantly

improve customer satisfaction andshareholder value by reducing variability inevery aspect of business.

Technical DefinitionA statistical term signifying 3.4 defects per

million opportunities.


7/29

7

SigmaLevel Defects Per MillionOpportunities Rate ofImprovement

1 WW 690,000

2WW 308,000 2 times

3WW 66,800 5 times

4WW 6,210 11 times

5WW 230 27 times

6WW 3.4 68 times


8/29

8

B

ank of AmericaB

ank of America SS

ExperienceSS

Experience Goals

# 1 in Customer Satisfaction

Worlds most admired company Worlds largest bank

Strategy - Develop business process excellenceby applying voice of the customer to identify and

engineer critical few business processes using SixSigma

Created Quality & Productivity DivisionSource: Best Practices Report


9/29

9

Bank of AmericaBank of America SS ExperienceSS Experience

Wanted results in 1 year;

Hired more than 225 MBB & BBs from GE, Motorola,Allied Signal for rapid deployment

Developed 2 weekGreen Belt training programs

Introduced computer simulation of processes

Trained 3767 Green Belts, certified 1230 - Minimum valuetarget perGB project $ 250K

Trained 305 Black Belts, certified 61 - Minimum value

target per BB project $ 1 million Trained 43 MBB,

1017 in DFSS

80 % ofExecutive Team trained in GB and 50 % Certified


10/29

10

Bank of AmericaBank of America SS ExperienceSS Experience

Results of first 2 years:

Reduced ATM withdrawal losses by 29.7 %

Reduced counterfeit losses in nationwide cashvaults by 54%

Customer delight up 20%;

Added 2.3 million customer households

1.3 million fewer customer householdsexperienced problems

Stock value up 52%

Y 2002 BOA named Best Bank in US & Euromoney's Worlds Most Improved Bank


11/29

11

Revenue Capital Utilization Return on Assets Profits

Quote Time Defect Rate Waste On Time Delivery Inventory; Machine Utilization

Strategically: Used by Leadership as a vehicle to developsustainable culture of Customer, Quality, Value and Continuousimprovement.

Operationally: By Quality Managers to reduce cycle times, costs,errors, rework, inventory, equipment downtime.

Deployment across all types of processes and industries -worldwide


12/29

12

Six Sigma & EFQM/ DQA Framework

Results

Innovation and Learning

Encouraging

& enabling people

To participate in

Improvement

Personally

actively

Involved in

improvement

Recognizing

Individual &Team effort

Identifying &designing

processes to deliverstrategy

Developing

Team skills

Aligning

Individual &

Organization

Goals

Recognizing

PeopleEstablishing

Process

managementSystem to be

used

ImplementingProcess

Measures

Improving

processes

to satisfy and

Generate value

For customers

Delivery,

Value,

reliability

Repurchase

satisfaction

Response

Time to

customers

Time to

Market

Satisfaction

InvolvementRecognition

Competency

Productivity

UtilityconsumptionTimelinessInventory

Process cycle time

Process costs

Defect rates

Productivity

Cash flow

Maintenance cost

Return on assets

Gross margins

Net profit

Sales

Market Share

Leadership

Policy & Strategy

People

Processes

People

Results

Society

ResultsPartnerships

Resources

Key Perf

Results

CustomerResults

Enablers


13/29

13

Who is Implementing Six SigmaWho is Implementing Six Sigma

At least 25% of the fortune 200 claim tohave a serious six sigma program - MichaelHammer.

Financial - Bank of America, GE Capital,Electronics - Allied Signal, Samsung,Sony

Chemicals - Dupont, Dow Chemicals Manufacturing - GE Plastics, Johnson

and Johnson, Motorola, Nokia,Microsoft, Ford.

Airline - Singapore, Lufthansa,Bombardier

And hundreds of others in Americas,Europe, Sub Continent.


14/29

14

Six Sigma ResultsSix Sigma Results

Company Annual SavingsGeneral Electric $2.0+ billion

JP Morgan Chase *$1.5 billion (*since inception in1998)

Motorola $ 16 billion (*since inception in 1980s)

Johnson & Johnson $500 million

Honeywell $600 million

Six Sigma Savings as % of revenue vary from 1.2 to 4.5 %For $ 30 million/yr sales Savings potential $ 360,000 to $1.35 million.

Investment: salary of in house experts, training, process

redesign.


15/29

15

Six Sigma Project MethodologySix Sigma Project Methodology

ControlDefine Measure Analyze Improve

Establish

standards tomaintainprocess;

Design thecontrols,implementand monitor.

Evaluate

financialimpact of theproject

Identify,evaluate andselectprojects forimprovement

Set goalsForm teams.

Collect dataon size of theselectedproblem,

identify keycustomer

requirements,

Determinekey productand processcharacteristic

.

Analyze data,establish andconfirm the vital few

determinantsof theperformance.

Validatehypothesis

Improvementstrategy

Developideas to

remove rootcauses

Design andcarry outexperiments,

Optimize theprocess.

Finalsolutions

Project Phases


16/29

16

Six SigmaSix Sigma Case StudyCase StudyService OrganisationService Organisation

Background

M/s Alpha Inc. manages out bound cargo froma distribution centre to different stores.

Deliveries made on trucks - owned and hired.

Customers dissatisfied at delivery schedules.

Leadership decision to deploy Six Sigma;

Team of 1 Black Belt and 3 Green Belts

formed Sponsor of the project Distribution Manager


17/29

17

DefineDefine -- Critical to Quality (CTQ)Critical to Quality (CTQ)

Focus on customers generating annualrevenue of USD 400,000/-.

Customer

needs

Improved delivery

performanceLevel 1 CTQ Timely delivery

Level 2 CTQ On time delivery to schedule

Level 3 CTQ Delivery within +/- 1 hour ofscheduled delivery time

Current process sigma level - 2.43 or 175889 DPMO


18/29

18

DefineDefine -- Goal StatementGoal Statement

Reduce number of delayed deliveries by50 % by 31st December Y 2002 to

better meet customer requirement oftimely delivery defined as within +/- 1hour of scheduled delivery.


19/29

19

DefineDefine -- Performance StandardsPerformance StandardsOutput unit A scheduled delivery of freight

Outputcharacteristic

Timely delivery

Project Y measure Process starts when an order is received

Ends when goods are received & signedfor at customers desk.

Process measurement Deviation fromscheduled delivery time in minutes.

Specification limits LSL = -60 minutes

USL= +60 minutes

TargetS

cheduled time or zero minutesdeviation

Defect Delivery earlier or later than 1 hour.

No. of defectopportunities per

unit

1 opportunity for a defect per scheduleddelivery of freight.


20/29

20

DefineDefine -- SIPOC DiagramSIPOC Diagram

Supplier Stores Manager

Input Stores Order

Process Steps

(high level)

Receive order

Plan deliveryDispatch Driver with goods

Deliver goods to stores

Receive delivery

Output Received freight withDocuments

Customer Store Manager

Detailed process maps drawn


21/29

21

Measure and AnalyzeMeasure and Analyze

Driver and Distance identified as keyfactors influencing delivery performance.

Driver selected for focus.

Potential root causes as to why Driverinfluenced the time:

Size of the vehicle

Type of engine Type of tyres

Fuel capacity


22/29

22

Experiments designed and conductedusing truck type and tyre size.

Findings: Larger tyres took longer time at certain

routes where area was cramped and timelost in maneuvering.

High incidence of tyre failures since tightturns led to stress on tyres thus increasingnumber of flat tyres.

Team modified planning of dispatchprocess by routing smaller trucks atmore restrictive areas.

ImproveImprove


23/29

23

Test implementation. Process sigma level up from 2.43 or

175889 DPMO to 3.94 or 7353 DPMO. Performance still fell short of best in class

4.32 or 2400 DPMO. Improvement led to significant customer

satisfaction. Process continually monitored and data on

new cycle times, tyre failure collected asper defined methods and frequency,analysed and monitored.

Customer satisfaction measured andmonitored.

ControlControl


24/29

24

Key Lessons LearntKey Lessons Learnt

Define Difficulty in identifying the right project and

defining the scope;

Difficulty in applying statistical parameters

to Voice of the Customers; Trouble with setting the right goals;

Measure Inefficient data gathering;

Lack of measures;

Lack of speed in execution;


25/29

25


Analyse Challenge of identifying best practices Overuse of statistical tools/ under use of practical

knowledge Challenge of developing hypotheses

Improve Challenge of developing ideas to remove root

causes Difficulty of implementing solutions

Control

Lack of follow up by Managers/ Process Owners Lack of continuous Voice of the Customer

feedback Failure to institutionalize continuous improvement.


26/29

26


Define ranked most important step but getsthe lowest resource allocation

Project scoping and its definition is critical toits success/ failure;

Measure is considered most difficult stepand also gets the highest resources

Source: Greenwich Associates Study Y 2002


27/29

27

Versatile Breakthrough improvements Financial results focus Process focus Structured & disciplined problem solving

methodology using scientific tools and techniques Customer centered Involvement of leadership is mandatory.

Training is mandatory;

Action learning (25% class room, 75 %application)

Creating a dedicated organisation for problemsolving (85/50 Rule).

What Makes Six Sigma Different?What Makes Six Sigma Different?


28/29

28

Benefits ofSix SigmaBenefits ofSix Sigma

Generates sustained success

Sets performance goal for everyone

Enhances value for customers;

Accelerates rate of improvement;

Promotes learning across boundaries; Executes strategic change


29/29

29

Thank you

Q & A