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Online Student Guide

OpusWorks 2019, All Rights Reserved

Introduction to Six Sigma

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Table of Contents

LEARNING OBJECTIVES ........................................................................................................................................ 4

INTRODUCTION ...................................................................................................................................................... 4 SIX SIGMA AND BUSINESS SUCCESS ...................................................................................................................................... 4 WHAT IS SIX SIGMA? ............................................................................................................................................................... 5 LEAN: THE ORIGIN OF SIX SIGMA ......................................................................................................................................... 5 MANAGEMENT ......................................................................................................................................................................... 6 LEAN AND SIX SIGMA .............................................................................................................................................................. 6 VOICE OF THE CUSTOMER (VOC) ......................................................................................................................................... 7 VOICE OF THE PROCESS .......................................................................................................................................................... 7 THE RELATIONSHIP BETWEEN SIGMA LEVEL AND DPMO.............................................................................................. 8 WHAT DOES SIX SIGMA MEAN TO YOU ............................................................................................................................... 9 SIX SIGMA: TODAY’S PERFORMANCE MEASURE................................................................................................................. 9 SIX SIGMA SUCCESS ............................................................................................................................................................... 10

TEAM MEMBER INTRODUCTION ................................................................................................................... 10 EXECUTIVE MANAGEMENT .................................................................................................................................................. 10 PROJECT CHAMPIONS ............................................................................................................................................................ 10 MASTER BLACK BELTS ......................................................................................................................................................... 10 BLACK BELTS ......................................................................................................................................................................... 10 GREEN BELTS ......................................................................................................................................................................... 11 FINANCIAL LIAISONS ............................................................................................................................................................. 11 SIX SIGMA IS “TOP DOWN” DRIVEN ................................................................................................................................... 11 SIX SIGMA PROJECT SELECTION MUST ALIGN WITH BUSINESS STRATEGY ................................................................. 12 SUCCESS FACTORS & ROADBLOCKS .................................................................................................................................... 12 SIX SIGMA PROJECT TEAMS ARE PROCESS FOCUSED ...................................................................................................... 13 THE STRUCTURE OF SIX SIGMA PROJECTS ........................................................................................................................ 13 THE FOCUS OF SIX SIGMA METHODOLOGY ....................................................................................................................... 14 IDENTIFY THE KEY LEVERAGE KPIVS ............................................................................................................................... 14

SIX SIGMA DMAIC METHODOLOGY ............................................................................................................... 15 THE DMAIC METHODOLOGY OVERVIEW ......................................................................................................................... 15 DEFINE PHASE ....................................................................................................................................................................... 16 MEASURE PHASE ................................................................................................................................................................... 16 ANALYZE PHASE .................................................................................................................................................................... 16 IMPROVE PHASE .................................................................................................................................................................... 17 CONTROL PHASE .................................................................................................................................................................... 17 SIX SIGMA IS… ........................................................................................................................................................................ 18

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Learning Objectives

Upon completion of this course, student will be able to: • Define Six Sigma and Discuss its origin and evolution • Describe how it differs from Lean and Six Sigma • Explain how sigma levels are determined, and how they are used to indicate process capability • Describe the roles of Six Sigma team members • Discuss key factors of Six Sigma success • Discuss important elements of the Six Sigma process, including key inputs and outputs and the role

of “Critical to Xs” • Describe the five phases of the DMAIC improvement cycle

Introduction

Six Sigma and Business Success

To begin, let’s take a look at what makes an organization successful. When we compare successful organizations, we find them to share the following four key elements:

• Customer focus: They are committed to satisfying both internal and external customers. • Responsiveness: They are responsive to the needs of the customer, and they meet those needs in a

timely manner. • Differentiation: They differentiate themselves from the competition through exceptional business

performance. They don’t simply satisfy their customers; they delight them. Typically, this means providing value in all they do.

• Continual improvement: They are innovative and relentless in their pursuit of continuous improvement, in which they seek to achieve quality at reduced costs.

Today, many organizations are successfully integrating Six Sigma Principles into their business models as a way to differentiate themselves from competition.

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What is Six Sigma?

So, what exactly is Six Sigma? Let’s take a moment to define Six Sigma in broad terms. Six Sigma is a commitment to the customer. It is an assurance that an organization will continuously improve its processes until it can consistently exceed customer requirements. Six Sigma provides a statistical measurement of an organization’s process, which is both reliable and valid. Six Sigma stretches people’s thinking within an organization, with respect to quality and customer satisfaction. It improves an organization’s ability to solve problems creatively. Six Sigma provides a management framework, or a mental set, for simultaneously thinking about process economics, quality, and customers. Next, we will review the history of Six Sigma methodology.

Lean: The Origin of Six Sigma

Today’s Six Sigma principles evolved and expanded from the fundamental Lean methodology used during the 1970s. The transition to Six Sigma started when a Japanese company acquired Motorola TV production in the late 1970s and was able to drop its defect rate to 1/20th of its prior level. Subsequently, in the early 1980s, Motorola developed Six Sigma methodology under the leadership of Bob Galvin and reinforced by the sound practices of Mikel Harry and Bill Smith. Since that time, Six Sigma has grown into the global continuous improvement methodology it is today.

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Management

Let’s look at how Six Sigma differs from other quality initiatives. One distinguishing factor of Six Sigma is its formal implementation process, which starts with strong management support from the very top of the organization. It is a top-down driven methodology. Quality initiatives that use the bottom-up, or grassroots, approach often fail because they don’t have proper management or leadership support. With a limited structure to follow, and without the cooperation of the entire company, it is difficult for individual business units to implement their ideas. Six Sigma, on the other hand, actively involves all employees in the improvement process.

Lean and Six Sigma

Like Lean, Six Sigma’s process improvement methodology applies to a variety of business problems, within both manufacturing and service organizations. Aside from this key similarity, however, Lean and Six Sigma are fundamentally different. Let’s compare the two. Six Sigma is a data driven statistical business methodology. It focuses on minimizing process variation in order to identify and remove the cause of defects and errors. The main emphasis of Six Sigma is to improve the quality of manufacturing and business process outputs by defining what requirements are critical to customer satisfaction. In Six Sigma, the requirements that are “critical to” the customer are referred to as CTXs. Lean is an approach to improve quality, increase productivity, reduce costs and increase customer satisfaction by eliminating waste and creating value. Many organizations combine Six Sigma ideas with Lean to create a methodology known as Lean Six Sigma (LSS). A balanced combination of the two methodologies, LSS integrates Lean’s efficiency improvement with Six Sigma’s variation reduction power to optimize business processes.

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Voice of the Customer (VOC)

As you just learned, Six Sigma focuses on improving the quality of process outputs by defining what requirements are critical to customer satisfaction. For an organization to understand and meet the needs of its customers, it must truly listen to them. The Voice of the Customer (VOC) is a fundamental principle of Six Sigma. Let’s take a look at how it applies. As shown on this graph, the Voice of the Customer (VOC) is represented by lower and upper specification limits. These specification limits define the customer requirements. The curve on the graph represents the Voice of the Process, which is a measure of the variation of the process data. Next, we will show you how an organization can analyze its process data, in relation to the specification limits, to determine how well it is responding to its customers’ needs.

Voice of the Process

Recall that the Voice of the Process is a measure of the variation in the VOC data. It is represented by the standard deviation of the data, or “sigma.” In Six Sigma terminology, there are two meanings for the word “sigma.” The first meaning of sigma is standard deviation. It is a measure of the spread, or variation, of the data from the mean. A low standard deviation indicates that the data points are all fairly close to the mean. A high standard deviation, on the other hand, indicates that the data points are spread out over a larger range of values. The second meaning of sigma refers to the level at which a process is capable of meeting customer specifications. This capability level is referred to as a sigma level, or sigma score. It is determined by the distance from the center of the data to the specification limits, as measured in standard deviations. In this diagram, for example, the distance from the center of the data, or the mean, to the closest specification limit is two standard deviations.

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Therefore, we say the capability of this process for meeting customer specifications is two sigma, or that the process is operating at a two sigma level. Next, we will discuss sigma levels in more detail.

The Relationship Between Sigma Level and DPMO

Sigma process capability levels can be used to calculate and express measures. They indicate the percentage of a process output that is good product versus the percentage that is defective. These percentages are determined by defects per million opportunities, or DPMO.

This chart shows the performance yields of each sigma level. As you can see, at the one sigma process capability level, DPMO is 690,000. This means that only 30.9 percent of the process output is good product, and that 69.1 percent is defective. At the six sigma level, on the other hand, DPMO is only 3.4, which translates to 99.9997 percent yield.

Recall that in our previous example we determined the process to be operating at a two sigma level. This means that 30.8 percent of the process output will be defective.

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What Does Six Sigma Mean to You

As you just learned, sigma level measurements are specifically based on the number of defects in the process. At one time, 99 percent quality was considered good. 99 percent represents a 3.8 sigma process. Let’s see what that means. Each of these four examples shows how a 3.8 sigma process compares to a six sigma process. Take a close look at the first example. As you can see, a six sigma performance isn’t just two times better than a 3.8 performance; it is almost 20,000 times better! In Six Sigma, the improvements from one sigma level to the next are exponential.

Six Sigma: Today’s Performance Measure

Six Sigma measurements can be used to compare processes, departments, facilities, companies, and the like. This graph uses sigma levels to measure the performance of various processes. As you see, when the sigma value goes up, the number of defects declines. In other words, the higher the sigma value, the better the quality.

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Six Sigma Success

Six Sigma is about people. The success of an organization’s Six Sigma initiative depends greatly upon the strength of its team.

Business leaders must ensure that selected team members have the correct skills, are strong leaders, and receive training in both Six Sigma methodology and team management.

Team Member Introduction

Although each Six Sigma team may be configured differently, and the names of the members may change, the roles and responsibilities for a successful implementation are usually very similar.

Executive Management

Executive Management, sometimes referred to as Deployment Champions, is responsible for the sponsorship and commitment of an organization to the Six Sigma methodology. Executive Management provides the organizational structure necessary to successfully implement Six Sigma.

Project Champions

Project Champions are held accountable for the project’s implementation. They regularly review project plans to ensure project development, completion, and implementation. Project Champions are also a resource for removing roadblocks and resistance.

Master Black Belts

Master Black Belts are often former Black Belts who have successfully completed a specific program that often includes successfully completing numerous projects, advanced statistics, advanced leadership skills and advanced change management skills. Master Black Belts promote the Six Sigma philosophy throughout the organization. They act as a consultative resource for Black Belts; and they train, coach, and mentor other employees.

Black Belts

Black Belts act as both statistical consultants and team leaders for the project. They work with a Champion to select the right project, and they are accountable for the results. Their responsibilities

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include deploying effective control plans to ensure gains are sustained, and communicating results to leverage gains within and among organizations. They also help train other employees. Black Belts who receive additional training and demonstrate success at leading Six Sigma projects can become Master Black Belts.

Green Belts

Green Belts are a valuable resource for Black Belts. Because Green Belt employees typically perform the operations within the process, they may act as subject matter experts on process knowledge. For example, they will know if any process changes occurred that might not be represented in the process documentation. Green Belts are trained to use specific Six Sigma tools in order to assist Black Belts through various stages of an improvement project. By learning how to use these tools, they become more effective at presenting information and ideas to the team. They are often the link between the project team and the operational team. They are trained to manage projects using the Six Sigma DMAIC methodology. In many cases, they are assigned project work by Champions.

Financial Liaisons

Financial Liaisons provide key financial metric information to help create the Cost of Poor Quality and cost reduction opportunities. They help quantify the financial benefit of the improvement project at the outset of the project and when the solution is selected.

Six Sigma is “Top Down” Driven

In Six Sigma, an organization’s improvement project activity must align with its overall business strategy. A top-down driven methodology, Six Sigma ensures this alignment through active management leadership, commitment, and participation. Here are some examples:

• To maximize return on investment (ROI), management focuses on blending customer requirements and core processes with stakeholder needs.

• It defines and uses key metrics to monitor and track project performance.

• It links quantifiable long term results to the business strategy.

Next, we will examine the project selection process.

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Six Sigma Project Selection Must Align with Business Strategy

As you just learned, the success of a Six Sigma project depends greatly upon its leadership. In particular, a key factor of success is management’s ability to select the right project. Well-selected projects reap huge rewards, while using company resources effectively and balancing risks. Management should choose projects that align with, and effectively impact, the company’s strategic improvement and financial goals. It should prioritize projects based on complexity, risk, reward, resources available, and the current needs of the organization. There are a number of important issues to consider when selecting a project, including the the following:

• How does the project affect, or correlate with, overall business objectives? • Will the project impact customer satisfaction or cost? • How difficult or costly will the potential project process improvements be to implement? • How long will it take? • What skills (such as Black Belt or Green Belt, for example) are required?

Management’s ability to match the right resources to the right project has as much impact on a project’s success as does the degree of commitment from the Six Sigma team.

Success Factors & Roadblocks

The committed leadership of management is critical to Six Sigma success. Without it, improvement efforts will not achieve breakthrough performance or be sustained over time. Other factors that contribute to a successful Six Sigma implementation are shown here. Take a moment to review them. To ensure success, an organization’s management must also be aware of roadblocks and implement strategies to remove them.

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Six Sigma Project Teams are Process Focused

You have just learned some key factors of Six Sigma success, including a well-trained team, strong leadership, and correct project selection. Now let’s see how Six Sigma actually works. To begin, let’s briefly review the definition of a process.

As it relates to Six Sigma, a process begins when an organization gets such things as equipment, people, or materials from its suppliers. Next, a sequence of events or steps occurs that produces a product or service that is passed on to its customer. The entire process from the suppliers to the customers is called the value stream, and it is the focus of Lean.

Six Sigma project teams are process focused. They address specific problems related to process quality, defects, and excess variation. They use tools such as process maps, cause and effect diagrams, and data analysis to identify and eliminate the root causes of the problem.

The Structure of Six Sigma Projects

This illustration shows the basic structure of a process, as it relates to a Six Sigma project. Recall that CTXs are those things that are “critical to” the customer. In order to truly understand these customer requirements, CTXs must do the following: clearly describe what the customer is looking for or will be evaluating; link to a specific process output requirement; describe a single performance criteria; and be expressed using observable or measurable factors. CTXs are divided into the following three categories: Critical to Quality, or CTQ; Critical to Cost, or CTC; and Critical to Delivery, or CTD.

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Key Process Output Variables, or KPOVs, are the things that are measured as the output of the process. The Six Sigma team must be able to tie these process metrics directly to CTXs. Six Sigma projects address gaps, or deficiencies, in one of the three CTX categories. In addition to addressing the CTXs of both internal and external customers, projects must also address, and align with, an organization’s overall business strategy. Next, we will take a closer look at what this means.

The Focus of Six Sigma Methodology

The general idea behind the Six Sigma methodology is as follows: If an organization can establish a relationship between the inputs to a process and the outputs, it can control the inputs, which will allow it to predict the outputs. In Six Sigma terminology, the outputs are called Y’s, and the inputs are called X’s. The expression, “Y is a function of the X’s” is one of the most important concepts behind permanently solving process and business problems. That’s because it requires improvements to be made at the most basic levels of a process.

Identify the Key Leverage KPIVs

Another way to visualize the Six Sigma process is to use a funnel. As you see here, many inputs (KPIVs or Xs) go into the funnel. Throughout the phases of the project, the team narrows down the list of inputs down. This allows the team to identify a few key leveraged KPIVs, which have the most influence on the outputs (KPOVs or Ys), and are tightly controlled. The result is an improved process that meets customer requirements.

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Six Sigma DMAIC Methodology

The primary improvement methodology used in Six Sigma projects is DMAIC. The letters, D, M, A, I, C, stand for Define, Measure, Analyze, Improve, and Control, which are the five phases of this improvement cycle. DMAIC is a structured, statistically focused, rigorous, data driven, and systematic business improvement

methodology. It is key to Six Sigma project success.

The DMAIC Methodology Overview

Here is an overview of the DMAIC methodology. The focus of the Define phase is to establish the real problem and its importance to the customer and quality.

The focus of the Measure phase is to gather information on the current process performance and determine baseline capability.

The focus of the Analyze phase is to evaluate and digest the data, and to determine the real key root cause of the problem. The focus of the Improve phase is to develop a course of action to fix the

root cause, and then verify the fix. Once a fix is incorporated, the focus of the Control phase is to implement controls to maintain improvement, and to verify the fix again.

Next, we will examine the details of each phase.

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Define Phase

In the Define phase, members of the project team are chosen based upon their skills, relative to the project. In this phase, the team’s objective is to identify and validate the improvement opportunity; define critical customer requirements; and prepare itself to be an effective project team. The team begins the important step of documentation by creating a Project Charter and determining the project scope.

Measure Phase

A major benefit of Six Sigma is its requirement for a fact-based and data-driven analytical approach. In the Measure phase, the team has several types of process maps available to document the current as-is process. It begins collecting data to identify the process parameters that affect the CTQ variables. With this information, the team analyzes the current measurement system and estimates the baseline capability of the process. It measures the Cost of Poor Quality as it relates to the project.

Analyze Phase

In the Analyze phase, the team uses the results from the Measure phase to narrow the range of potential causes requiring investigation. In this phase, the team uses Cause and Effect analysis to understand the causes of variation in the process and process behavior. It identifies potential causes of the problem and performs analysis to identify root causes.

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Improve Phase

In the Improve phase, the team identifies, evaluates, and selects the right improvement solutions to maximize return on investment. Its objective is to demonstrate, with facts and data, that its chosen solutions solve the problem. The organization implements the process changes that will eliminate the defects and close the gap between the current process performance and customer needs (remember, these are the customer needs that were identified during the Define phase). In this phase, the team develops a change management approach to help the organization adapt to the changes introduced through its solution implementation.

Control Phase

In the Control phase, the team’s objective is to ensure the gains achieved will be maintained, and the process will not revert back to its prior state. To do this, it puts process controls and a control plan in place. In this phase, it identifies and implements a plan for transitioning from the Six Sigma team to the operations team. Finally, the team leverages what it learned from the project to help management and others.

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Six Sigma is…

In summary, Six Sigma is about improving customer satisfaction and loyalty. It is a disciplined management philosophy used to bring about change and improve bottom line fiscal results.

It uses statistical techniques and tools, and ensures accountability by using valid and reliable measurements. Six Sigma is a method for improving processes by reducing variation and eliminating defects. DMAIC, a five-step improvement cycle, is the primary methodology used in Six Sigma projects.