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FICCI CE Six Sigma - A Breakthrough Strategy Competitive Edge Management Consultants 

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FICCI CE

Six Sigma - A Breakthrough Strategy 

Competitive EdgeManagement Consultants 

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FICCI CE

• 400 State-of-the-art training slides on concepts of Six

Sigma, implementation methodologies, tools for

achieving Six Sigma and training of black belts.

• Self assessment utility package.

• Quality promotional posters.

Contents 

Jointly developed by FICCI Quality Forum and Competitive Edge, Management consultants 

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FICCI CE

1. Basic concepts of Six Sigma

4. Measurement phase

3. Define phase

2. Fundamentals of the breakthrough strategy

5. Analysis phase

6. Improvement phase

8. Implementation and deployment

7. Control phase

9. Measurement of business excellence

CLICK on the boxes below to navigate 

End slide show

Index 

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FICCI CE

1. Basic concepts of Six Sigma 

Most effective strategy

Limitation of other tools

What is Sigma

Six Sigma and defect rate

Old and new concept of quality

Six Sigma and cost of quality

Reasons to adopt Six Sigma

Global acceptability and success stories

How Six Sigma works

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FICCI CE

Most effective strategy 

Six Sigma is the most effective breakthrough strategy ever

devised. It enables companies to make substantialimprovements in their bottom-line by designing and

monitoring every day business activities in ways which

minimizes all types of waste and non-value adding

activities and maximizes customer satisfaction. 

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FICCI CE

Limitations of other tools 

Many organizations have earlier tried Downsizing, Outsourcing,

Activity based costing, Business process reengineering, Just in time,

Kaizen & TQM for improving quality and business results. While all

these tools are useful in their own ways, they often fail to make

 breakthrough improvements in bottom line and quality.

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FICCI CE

Limitations of other tools 

Kaizen, for example, means doing little things better and continuously

reaching for better standards, work well till 3 or 4 sigma in specific processes. These small improvements may not necessarily translate

into overall business improvement. This is because Kaizen only uses

 basic tools. For reaching 5 or 6 sigma standards, the organization will

have to use sophisticated tools like Quality Function Deployment

(QFD), Failure Mode and Effect Analysis (FMEA) and Design of

Experiments (DOE) to achieve optimum throughput at minimum cost.

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FICCI CE

What is Sigma 

The term „Sigma‟  taken from the Greek alphabet, is used

to designate the distribution or spread about the mean

(average) of any parameter of product, process or procedure. In the context of business or manufacturing

 process, Sigma capability is a metric which indicates how

the process is behaving. Higher the Sigma value, better the

capability of the process to produce defect free work and

vice versa.

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FICCI CE

Six Sigma and error or defect rate 

At present most companies, when their processes are under

control, are able to achieve 3 sigma capability which represents99.7% performance i.e 3 defects per 1000. With rapid

technological advances and development of complex products,

this level of quality is no longer acceptable. 

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FICCI CE

As manufacturing of most of the products involves large number of processes and if each process has a maximum quality capability of 99.7%,

the quality of finished product would be considerably less. Therefore, if the

companies have to compete in the global markets, they have to achieve a

much higher level of quality capability.

Six Sigma and error or defect rate 

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FICCI CE

Levels of Sigma and defect rate 

Quality level % Quality Defective PPM*

 

3 Sigma 99.73 66807

4 Sigma 99.9937 6210

5 Sigma 99.999943 233

6 Sigma 99.9999998 3.4

 

*Parts Per Million

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FICCI CE

Old concept

of quality 

Past concepts of quality focused on “conformance to standards” .  This

definition assumed that as long as the company produced quality productsand services, their performance standard was correct regardless of how

those standards were met. Moreover, setting of standards and

measurement of performance was mainly confined to the production areas

and the commercial and other service functions were managed through

command and control.

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FICCI CE

New concept of quality 

In Six Sigma, the concept of quality encompasses manufacturing,

commercial and other service functions of an organization because all

these functions directly or indirectly affect products/service quality &

customer satisfaction. It also embodies a structured system of capturing

all types of errors and their quantified measurement for subsequent

analysis and improvement.

Under the new approach, quality is a state in which Value enr ichment  

is realized for the customer and provider in every aspect of business

relationship.

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FICCI CE

Value enrichment 

The term „Value enrichment‟  for the company means that they must

strive to produce highest quality products at the lowest possible costs to be competitive in the global markets.

For customers, the term „Value enrichment‟ means that they have the

right to purchase high quality products/services at the lowest cost.

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FICCI CE

Knowing characteristics critical to customer 

Value enrichment for the company and the customer is done by

measurement based approach of Six Sigma, which enables us to find :-• Vast areas of business about which we do not know enough.

• When we do not know about a parameter or a characteristic which are

important to customers, we do not value it. 

• If we do not value a parameter or a characteristic, we do not measure it. 

• If we do not measure, we can not improve. 

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FICCI CE

Six Sigma and cost of quality 

Six Sigma has a very significant impact on the cost of quality. Asthe Sigma level moves up, the cost of quality comes down and vice

versa. Traditionally recorded quality cost generally account for

only 4 to 5 percent of sales which mainly comprise of cost of scrap,

re-work and warranty.

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FICCI CE

Hidden costs of quality 

There are additional costs of quality which are hidden and do not

appear in the account books of the company, as they are intangible anddifficult to measure. These additional costs could be as high as 20-25%

of sales and comprise of low conversion efficiency of materials, cost of

resolving customer problems, inadequate resource utilization, high

inventory, long cycle times, more set-up times, penalties due to late

delivery and lost customer loyalty and goodwill.

CC C

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FICCI CE

•Scrap

•Rework•Warranty costs

Hidden Costs 

Visible costs

• Excessive use of material

• High inventory

• Inadequate resource utilization

• Cost of redesign and re-inspection

• Cost of resolving customer problems

•  Lost customers / Goodwill

Visible and hidden costs 

• Conversion efficiency of materials

FICCI CE

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FICCI CE

Cost of quality at various levels of Sigma 

Sigma Defect rate(PPM) Cost of quality Competitive level

3.4 <10%

233 10-15%

6210 15-20%

66807 20-30%

308537 30-40%

6,90000 >40%

World

Class

Industry

Average

Non

Competitive

6

5

4

3

2

1

FICCI CE

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FICCI CE

Six Sigma is a high performance data driven approach

focused on analyzing the root causes of business

 problems and solving them. It ties the outputs of a

 business directly to market place.

How Six Sigma works 

FICCI CE

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FICCI CE

Clear focus on the bottom line 

Six Sigma places a clear focus on getting the bottom lineresults along with the time frame. No Six Sigma project is

approved until the bottom line or the success factors are

clearly spelt out. Each project must be completed within a

given time frame which is usually 3-6 months.

FICCI CE

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FICCI CE

Objectives of Six Sigma 

At the strategic level, the goal of Six Sigma is to align an

organization to its marketplace and deliver real improvements (in

terms of rupees/dollars) to the bottom line.

At the operational level, the Six Sigma goal is to move the

 business product or service attributes within the zone of customer

specifications and to significantly shrink process variation.

FICCI CE

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FICCI CE

The Six Sigma strategy affects five fundamental areas

of business :-

1. Process improvement

2. Product & service improvement

3. Customer satisfaction

4. Design methodology

5. Supplier improvement

The business improvement mechanism is shown in the

next slide.

Impact of Six Sigma 

FICCI CE

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FICCI CE

Suppliers InputsProcess

Outputs

Business

Process

CriticalCustomer

Requirements

Defects

Variation in output of processes

causes defects 

Six Sigma business improvement mechanism 

FICCI CE

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FICCI CE

Aspects of Six Sigma 

Six Sigma approach integrates the human and process

elements of improvement to produce breakthrough

results.

FICCI CE

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FICCI CE

Human elements 

• Strong leadership

• Training

• Customer focus

• Project teams

• Culture change

FICCI CE

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FICCI CE

Process elements 

• Analysis of variation

• Disciplined approach

• Quantitative measures

• Statistical methods

• Process improvement 

FICCI CE

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Reasons to adopt Six Sigma 

In the past, quality programs adopted by organizations focused on meeting

customer‟s needs without due consideration of visible and invisible costs.

Thus, many organizations managed to produce high quality goods, but at a

comparatively high cost.

However, today in the fiercely competitive market, the organizations haveno choice but to offer the best quality products and services at the

minimum cost - which is the purpose and objective of Six Sigma.

FICCI CE

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Reasons to adopt Six Sigma

• Organizations which achieve significant quality

improvement earn 8 - 10 % better prices.

• Organizations which achieve a superior quality position are

3 times more profitable than those with inferior levels of

quality.

• Organizations which improve their quality, gain 4-5 % in

market share each year.

• Each significant positive shift in process capability equates

to 10 times improvement in profitability.

FICCI CE

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Global acceptability 

Six Sigma approach was initially developed in Motorola

and greatly refined during its application in General

Electric. This is what CEO, GE Power systems has to

say about Six Sigma.

“Quality (Six Sigma)…  The Pride and Commitment is the most

 pervasive and all encompassing initiative we (GE) have ever

launched. Quality is the fabric by which all of us will be bound

together, and how our daily activities and contributions can be

measured both internally and externally by our customers when

they vote with their next order”.

Mr. Robert.L.Nardelli 

FICCI CE

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Global acceptability 

The world over, organizations seeking better ways of

improving their profitability have adopted Six Sigma because of its ability in giving quick tangible results.

These organizations include General Electric, Allied

signal, Honda, Sony, Canon, Polaroid, Texas instruments

and many more fortune 500 companies across the globe.

FICCI CE

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Success stories - General Electric 

General Electric‟s, Jack Welch describes Six Sigma as

the most important initiative GE has ever undertaken. GEhad an operative income of 10% for decades and they were

not able to improve this despite various efforts. After

implementation of Six Sigma GE was able to improve its

operative income from 10% in 1995 to 16.7% in 1998.

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FICCI CE

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Asea Brown Boveri 

ABB, after application of Six Sigma has reduced

measurement equipment error by 83%. The company also

made drastic improvements in material handling resulting in

an annual estimated cost savings of US $775000.

FICCI CE

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Challenge for the Indian companies 

It is high time, that Indian companies also start

implementing Six Sigma for making breakthroughimprovements and to remain globally competitive.

FICCI CE

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2. Fundamentals of the breakthrough strategy 

Fundamental steps

Operations perspective of strategy

Process perspective of strategy

Business perspective of strategy

Strategies at various levels

Six sigma roadmap

Players and their responsibilities

Black Belt training program

FICCI CE

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Fundamental steps 

There are 6 fundamental steps involved in applying the

 breakthrough strategy for achieving Six Sigma. These 6

steps are :-

• Define• Measure

• Analyze

• Improve

• Control

• Standardize 

FICCI CE

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   B   R   E   A   K

   T   H   R   O   U   G   H   S

   T   R   A   T   E   G   Y

Identification

Characterization

Optimization

Institutionalization

Define

MeasureAnalyze

Improve

Control

Standardize

Identify key business

issues

Understand current

performance levels

Achieve breakthrough

improvement

Integrate Six Sigma in

day to day functioning.

Stage Phase Objective

The Six Sigma roadmap- Breakthrough strategy 

FICCI CE

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Define phase 

This phase defines the project. It identifies critical

customer requirements and links them to business needs.

It also defines a project charter and the business processesto be undertaken for Six Sigma.

Note: This phase is extensively covered in a separate chapter “Define phase”. 

FICCI CE

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Measurement phase 

This phase involves selecting product characteristic, mapping

respective process, making necessary measurements and

recording the results of the process. This is essentially a data

collection phase.

Note: This phase is extensively covered in a separate chapter “Measurement phase”. 

FICCI CE

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Analysis phase 

In this phase an action plan is created to close the “gap” 

 between how things currently work and how the organization

would like them to work in order to meet the goals for a

 particular product or service. This phase also requires

organizations to estimate their short term and long term process

capabilities.

Note: This phase is extensively covered in a separate chapter “Analysis phase”. 

FICCI CE

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Improvement phase 

This phase involves improving processes/product performance

characteristics for achieving desired results and goals. This phase

involves application of scientific tools and techniques for making

tangible improvements in profitability and customer satisfaction.

Note: This phase is extensively covered in a separate chapter “Improvement phase”. 

FICCI CE

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Control phase 

This phase requires the process conditions to be properly

documented and monitored through statistical process control

methods. After a “settling  in”  period, the process capability

should be reassessed. Depending upon the results of such afollow-up analysis, it may be sometimes necessary to revisit

one or more of the preceding phases.

Note: This phase is extensively covered in a separate chapter “Control phase”. 

FICCI CE

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Standardization phase 

This phase requires institutionalizing Six Sigma into day to

day working of the organization. In this phase the Six Sigma

gains derived by certain specific projects are applied to the

other projects as well for optimum business results.

FICCI CE

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The breakthrough strategy 

Each phase is designed to ensure that :-

• Companies apply the breakthrough strategy in a systematic

way.

• Six Sigma projects are systematically designed and

executed and

• The results of these projects are incorporated into running

the day-today business.

FICCI CE

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Strategy at various levels 

Almost every organization can be divided into 3 basic

levels :-

1. Business level

2. Operations level

3. Process level.

It is extremely important that Six Sigma is understood andintegrated at every level.

FICCI CE

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Strategies at various levels 

• Executives at the business level  can use Six Sigma for

improving market share, increasing profitability and

organizations long term viability.• Managers at operations level  can use Six Sigma to improve

yield and reduce the labor and material cost.

• At the process level  engineers can use Six Sigma to reduce

defects and variation and improve process capability leading to better customer satisfaction. 

FICCI CE

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Business perspective of the breakthrough strategy 

• Define what plans must be in place to realize improvement of

each state.

• Measure the business systems that support the plans.

• Analyze the gaps in system performance benchmarks.

• Improve system elements to achieve performance goals.

• Control system-level characteristics that are critical to value.

• Standardize the systems that prove to be best-in-class.

FICCI CE

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Operations perspective of the breakthrough strategy 

• Define Six Sigma projects to resolve operational issues.

• Measure performance of the Six Sigma projects.

• Analyze project performance in relation to operational goals.

• Improve Six Sigma project management system.

• Control inputs of project management system.

• Standardize best-in-class management system practices.

FICCI CE

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Process perspective of the breakthrough strategy 

• Define the processes that contribute to the functional problems.

• Measure  the capability of each process that offers operational

leverage.

• Analyze the data to assess prevalent patterns and trends.

• Improve  the key product/service characteristics created by the

key processes.

• Control the process variables that exert undue influence.• Standardize the methods and processes that produce best-in-

class performance. 

FICCI CE

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Six Sigma players and their responsibilities 

FICCI CE

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Champions - Qualification 

The CEO  should be the main driver of the Six Sigma

 program. Under him departmental / functional heads such

as vice president or director manufacturing or marketing

have to take charge in implementing the program. The

champions must have complete hands-on experience withsound knowledge of advanced statistical tools.

FICCI CE

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Champions - Responsibilities 

• Create the vision  of Six Sigma for the organization.

• Define the road map   to implement Six Sigma across theorganization.

• Select the r ight people . 

• Develop a training plan   for implementing breakthrough

strategy.

• Carefully select high impact projects . 

FICCI CE

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Champions - Responsibilities 

• Support development of statistical thinking .

• Realize the gains by supporting Six Sigma projects

through allocation of resources   and removal of

roadblocks.

• Recognize and reward people .

FICCI CE

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Selecting the right people 

The success of Six Sigma to a very large extent depends

upon selection of right people. The CEO must therefore

ensure that the selected experts have suitable qualification,

mental attitude to challenge the status-quo and a missionary

zeal to implement change. These experts are also known as

“black   belts”. The qualification, responsibilities andtraining program of black belts is discussed on the

following slides.

FICCI CE

Wh the name “Black Belts”?

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Why the name “Black Belts”? 

The name black belts comes from the sport of Karate .Both Karate and Six Sigma depend on mental discipline

and systematic, intensive training. Just as black belts in

Karate depend on power, speed and decisiveness, Six

Sigma black belts should also depend on the same

qualities. Just as the black belts continuously reposition

their bodies, Six Sigma black belts also must be able to

reposition themselves as they move from one project to

another.

FICCI CE

Characteristics of Six Sigma Black Belt

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Characteristics of Six Sigma Black Belt 

• Understands the “big  picture” of the business.

• Focuses on results and understands the importance of the bottom line.

• Speaks the language of money, time, organizational objectives.

• An expert in SPC and continuous improvement tools.

• Capable of consulting, mentoring and coaching.

• Drives change by challenging conventional wisdom.

• Anticipates and confronts problems proactively and solves them.

FICCI CE

Master Black Belts Qualification

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Master Black Belts - Qualification 

They are usually Chief Engineers or Head of departments /functional heads.They must posses a technical degree and

have sound knowledge of statistical tools.

FICCI CE

M t Bl k B lt R ibiliti

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Master Black Belts - Responsibilities 

The master Black Belts should take the main responsibility

of implementing Six Sigma program. They must assist theorganization in identifying Six Sigma projects and also

develop and train Black Belts under them.

FICCI CE

M t Bl k B lt R ibiliti

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Master Black Belts - Responsibilities 

• Take on leadership of major programs.

• Participate in project reviews to offer technical expertise.

• Organize training and development programs for Six Sigma

team members/black belts.

• Facilitate sharing of best practices across the organization.• Ensure successful implementation of Six Sigma projects from

start to end.

FICCI CE

Black Belts Qualification

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Black Belts - Qualification 

They must posses a technical degree or must have minimum 5years of relevant experience. They must have good knowledge

of statistical tools.

FICCI CE

Black Belts Responsibilities

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Black Belts - Responsibilities 

• Act as a breakthrough strategy expert.

• Identify barriers or roadblocks.

• Lead and direct teams in project execution.• Report progress to management.

• Determine the most effective tools to apply.

FICCI CE

Black Belts Responsibilities

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Black Belts - Responsibilities 

• Prepare detailed project report in all the phases.

• Get inputs from operators, first line supervisors and

team leaders.

• Train others.

• Ensure that the results are sustained.

FICCI CE

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Black Belt training program 

FICCI CE

Black Belt training

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While the Six Sigma methodology needs the involvement of

all people across the organization, the bulk of implementing 

the breakthrough strategy rests on black belts. Black Belts

 possess the Six Sigma knowledge and skills necessary toimplement, sustain and lead a highly focussed Six Sigma

initiative within the organization.

Black Belt training 

FICCI CE

Black Belt training

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Black Belt training 

Black Belt training is divided into four sessions. Each sessionis organized around the four core phases of break through

strategy i.e. Measurement, Analysis, Improvement & Control.

Usually the black belt training is completed in four months

with one week devoted to class room instructions for each

 phase followed by three weeks in application of knowledge tothe assigned project. The training program for each phase is

depicted on the following slides.

FICCI CE

Black Belt training Measurement phase

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Black Belt training - Measurement phase Training period 4 weeks ( 1 Week classroom instructions, 3 weeks on projects ) 

• Select CTQ characteristic

• Define performance standards

• Establish data collection plan,

validate measurement system &

collect data.

Customer surveys, QFD, FMEA

Blue prints, customer surveys

Histograms, control charts

Components of training Tools used*

*These tools have been covered in the relevant chapters. 

FICCI CE

Black Belt training - Analysis phase

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Black Belt training - Analysis phase

Training period 4 weeks ( 1 Week classroom instructions, 3 weeks on projects )

• Establish process capability

• Define performance objective

• Identify variation sources

Process capability indices (Cp, Cpk),

Benchmarking

Control charts, FMEA, Cause &

effect diagram, Histograms.

Components of training Tools used*

*These tools have been covered in the relevant chapters

FICCI CE

Black Belt training - Improvement phase

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Black Belt training - Improvement phase 

Training period 4 weeks ( 1 Week classroom instructions, 3 weeks on projects )

• Screen potential causes

• Discover variable relationships

• Establish operating tolerances

& pilot solution

Pareto Analysis, FMEA, Cause

& Effect.

FMEA, Process flowcharting,

Cause & Effect.

Design of Experiments, Process

capability study.

Components of training Tools used*

*These tools have been covered in the relevant chapters

FICCI CE

Black Belt training - Control phase

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Black Belt training Control phase

Training period 4 weeks ( 1 Week classroom instructions, 3 weeks on projects )

• Validate measurement system

• Determine process capability

• Implement process control

system & project closure

Process flowcharting

Capability indices

Mistake proofing, SPC,

Risk management.

Components of training Tools used

*These tools have been covered in the relevant chapters

FICCI CE

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3. Define phase 

Key steps of define phase

Projects critical to customers

Develop team charter

Define process map

Objectives of define phase

FICCI CE

Objectives of define phase

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Objectives of define phase 

• To identify the process or product for improvement.

• To develop an action plan.

• To obtain formal project approval. 

FICCI CE

Key steps of the define phase

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Key steps of the define phase 

A. Identify project which are critical to customers.

B. Develop team charter / action plan.

C. Define process map.

Each step is discussed in detail in the following slide.

FICCI CE

A Identify projects critical to customers

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A. Identify projects critical to customers 

The following steps are required for this purpose :-

I. Identify present & future customers.

II. Analyze voice of the customer.

III Translate customer needs into Critical to Quality (CTQ)

requirements.

IV. Integrate CTQs with business strategies.

V. Identify projects for breakthrough improvements.

FICCI CE

A Identify projects critical to customers

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A. Identify projects critical to customers 

The following sources of input can be used to build thedatabase on the customers and for identification of CTQs.

• Customer surveys

• Customer complaints

• Internal problems

• Benchmarking data with key competitors and

• Brainstorming

FICCI CE

B Develop a team charter

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B. Develop a team charter 

The following steps are required for developing a team

charter / action plan:-

I. Develop a business case  - Relevance of the project,

consequences of not undertaking the project and how doesit fit with the business goals.

II. Define problem / goal statement  - Why are we not

meeting our customer requirements, how significant is the

 problem, when & where do the problems occur and what isthe impact of the problem.

FICCI CE

Develop a team charter

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Develop a team charter 

III. Assess project scope - Which processes will the team

focus on, resources available to the team, the start & the

end point.

IV. Define timeframe - This should contain complete list

of activities to be undertaken alongwith realistic time

frames.

V. Define roles and responsibilities - Define the roles andresponsibilities of various team members.

FICCI CE

C Define process map

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C. Define process map 

The following steps are required for process mapping :-

I.  Define process

II.  Connect the customer to your process

III. Map business process - The process map for the project

includes customer and their key requirements, inputs,

suppliers, process steps and outputs.

FICCI CE

4 Measurement phase

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4. Measurement phase 

Understanding and controlling variation

Accuracy and precision

Measurement of accuracy

Measurement of precision

Understanding normal distribution

Meaning of a sigma process

Various levels of sigma process

Picturisation of accuracy and precision

Calculating non-conformities

Objectives of Measurement phase

FICCI CE

Objectives of Measurement phase

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Objectives of Measurement phase 

• Collect data for identified projects.

• Characterize data by using mean, standard deviationand z value.

• Understand various levels of sigma process.

• Measure non-conformances.

FICCI CE

Understanding & controlling variation 

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g g

Variation is a basic phenomenon of nature. This effects all

entities including products and processes. Variation is found

in all stages of product life cycle including design &

development, manufacturing, service and supplier processes.

Controlling process variation is a key to achieving Six Sigmaquality .

FICCI CE

Understanding & controlling variation

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Understanding & controlling variation 

Variation is responsible for the difference between one unit of

 product and another. It can also be defined as the difference

between specif ications and customer requi rements . Variation

is present in all processes. When it is present in one or morecharacteristics of a product or process, it causes poor quality

and customer dissatisfaction.

FICCI CE

Understanding & controlling variation

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Understanding & controlling variation 

Products and processes are expected to vary because no two

things are exactly alike. Differences result from materialcharacteristics, methods, people, machine and

environmental factors as depicted on the next slide.

FICCI CE

Sources of variation 

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Variation

Methods

•Procedures•Policies

•Accounting

Material

•Assemblies•Components

•Suppliers

•Consumables

Environment 

• Noise level•Humidity

•Temperature

•Lighting

People•Training

•Experience

•Skill

•Attitude

Machine•Technology

•Variability

•Tooling

•Fixtures

Measurement•Counting

•Instruments

•Gauging

•Tests

FICCI CE

Causes of variation 

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Chance / Inherent Causes

They have the influence on

the output all the time. 

Causes

Special / Assignable Causes

They influence the output

only once in a while. 

FICCI CE

Chance / inherent causes of variation 

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Chance or inherent causes are sources of variation which are

always present because of small day-to-day variables. Thesecauses are inherently part of the process (or system) and

affect everyone working in the process. They are typically

due to a large number of small random sources of variation.

Chance causes also contribute to the output variability

 because they themselves vary.

FICCI CE

Chance / inherent causes of variation

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Chance / inherent causes of variation 

Each chance/inherent cause typically contributes a small

 portion to the total variation in process outputs. Inherent

causes usually have a nonsystematic, random appearance.Process or system variability is defined in terms inherent causes

 because they are regular contributors. The variables involved in

inherent causes may change slightly from day to day, but this is

natural. They will always be present, and the best way to stayahead of this situation is to plan for it.

FICCI CE

Special / assignable causes 

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p g

These are causes that do not occur naturally and are unusual.

These types of causes are not inherent part of the process (orsystem) all the time or do not affect everyone but arise because

of specific circumstances. Special causes are sporadic

contributors and are due to some specific circumstances.

Process or system variability is defined without them. Special

causes can be identified and efforts can be made to minimize

their influence on the process.

FICCI CE

A & P i i

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Accuracy & Precision 

FICCI CE

Visually summarising data - Histograms 

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Histograms are one of the simplest ways to summarize the

data in the visual form. Histograms give us the graphical

 picture of the data . It graphically depicts the frequency of

occurrence of an event. On the X axis, the measured valuesor scale is plotted, and on the Y axis the frequency is

 plotted. Histograms are extremely important in analyzing

variation in the processes.The example of an histogram is

shown on the following slide.

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FICCI CE

Measurement of central tendency -Accuracy 

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y y

Accuracy is defined as closeness of agreement between

observed values and known reference standard.

Accuracy can be measured by measuring central tendency   of

the process.

FICCI CE

Accuracy 

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y

There are three popular measures of accuracy:-

• Mean

• Mode

• Median

The most commonly used measure of accuracy is mean ( simplearithmetic mean). Hence for the purpose of Six Sigma we

confine our study on Mean only.

FICCI CE

Measurement of accuracy 

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Mean - it is the arithmetic average of the measurements.

To find the mean, all the measurements  X 1 , X 2 , X 3 , …… , X n 

are added and their sum is divided by the number of

measurements, n. Mathematically it is represented as:-

Mean X =( X1 + X2 + X3 +……+ Xn)

n

FICCI CE

Measurement of dispersion - Precision

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Measurement of dispersion Precision 

Precision is the measure of dispersion between several individual

observations of relevant quality characteristics. Precision describes

consistency of the process. Precision can be measured through :-

1. Range:  Range is the difference between the largest and smallestmeasurement in a given set of observations.

2. Standard Deviation: Standard deviation in general terms is a measure of

mean variation of values from the central tendency.

Standard deviation is more reliable method of measuring precision, hencefor the purpose of Six Sigma, we will confine our study on Standard

deviation.

FICCI CE

Measurement of precision 

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Mean Deviation of values from central tendency can also be

used to measure dispersion. However, there is one difficulty

in the use of this measure, that the algebraic sum of all

deviations is zero.

Standard deviation is calculated as root mean square of the

deviations of observations from the mean which henceforth

will be represented by abbreviation SD.

FICCI CE

Calculation of standard deviation 

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Variance, V =

(X1

2 + X2

2 +….+Xn

2) - n ( X ) 2

(n - 1)

Standard Deviation, SD =V

Standard deviation can be calculated by the following formula :-

If X1, X2 ,X3…………Xn are individual observations

And X is the arithmetic mean 

FICCI CE

Example to calculate standard deviation 

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Sl. X X (Square)

1 10 100

2 11 121

3 12 144

4 13 169

5 14 196

Total 60 730

Calculate standard deviation of 10, 11, 12, 13 , 14

FICCI CE

Calculation of Standard Deviation 

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Variance, V =

(X12 + X2

2 +….+Xn2) - n ( X )2 

(n - 1)

X =60

5= 12

=730 - 5 x (12)

(5 - 1)

= 2.5

SD = =1.58112.5

FICCI CE

Sigma 

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Standard deviation is also referred to as the Greek letter

sigma in quality management literature. Consequently

 process variation can be described by how many sigmas ( i.e

how many multiples of standard deviation or SD ) fit within

the specification limits.The higher this number, the better is

the quality and vice versa.

Sigma is a statistical measure of the qual i ty consistency for

a particular process / product.

FICCI CE

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Understanding normal distribution 

FICCI CE

Normal Distribution 

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In practice generally we come across data which is of

variable type and is measured on continuous scale. If there

are no extraneous factors it follows a systematic patternknown as “Normal  Distribution”. It can be derived after

 plotting histogram as explained in the next slide.

FICCI CE

Histogram 

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CTQ

   F  r  e  q  u  e  n  c  y

10

20

30

40

50

60

0

Thickness of output in mm

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

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FICCI CE

Most commonly used intervals 

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In normal distribution, the most common intervals are :

1. Process mean - SD and process mean + SD i.e 1 Sigma

2. Process mean - 2 SD and process mean + 2 SD i.e 2 Sigma

3. Process mean - 3 SD and process mean + 3 SD i.e 3 Sigma 

FICCI CE

% Population between Mean - SD & Mean + SD (1Sigma) 

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2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Mean = 10, SD = 2

- SD + SD

Mean+SD =12Mean-SD =8

% Population

% population between Mean - SD and Mean + SD or 1 Sigma = 68.3,

This implies that 68.3% population lies between dimensions of 8 and 12

FICCI CE

% Population between Mean - 2 SD & Mean + 2 SD (2Sigma) 

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2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Mean = 10, SD = 2

% Population

Mean-2 SD=6Mean+2 SD=14

-2 SD +2 SD

% population between Mean - 2 SD and Mean +2 SD or 2 Sigma = 95.5

This implies that 95.5% population lies between dimensions 6 &14

FICCI CE

% Population between Mean - 3 SD & Mean + 3 SD (3 Sigma) 

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2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Mean = 10, SD = 2 

Mean + 3SD =16Mean - 3SD =4

% Population

- 3 SD + 3 SD

% population between Mean - 3 SD and Mean +3 SD or 3 Sigma = 99.73

This implies that 99.73 % population lies between 4 & 16

FICCI CE

Range of observations for nearly 100% population 

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Range of observations for nearly 100% population (to be

 precise 99.73%) depends upon, mean of the process and

standard deviation of the process. If it follows normaldistribution the population lies between -

Mean - 3 SD & Mean + 3 SD i.e ( 3Sigma )

FICCI CE

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What is a Sigma process 

FICCI CE

Meaning of a Sigma process 

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From a sigma process we come to know that at what

distance, in terms of the standard deviation, thespecification limits are placed from the target value.

FICCI CE

Move beyond 3 sigma 

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Until a few years back all statistical process controls

were designed on the basis of 3 sigma limits. It is only inthe recent years that this concept has been challenged and

the organizations have started looking for quality levels

 beyond 3 Sigma.

FICCI CE

3 Sigma process 

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LSLUSL

Mean=8

SD = 2

- 3 SD + 3 SD

2 3 4 5 6 7 8 9 1210 16151413111

Note : LSL is Lower specification limit and USL is Upper specification limit.

FICCI CE

4 Sigma process 

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2 3 4 5 6 7 8 9 1210 16151413111

LSL USLMean=8

SD = 1.33

- 4 SD + 4 SD

FICCI CE

5 Sigma process 

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2 3 4 5 6 7 8 9 1210 16151413111

LSLUSL

Mean=8

SD = 1.07

- 5 SD + 5 SD

FICCI CE

6 Sigma process 

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LSL USL

Mean=8

SD = 1

- 6 SD + 6 SD

2 3 4 5 6 7 8 9 1210 16151413111

FICCI CE

Precision 

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Lesser the standard deviation of the process, more precise or

consistent is the process

FICCI CE

3 Sigma Vs 6 Sigma 

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The goal of Six Sigma program is to reduce the variation in

every process to such an extent that the spread of 12 sigmas i.e.6 Sigmas on either side of the mean fits within the process

specifications. The figure on next slide shows what this looks

like.

FICCI CE

3 Sigma Vs 6 Sigma 

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2 3 4 5 6 7 8 9 1210 16151413111

LSL USL

6 Sigma curve 

3 Sigma curve 

In a 3 sigma process the values are widely spread along the center line,

showing the higher variation of the process. Whereas in a 6 Sigma

 process, the values are closer to the center line showing

less variation in the process.

FICCI CE

3 Sigma Vs 6 Sigma 

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The comparison on the previous slide also shows a process in

which the process spread of Six Sigmas (ie. 3 Sigmas on either

side just fits within the specifications). In this case one must be

extremely careful to ensure that the process average never slips

off the target, otherwise the curve will shift and non-

conforming items will increase. With Six Sigma requirement

the process mean can shift by as much as 1.5 sigma before the

likelihood of non-conforming items is increased. Even if the

 process mean does shift off center by as much as 1.5 sigma,only 3.4 non-conforming items per million parts should result.

FICCI CE

Amount of process shift allowed 

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2 3 4 5 6 7 8 9 1210 16151413111

LSL USL

SD = 1

1.5 SD 1.5 SD

FICCI CE

Accurate and PrecisionPicturization of accuracy & precision 

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Accuracy & precision of a process can

 be best explained by using the analogyof a rifle firing at a target.

FICCI CE

Accuracy and precision 

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With the center of the target taken to be the true value of the

characteristic being measured and by the rifle shotsrepresenting the measured values, there are four combinations

of accuracy and precision as depicted in the following slides.

FICCI CE

Inaccurate and imprecise 

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+

FICCI CE

Accurate and imprecise 

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+

FICCI CE

Precise but inaccurate 

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+

FICCI CE

Accurate and precise 

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+

FICCI CE

Six Sigma objective 

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As observed from the Picturization in the preceding slides, the

objective of moving towards Six Sigma quality is to

continuously achieve greater consistency of the processes by

reducing the variation.

FICCI CE

C l l ti f iti

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Calculating non conformities 

FICCI CE

Calculating non conformities 

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The number of observations falling within the distribution

frequency curve can be co-related with the area under the

curve.

Finding area ( percentage of non conformities  ) under anormal curve requires the use of standard normal distribution

table. It is conventional to use the letter z  to denote the

standard normal variate. The table for areas under normal

curve are given at the end of this section.

FICCI CE

Sigma ratings in terms of Z 

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The z value corresponding to USL or LSL* tells us how manysigma the USL or LSL is from the process setting. Thus the z

value corresponding to the specification limit gives the sigma

rating of the process.

Note 1:  As we know that most of the variable data that we come across in the

industry follows normal distribution with certain mean and standard deviation. Wedefine a variate „Z‟(  standardized normal variate ) which has a mean value 0 and

standard deviation 1. This is done in order to make use of Standard Normal Tables.

* LSL is the lower specification limit & USL is the upper specification limit 

FICCI CE

Calculating non conformities 

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LSL USL

Non

conformitiesNonconformities

FICCI CE

Formula for calculating % non conformities 

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With respect to LSL,

With respect to USL

ZL = ( LSL - X )/SD

ZU = ( USL-X )/SD

Where X= Process meanSD = Process Standard deviation

USL = Upper specification limit

LSL = Lower specification limit respectively.

FICCI CE

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Illustration for calculating

% non conformities 

FICCI CE

Histogram for rolling thickness 

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Spec: 1.6+/- 0.1 mm

50

40

30

20

10

0

1.465 1.505 1.545 1.585 1.625 1.665 1.705 

LSL USL

Thickness

Mean=1.58

SD=0.042

FICCI CE

Normal curve for the population 

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Spec: 1.6+/- 0.1 mm

50

40

30

20

10

0

1.465 1.505 1.545 1.585 1.625 1.665 1.705 

LSL USL

Thickness

Proportion

of defects

Proportionof defects

Mean=1.58

SD=0.042

FICCI CE

Calculating non conformities 

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With respect to LSL, 

With respect to USL,

= ( 1.50-1.58 )/0.042 = -1.90

ZU = ( USL-X )/SD = ( 1.70-1.58 )/0.042 = 2.86

ZL = ( LSL - X )/SD

The Percentage of values falling beyond specification limits, corresponding

to the z value can be read from the standard normal table as 0.0287 and

0.0021 for ZU and ZL respectively. Total percentage of non conformities=2.87+0.21=3.08. (While referring to Normal distribution table, only

absolute value of z should be taken.)

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FICCI CE

Areas under normal curve - Normal distribution table 

Area 

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z Area z Area z Area z Area0.80 0.211855 1.00 0.158655 1.20 0.115070 1.40 0.080757

0.81 0.208970 1.01 0.156248 1.21 0.113140 1.41 0.079270

0.82 0.206108 1.02 0.153864 1.22 0.111233 1.42 0.077804

0.83 0.203269 1.03 0.151451 1.23 0.109349 1.43 0.076459

0.84 0.200454 1.04 0.149170 1.24 0.107488 1.44 0.074934

0.85 0.197662 1.05 0.146859 1.25 0.105650 1.45 0.073529

0.86 0.194894 1.06 0.144572 1.26 0.103835 1.46 0.072145

0.87 0.192150 1.07 0.142310 1.27 0.102042 1.47 0.070781

0.88 0.189430 1.08 0.140071 1.28 0.100273 1.48 0.069437

0.89 0.186733 1.09 0.137875 1.29 0.098525 1.49 0.068112

0.90 0.184060 1.10 0.135666 1.30 0.096801 1.50 0.0668072

0.91 0.181411 1.11 0.133500 1.31 0.095098 1.51 0.0655217

0.92 0.178786 1.12 0.131357 1.32 0.093418 1.52 0.0642555

0.93 0.176185 1.13 0.129238 1.33 0.091759 1.53 0.0630084

0.94 0.173609 1.14 0.127143 1.34 0.090123 1.54 0.0617802

0.95 0.171056 1.15 0.125072 1.35 0.088508 1.55 0.0605708

0.96 0.168528 1.16 0.123024 1.36 0.086915 1.56 0.0593799

0.97 0.166023 1.17 0.121001 1.37 0.085343 1.57 0.0582076

0.98 0.163543 1.18 0.119000 1.38 0.083793 1.58 0.0570534

0.99 0.161087 1.19 0.117023 1.39 0.082264 1.59 0.0559174

e

FICCI CE

Areas under normal curve - Normal distribution table 

Area 

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z Area z Area z Area z Area1.60 0.0547993 1.80 0.0359303 2.00 0.0227501 2.20 0.0139034

1.61 0.0536989 1.81 0.0351478 2.01 0.0222155 2.21 0.0135525

1.62 0.0526161 1.82 0.0343794 2.02 0.0216916 2.22 0.0132093

1.63 0.0515507 1.83 0.0336249 2.03 0.0211782 2.23 0.01287361.64 0.0505026 1.84 0.0328841 2.04 0.0206751 2.24 0.0125454

1.65 0.0494714 1.85 0.0321567 2.05 0.0201821 2.25 0.0122244

1.66 0.0484572 1.86 0.0314427 2.06 0.0196992 2.26 0.0119106

1.67 0.0474597 1.87 0.0307419 2.07 0.0192261 2.27 0.0116038

1.68 0.0464786 1.88 0.0300540 2.08 0.0187627 2.28 0.0113038

1.69 0.0455139 1.89 0.0293789 2.09 0.0183088 2.29 0.0110106

1.70 0.0445654 1.90 0.0287165 2.10 0.0178643 2.30 0.0107241

1.71 0.0436329 1.91 0.0280665 2.11 0.0174291 2.31 0.0104440

1.72 0.0427162 1.92 0.0274289 2.12 0.0170029 2.32 0.0101704

1.73 0.0418151 1.93 0.0268034 2.13 0.0165858 2.33 0.0099031

1.74 0.0409295 1.94 0.0261898 2.14 0.0161773 2.34 0.0096418

1.75 0.0400591 1.95 0.0255880 2.15 0.0157775 2.35 0.0093867

1.76 0.0392039 1.96 0.0249978 2.16 0.0153863 2.36 0.0091375

1.77 0.0383635 1.97 0.0244191 2.17 0.0150034 2.37 0.0088940

1.78 0.0375379 1.98 0.0238517 2.18 0.0146286 2.38 0.0086563

1.79 0.0367269 1.99 0.0232954 2.19 0.0142621 2.39 0.0084242

FICCI CE

Areas under normal curve - Normal distribution table 

Area 

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z Area z Area z Area z Area2.40 0.00819755 2.60 0.00466120 2.80 0.00255519 3.00 0.00134999

2.41 0.00797623 2.61 0.00452715 2.81 0.00247711 3.10 0.00096660

2.42 0.00776023 2.62 0.00439650 2.82 0.00240123 3.20 0.00068714

2.43 0.00754941 2.63 0.00426930 2.83 0.00232744 3.30 0.00048342

2.44 0.00734365 2.64 0.00414532 2.84 0.00225574 3.40 0.00033693

2.45 0.00714284 2.65 0.00402462 2.85 0.00218600 3.50 0.00023263

2.46 0.00694686 2.66 0.00390708 2.86 0.00211829 3.60 0.00015911

2.47 0.00675565 2.67 0.00379258 2.87 0.00205243 3.70 0.00010780

2.48 0.00656915 2.68 0.00368118 2.88 0.00198847 3.80 0.00007235

2.49 0.00638717 2.69 0.00357264 2.89 0.00192630 3.90 0.00004810

2.50 0.00620967 2.70 0.00346702 2.90 0.00186586 4.00 0.00003167

2.51 0.00603658 2.71 0.00336421 2.91 0.00180721 4.10 0.00002066

2.52 0.00586778 2.72 0.00326413 2.92 0.00175023 4.20 0.000013552.53 0.00570315 2.73 0.00316679 2.93 0.00169486 4.30 0.00000854

2.54 0.00554264 2.74 0.00307202 2.94 0.00164115 4.40 0.00000541

2.55 0.00538617 2.75 0.00297282 2.95 0.00158894 4.50 0.00000340

2.56 0.00523365 2.76 0.00289011 2.96 0.00153828 4.60 0.00000211

2.57 0.00508493 2.77 0.00280285 2.97 0.00148904 4.70 0.00000130

2.58 0.00494003 2.78 0.00271803 2.98 0.00144130 4.80 0.00000079

2.59 0.00479883 2.79 0.00263548 2.99 0.00139493 4.90 0.00000048

5.00 0.00000029

FICCI CE

Areas under normal curve - Normal distribution table 

Area 

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z Area5.10 0.00000180

5.20 0.00000107

5.30 0.00000063

5.40 0.00000037

5.50 0.00000021

5.60 0.00000012

5.70 0.000000070

5.80 0.000000040

5.90 0.000000022

6.00 0.000000012

Note: Only absolute values of z should be taken while referring to this table.

FICCI CE

5. Analysis phase 

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Definition of process capability

Empirical rule

Need for process capability

Factors influencing process capability

Estimating process capability

Process capability indices - Cp index

Process capability indices - Cpk index

Objectives of Analysis phase

Benchmarking

FICCI CE

Objective of Analysis phase 

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• The objective of this phase is to study the stability, shape,center and spread of the process.

• To establish an improvement goal or the performance

objective through benchmarking.

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FICCI CE

Process capability 

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Process capability

The inherent variability of a quality characteristic that the

 process is capable of maintaining, when in a state of statisticalcontrol under a given set of conditions.

Assuming normal distribution of the quality characteristic

Process Capability = +/- 3 SD = Total spread of 6 SD. 

FICCI CE

Process capability 

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Process capability is judged by comparing process performance with process requirements. Since meeting

specification limits is one of the most basic requirements of

a process capability study, it is extremely important to

accurately verify and define the specification limits.

FICCI CE

Need for process capability 

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  For meeting customer requirements/ specifications.

  To compare actual performance of equipment with

manufacturer‟s claim. 

  To compare the performance of two processes.

  To provide more realistic tolerances for component

dimensions.

  Provide a basis for process control. 

FICCI CE

Factors influencing process capability 

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1. Condition of machine/ equipment.

2. Type of operation and operational conditions.

3. Raw materials.

4. Skill of operators.

5. Measurement method / instruments.

6. Inspector‟s skill.

FICCI CE

Estimation of process capability 

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• Visual from run chart.

• Frequency distribution and histogram.

• Control charts.

• Analysis of variances.

• Probability papers. 

Note : Reduction of variability can be achieved through use of SPC

tools and Design of Experiments.

FICCI CE

The empirical rule 

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We have seen in the earlier chapter that almost all (to be

accurate 99.73%) the process output from a normally

distributed process lies between (process mean - 3 SD)

and (process mean+ 3 SD).

The total spread of the process can thus be described as 6 SD 

FICCI CE

99.73% population between process mean +/- 3 SD 

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LSL USL

- 3 SD + 3 SD

2 3 4 5 6 7 8 9 1210 16151413111

FICCI CE

Process capability indices : The Cp index 

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A  major reason for quantifying process capability is tocompute the ability of a process to hold product tolerances.

A measure of this relationship is process capability ratio or

Cp. Process capability is also known as potential capability.

The Cp index is given by:-

Cp = Tolerance

6 SD

Where Tolerance = USL - LSLSD = Standard Deviation

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FICCI CE

Calculating defective PPM at various levels of sigma. 

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Refer normal distribution table for finding defective parts per

million ( PPM ) for corresponding z values. 

Quality level Cp z Defective PPM 

2 Sigma 0.67 2 22750

3 Sigma 1.00 3 1350

4 Sigma 1.33 4 32

5 Sigma 1.67 5 0.3

6 Sigma 2.00 6 0.001

FICCI CE

Impact of process capability 

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For individual parts, the ideal design is Cp = 2; in other words,

the design specification is twice as “wide” as the true capability

of the process. This is where the phrase “Six Sigma Quality” 

originated. Since the process capability is +/- 3SD, a design

specification twice as wide would be +/- 6 SD.

FICCI CE

Impact of process capability 

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However, it is learnt from the industry experience across theworld, that the processes rarely stay centered on their targeted

nominals, shifts of 1.5 SD to either side of the mean are

common, even in well controlled processes.

Therefore in practice, an ultimate z-value of 4.5  is considered

Six Sigma Quality. Consulting the z-table, we find that the

 probability of producing non conformities associated with a z-

value of 4.5 is 0.0000034. If this value is obtained, then only3.4 out of every million parts manufactured will be defective.

FICCI CE

Calculating defective PPM with permissible shift of 1.5 SD

at various levels of sigma. ( practical situation ) 

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Refer normal distribution table for finding defective PPM for

corresponding z values. 

Quality level Cp z Defective PPM 

2 Sigma 0.17 0.5 308538

3 Sigma 0.50 1.5 66807

4 Sigma 0.83 2.5 6210

5 Sigma 1.17 3.5 233

6 Sigma 1.50 4.5 3.4

FICCI CE

Drawbacks of Cp 

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Cp however is not a very reliable measure as it does not tell us

all.

Consider the following four processes producing the sameoutput X with specification 20+/- 4. Each of these processes

have the Standard deviation of 1.

FICCI CE

Process 1

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LSL USL

X=20

SD=1

Cp=1.33

FICCI CE

X 22

Process 2

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LSL USL

X=22

SD=1

Cp=1.33

FICCI CE

X 15

Process 3

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LSL USL

X=15

SD=1

Cp=1.33

FICCI CE

Process 4

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LSL USL

X=25

SD=1

Cp=1.33

FICCI CE

Calculation of Cpk index 

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Cpk = Min [ USL - x , x - LSL ]

3SD 3SD

Cpk is a measure of process performance capability

The process performance index Cpk is given by:-

Example :

Specification : 20 +/- 4, SD = 1

Cp = Tolerance/6SD = 8/6 = 1.33

FICCI CE

Calculation of Cpk index - Example 

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x = 20, Cpk = Cp = 1.33

x = 22, Cpk = 0.67

x = 15, Cpk = -0.33

x = 25, Cpk = -0.33

Example :

Specification : 20 +/- 4, SD = 1

Cp = Tol/6 SD = 8/6 = 1.33

FICCI CE

Calculation of Cpk index 

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In the previous slide we observe that, although the Cp

value = 1.33 in all the four cases, but because of the shift

in the process setting level we are getting Cpk values as0.67 in 2nd case and hence the non conformities. Similar

observations are noticed in 3rd and 4th case where we get

the Cpk as -0.33.

FICCI CE

The Cpk index 

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Thus Cpk = Cp means the process is centered.

Cpk < 1 means non- conformances are being produced.

Cpk < 0 indicates that the process has been set beyond either of

the two specification limits.

Note : Cpk is always less than or equal to Cp. 

FICCI CE

Cp and Cpk indices 

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Therefore, the first step is to bring Cpk=Cp by proper

centering of the process. The second step should be to

improve the Cp value by decreasing the variation.

FICCI CE

Process capability indexes for one sided tolerances 

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One-sided Tolerances - The Cp and Cpk indexes are used

for characteristics with two-sided tolerances - that is,

 processes with both upper and lower specification limits.

Since many characteristics have only one-sided

specifications, it is also convenient to have one-sided

capability indexes.

FICCI CE

Process capability indexes for one sided tolerances 

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For processes that have only a Lower specification limit, LSL,the lower capability index Cpl is defined by:-

Correspondingly, when only an Upper specification exists,

we define an upper capability index by:-

Cpl = x - LSL

3 SD

Cpu = USL - x3 SD 

FICCI CE

Establish a goal for improvement 

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Once the organization has completed the process

capability study, the next step is to benchmark the

 processes with the best in class or world class parameters.

Benchmarking is discussed on the following slides.

FICCI CE

Benchmarking 

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FICCI CE

Benchmarking 

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Benchmarking is quality by comparison  for achieving

 better standards. In the global movement today, thecompetition is improving at a faster rate, and the only way

to improve your relative quality and move upwards is to

find out and implement the best industry practices.

FICCI CE

Benchmarking :-

Stages of improvement 

World Class Recognized as the best

Benchmarked by others

i C

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Best in Class 

Exceeds customer expectations, outperformsall competitors and has clear competitive edge

Efficient 

Meets all internal requirements for cost margins,

asset utilization, cycle-time and measures of excellence

Incapable 

Is ineffective, inefficient and at the risk of failing.

 Needs major redesign

Effective

Satisfies all customer requirements

FICCI CE

Benchmarking methodology 

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Benchmarking can be of various types - competitive

 benchmarking, product benchmarking, process

 benchmarking and best practices benchmarking. Whatever

 be the category chosen by the organization, the

 benchmarking methodology remains the same in each case.

Benchmarking methodology is explained through 5 simple

steps in the following slide :-

FICCI CE

A. Identify processes to Benchmark  

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• Select processes to benchmark.

• Measure current process capability and define goal.

• Understand detailed process which needs improvement.

FICCI CE

B. Select organization to Benchmark  

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• Select organizations which perform your process.

• Compile a list of world class process parameters.

FICCI CE

C. Compile the required information 

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• Develop a detailed questionnaire to obtain desired

information.

• Obtain the desired information. The information can be

obtained from various sources viz: internet, trade journals,

 professional associations, industry publications, industry

experts, libraries etc.

FICCI CE

D. Analyze gaps 

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Too much information is as bad as too little. Gather and

analyze only the information you need to make a direct

comparison of performance. Compare like with like.

Identify the performance gaps and develop an action plan

to close the gaps. Also highlight and quantify the

consequences of not closing the gap.

FICCI CE

E. Develop an action plan 

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• Review observations of the gap analysis.

• Set new performance standards.

• Develop an action plan for meeting the new performance

standards, identify process owners with their

responsibilities and move to improvement phase.

FICCI CE

6. Improvement phase 

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Objectives of Improvement phase

Histograms

Pareto analysis

Control charts

Root Cause Analysis

Process flowcharting

Failure Mode & Effect Analysis

Quality Function Deployment

Design of Experiments ( DOE )

FICCI CE

Objectives of Improvement phase 

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• To develop a proposed solution to the existing problems.

• To confirm that the proposed solution will meet the desired

quality improvement goals. 

• To identify resources required  for successfulimplementation of the solution.

• To plan and execute actual improvements.

The tools and techniques for making improvement are

discussed on the following slides :-

FICCI CE

Histogram 

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The frequency histogram can be described as a bar graph

displaying the frequency distribution of specific processes,

items and devices. This tool provides a valuable means for

tracking variation. For instance, it can categorize product defectlevels or distribution. The primary difference between the

histogram and any other bar diagram is that the horizontal scale

of the histogram represents a numerical scale.

FICCI CE

Histogram 

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A frequency histogram provides the basis for understanding the

variation of both production and service scenarios with the

visualization to identify opportunity easily with each area

(histogram bars) while keeping track of variation. It must be pointed out that frequency histograms do not tell the total

sources of variation and do not present a specific pattern over

time.

FICCI CE

Constructing a Histogram 

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Constructing a histogram is quite simple. Microsoft bar chartcan be used to draw a histogram. The following simple steps

should be followed :-

1. Select insert Microsoft bar graph.

2. Feed in scale and their respective frequencies.

3.Since there is no gap between the bars in a histogram, select

“format data series”. Click on “options”  field and make the gap

width between the bars=0.

Please see the example of a histogram generated by Microsoftgraph on the next slide.

FICCI CE

Constructing a Histogram 

35

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0

5

10

15

20

25

30

35

5 6 7 8 9 10

Machine set up time in minutes

FICCI CE

Pareto analysis 

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The Pareto principle is to concentrate on “vital  few”  rather

than “trivial many”  in tackling quality problems. The Pareto

diagram is a tool for identifying few actually important causesfor defectives which result in large proportion of defectives,

instead of concentrating on large number of causes which

contributes to a small proportion of the total defectives.

FICCI CE

Constructing a Pareto chart 

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A Pareto diagram is a bar chart of number of defectives with

 bars representing the number of defectives due to different

sources arranged in descending order of their importance. A

line graph of cumulative number of defectives (Ogive) is alsodrawn in the same chart. The causes are given along the x axis,

the number of defectives are given on the left y axis and the

cumulative %defectives is given along the right y axis.

FICCI CE

Constructing a Pareto chart 

Data on defective cords

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Data on defective cords

S No. Source of defectives No. of Percentage

defectives defectives

1 Wrong Ply TPM 75 25

2 Plyless Feeding 150 503 Single end 30 10

4 Wrong Cable TPM 45 15

Total 300 100

FICCI CE

Arranging data in descending order 

D t d f ti d

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Data on defective cords

S No. Source of defectives No. of Percentage Cumulative

defectives defectives % defectives

1 Plyless Feeding 150 50 50

2 Wrong Ply TPM 75 25 75

3 Wrong Cable TPM 45 15 90

4 Single end 30 10 100

Total 300 100

FICCI CE

Pareto analysis of defective cords 

300100%

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0

50

100

150

200

25080%

60%

40%

20%

0%Plyless

feeding 

Wrong ply

TPM

Wrong

cable TPM 

Single

end

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FICCI CE

Example -construction of P charts 

Day Rejects Tested Proportion1 14 286 0.049

2 22 281 0 078

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2 22 281 0.078

3 9 310 0.029

4 19 313 0.0615 21 293 0.072

6 18 305 0.059

7 16 322 0.050

8 16 316 0.051

9 21 293 0.072

10 14 287 0.049

11 15 307 0.049

12 16 328 0.049

13 21 296 0.071

14 9 296 0.03015 25 317 0.079

16 15 297 0.051

17 14 283 0.049

18 13 321 0.040

19 10 317 0.032

20 21 307 0.068

21 19 317 0.060

22 23 323 0.071

23 15 304 0.049

24 12 304 0.039

25 19 324 0.059

26 17 289 0.059

27 15 299 0.050

28 13 318 0.041

29 19 313 0.061

30 12 289 0.042

Total 493 9155

 

FICCI CE

Construction of P charts 

Data points Number of defective units

P =

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 Number of units in the sample

Process Average P =Total defective units

Total units observed

Upper control Limit ( UCL ) = P+3 P ( 1-P )

n

Lower control Limit = P-3 P ( 1-P )

n

n=Average sample size= 305* 

=

= 0.0926

=0.1508

0.053

* Since the data size do not vary much around the mean value, P chart is simplified

by taking the average sample size to calculate he control limits 

FICCI CE

Construction of P charts 

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The construction of control charts is very simple. Simply

select the range of data points ( “proportion”  column in the

excel sheet ) and click the graph button. Select “Line graph” 

and the p chart is automatically calculated. The average, UCLand LCL can be manually displayed by drawing three

additional lines on the graph. Please refer the next slide for the

graph.

FICCI CE

P chart 

0.1

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0

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.080.09

5 15 25

LCL0.015

UCL

0.0926

CL

0.053

Days

FICCI CE

NP charts 

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The NP chart is used for plotting number of defectives instead

of proportion defectives. This is another version of P chart and

its applicability depends upon the interest of the end user.

FICCI CE

Example -construction of np charts 

Day Rejects Sample size1 10 100

2 12 100

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2 12 100

3 10 100

4 11 100

5 6 100

6 7 100

7 12 100

8 10 100

9 6 100

10 11 100

11 9 100

12 14 100

13 16 100

14 21 100

15 20 100

16 12 100

17 11 100

18 6 100

19 10 100

20 10 10021 11 100

22 11 100

23 11 100

24 6 100

25 9 100

Total 272 2500

FICCI CE

Example -construction of np charts 

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 p = X1 + X2 + X3 +…..Xk

kn

n = subgroup sample size = 100 

UCL = np + 3 np ( 1-p )

LCL = np - 3 np ( 1-p )

27525*100

= = 0.1088

np = 0.1088*100 =10.88

=20.22

=1.54

FICCI CE

25

Example -construction of np charts 

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0

5

10

15

20

5 15 25

LCL1.54

UCL

20.22

Np

10.88   R  e   j  e  c

   t  s

Days

FICCI CE

Root cause analysis 

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In any organization numerous problems exist in all facets of its

activities. The efficiency and survival of the organization

depends on how promptly these problems are recognized and

their root causes are isolated and eliminated.

A systematic analysis of each potential problem area should be

carried out to recognize the root causes which are responsible

for creating the problem. This analysis is called Root Cause 

Analysis. This is more of a philosophy or a discipline rather

than any isolated technique for continuous improvement.

FICCI CE

Tools & techniques for root cause analysis 

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Ishikawa or cause and effect diagram

Histogram

Pareto Analysis

Control charts

Brain Storming

Flow Charting

Process Capability Analysis

Scatter diagram and regression analysis

Statistically Design Experiment ( Design of Experiments ) 

FICCI CE

Cause & Effect diagram - Major and subsidiary causes 

Material  Methods Environment 

Assemblies Procedures Noise level

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Men MeasurementMachine

Effect

Assemblies

Components

Suppliers

Consumables

Procedures

Policies

Accounting

Humidity

Temperature

Lighting

Training

Experience

Skill

Attitude

Variability

Tooling

Fixtures

Technology

Instruments

Gauging

Counting

Tests

FICCI CE

Example of Cause & Effect diagram 

Material  Methods Environment 

High lead time

Inadequate

process controlHigh Noise level

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Men MeasurementMachine

Low

operatingprofit

High lead time

High inventory

Poor quality

of vendors

poor review

system

process control

Poor MIS

Poor QC

Heat

Poor Lighting

Inadequate

TrainingLack

of Experience

Low

motivation

High

variation

PoorMaintenance

Frequent

breakdowns

Old machines

Inadequate

Instruments

Inadequate

measurement

No SPC

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FICCI CE

Typical causes for non conformance/ defects Material factors 

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• Use of untested materials

• Mix-up of materials

• Substandard material accepted on concession because ofnon-availability of correct material

• Inconsistency in specifications on the part of vendors

FICCI CE

Typical causes for non conformance/ defects Men factors 

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• Incorrect knowledge of setting up machines

• Careless operator and inadequate supervision

• Undue rush by the operator to achieve quality targets

• Lack of understanding of drawing instructions relating to a

 process

• Operator does not possess requisite skill for operating

machines

FICCI CE

Typical causes for non conformance/ defects Method factors 

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• Inadequate process controls

•  Non availability of proper test equipments

• Test equipment out of calibration• Vague inspection/ testing instructions

• Inspectors do not possess the necessary skill

FICCI CE

Click on the boxes to enter your Cause & Effect 

Material  Methods Environment 

Click to enter

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Men MeasurementMachine

click

FICCI CE

Process flow Charting 

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Flow charting provides the basis for understanding the standard

 process procedures, the relationship between people and work

to be done. Flowcharting is a very good tool for understanding

and identifying process bottlenecks such as delays, excessive

transportation, waiting time and queuing time. It also identifieskey customers, suppliers and process owners by operational

work unit, performance level, quality level and productivity at

each process point. Flow charts can also identify source of

errors, decision points and non-value adding operations.

FICCI CE

Receive PCB

Parts from vendorsReturn part to

vendors

Assemble parts in PCB

Test assembled PCB Rework & Analyze

Flow chart of Printed circuit board 

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Inspect parts

Inspect parts

Wait for Mfg.

Inspect PCB

Pack & Ship

Bad

Bad

Parts

good

or

bad Parts

good

orbad

Good

Good

FICCI CE

Customer

satisfaction

dept.Issue

owners

Sample : Seeking customer feedback and taking corrective action flow diagram. 

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Customer

Surveys

Complaints

Critical

Situations

Other

Customer

satisfaction

dept

Internationalmarketing

Administration

Domestic

Marketing

Technical

Delivery

Service

•Develop action plans

•Resolve issues

•Improve

•Issue

identification•Prioritization

•Ownership

•Review actions

•Emerging issues

•Action plan

FICCI CE

Failure Mode and Effects Analysis (FMEA) 

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FMEA is a structured analysis for identifying ways &

methods in which the product or processes can fail and

then plan to prevent those failures. FMEA is a proactivetool for reducing defects and non-conformities.

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FICCI CE

Advantages of FMEA 

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• For improving the reliability and safety of the

products.

• For improving customer satisfaction.

• Tracking actions to reduce non-conformities.

• New product development.

FICCI CE

Definition of terms 

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Failure Mode : It is a manner in which a part or a process

can fail to meet specifications. It is usually associated with

defect or non-conformities.

Examples : Missing part, Oversized, Undersized, Incorrect

 price, Offspec parts.

FICCI CE

Definition of terms 

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Cause :  Causes are sources of variation which are

associated with key process inputs. Cause can be best

defined as a deficiency which results in a failure mode.

Examples : Instructions not followed, Lack of experience,

Incorrect documentation, Poor handling etc.

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FICCI CE

Relationship of cause, failure mode & effect 

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Cause FailureMode

Effect

FICCI CE

Causes  Causes Causes 

FMEA through Cause & Effect Diagram

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FailureMode

Causes CausesCauses

Effect

Prevent

or Detect

FICCI CE

Steps in FMEA process 

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1. Develop a process map and identify process steps.

2. List key process outputs for satisfying internal and

external customer requirements.

3. List key process inputs for each process steps.4. List ways the process inputs can vary (causes) and

identify associated failure modes and effects.

5. Assign severity occurrence and detection rating for each

cause.

FICCI CE

Steps in FMEA process 

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6. Calculate risk priority number ( RPN) for each potential

failure mode.

7. Determine recommended actions to reduce RPN‟s.

8. Establish time frame for corrective actions.9. Take corrective actions.

10. Put all controls in place.

FICCI CE

Ranking terms used in FMEA calculationsScale:1(Best) to 10 ( Worst) 

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• Severity (SEV) : Severity indicates how severe is the impact of the effect on the customer.

• Occurrence (OCC) :  This indicates the likelihood of the cause of the

failure mode to occur.

• Detection (DET) :  This indicates the likelihood of the current system todetect the cause or failure mode if it occurs.

• Risk priority number : This number is used to place priority to items for

 better quality planning.

RPN = SEV X OCC X DET

See next slides for specimen best to worst ratings on a 10 point scale.

FICCI CE

Best to Worst ratings for FMEA calculations 

Rating Degree of Severity Likelihood of Occurrence Ability to detect

1 Customer will not at all observe Very remote possibility Sure that the potential failure

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 the adverse effect will be detected & preventedbefore reaching the next

customer 

2 Customer will experience Low failure with supporting Almost sure that the potential

slight discomfort documents failure will be detected before

reachig the next customer 

3 Customer will experience Low failure without supporting Less chances that the

annoyance because of slight documents potential failure will reach the

degradation of performance next customer undetected

4 Customer dissatisf ied due to Occasional failures Some controls may detect

reduced performance the potential from reaching the

next customer 

5 Customer is uncomfortable Moderate failure rate with Moderate chances that the

supporting documents potential failure will reach the

next customer 

FICCI CE

Rating Degree of Severity Likelihood of Occurrence Ability to detect

6 Warranty repairs Modearate failure rate without Controls are not likely to detect

Best to Worst ratings for FMEA calculations 

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supporting documents or prevent the potential failurefrom reaching the next

customer 

7 High degree of customer High failure rate with supporting Less chances that the potential

dissatisfaction documents failure will be detected or

 prevented before reaching

the next customer 

8 Vey high degree of customer High failure rate with supporting Very less chances that the

dissatisfaction documents potential failure will be detected

or prevented before reaching

the next customer 

9 Negative impact on the Failure is almost certain Existing controls will not detectcustomer the potential failure

10 Negative impact on the Assured failure Existing controls will not detect

customer, people & society the potential failure

FICCI CE

Rank severity

on 1 to 10

scale

Rank occurrence

on a 1 to 10

scale

List how the cause

is presently

being controlled

Rank how well

cause/failure

can be detected

on 1 to 10 scale

FMEA Form: ( Column 1 to 9 ) 

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1 2 3 4 5 6 7 8 9

Process Potential failure mode Potential failure effect SEV Potential causes OCC Current Controls DET RPN

Part No.

1

23

4

5

List failure

modes for each

step

List effects

of each

failure mode

List causes

for each failure

mode

RPN=

SEV*OCC*DET

FICCI CE

Designates people

responsible for

corrective action

FMEA Form contd: ( column 10 to 15 )

RPN is recalculated

on completion of

corrective action

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10 11 12 13 14 15

 Actions Recommended Responsibility SEV OCC DET RPN

List actions

recommended

on RPN pareto

FICCI CE

Quality Function Deployment ( QFD ) 

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 No matter how effectively a company meets the initial

needs of the customers, it must remain constantly alertand responsive to the changing and increasing needs of

the customers. Because if the company is not

responsive to these changing needs, the passage of time

will erode the early competitive advantages.

FICCI CE

QFD 

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QFD is a scientific technique for translating the voice of

the customer into development of products and

services. It is a complete product planning process asopposed to problem solving and analysis. The technique

was invented by Akashi Fukuhara of Japan and first

applied with very good results at Toyota.

FICCI CE

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Putting QFD into practice 

FICCI CE

Importance

Step 1 : List customer requirements and rank  

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Customer Requirements  on 10 pointscale 

Very Important

Moderately Important

Slightly important

FICCI CE

Step 2 : List technical requirements to meet customer requirements 

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   T  e  c

   h  n   i  c

  a   l   R  e  q  u

   i  r  e  m

  e  n

   t  s

FICCI CE

Customer competitive

evaluation on 5 point scale( 5 high , 1 low )

a  n   k

Step 3 : Comparing product with the nearest competitor

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1 2 3 4 5 Action   R  a

Competitor product  Our product 

Customer Requirements 

FICCI CE

Step 4 : Establish relationship between customer requirementand technical requirements 

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Customer RequirementsRank

Strong relation

Moderate relation

Weak relation

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FICCI CE

Step 5 : Do competitive technical Assessment 

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Customer Requirements  Rank  

Competitive evaluation

Competitive

Technical

Assessment 

5

4

3

2

1

Competitor assessment

Our assessment

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FICCI CE

QFD - customer‟s voice 

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The whole process of the QFD can be linked to GIGO (

Garbage in garbage out ). This is because, if the voice of the

customer has not been captured properly, the final product

will also not be the one actually desired by the market place.

It is therefore extremely important to capture the correctvoice of the customer before taking any other step in the

QFD planning process. We will explain this by the

forthcoming example of new car development.

FICCI CE

Example : new car development 

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FICCI CE

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A product development team wants to determine what the

customers want in a new car. After interviewing about 120 cardrivers, the team came out with the following chart of the

customer requirements : 

FICCI CE

Desired product attributes in a new car 

• Easy to drive

• Quiet riding , no squeaks or rattles

5

4.8

Requirement Rank

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• Excellently finished

• Smooth riding even on rough road

• Excellent gas mileage

• Aerodynamic design

• Hugs the road

• Free from breakdowns

• Fast acceleration

• Virtually maintenance free

• Durable - will last 150000 miles

• Protects the driver and passenger in case of accident

• Classic styling

• Has instruments to read critical functions

• Has many electronic devises

• Has convertible roof

4.64.5

3.9

3.8

3.7

3.63.5

3.4

3.3

3.2

3

2.2

2

1.4

FICCI CE

Translating into technical requirements 

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The product development team is all set to translate the requirementsof the customer into technical requirements as per the QFD matrix.

Fallacy : The survey is based on aggregate data management and its

 basic assumption is that there is one best answer for every one. 

FICCI CE

Classification of needs 

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The product development team is asked by the CEO to

classify the needs of various drivers and then give it a rating

instead of proceeding simply with the aggregate data

management. After the market survey the product

development team divided the customer into two broadcategories :-

1. The performance driver and

2. The practical driver

The team then came with the following findings -

FICCI CE

Two different profiles of desired product attributes 

•Fast acceleration

•Aerodynamic design

•Hugs the road 

Performance driver Practical driver

•Excellent gas mileage

•Virtually maintenance free

•Free from breakdowns

5

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•Easy to drive

•Excellently finished

•Quiet riding

•Classic styling

•Smooth riding

•Free from breakdowns

•Excellent gas mileage

•Protects drivers

•Durable

•Many electronic devices

•Convertible roof

•Virtually maintenance free

•Easy to drive

•Durable

•Quiet riding

•Smooth ride

•Protects driver

•Excellently finished

•Many electronic devises

•Aerodynamic design•Hugs the road

•Instruments to read functions

•Classic styling

•Convertible roof

•Fast acceleration

4

3

2

1

FICCI CE

New Car 

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The classification of the customer requirements clearly reveals

that the attribute which is most important  for theperformance driver, is  least important for the practical

driver  and vice versa. A simple listing of the customer

requirements would have definitely ended up in the

development of incorrect product for the market. Reading the

voice of the customer is therefore the most critical and

challenging aspect of the whole QFD process.

FICCI CE

QFD - Conclusion 

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It is therefore very important that your organization is

constantly looking for the living customers  instead of

mythological ones created by aggregate data management.

Once the voice of the customer has been properly captured,translating them into technical requirements should not be

much of a difficulty.

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FICCI CE

Design of experiments 

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Design of experiments (DOE) is a valuable tool to optimize

 product and process designs, to accelerate the development

cycle, to reduce development costs, to improve the transition of

 products from research and development to manufacturing andto effectively trouble shoot manufacturing problems. Today,

Design of Experiments is viewed as a quality technology to

achieve product excellence at lowest possible overall cost.

FICCI CE

Objectives of Experimentation 

Th f ll i f h bj i f

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The following are some of the objectives of

experimentation in an industry :

• Improving efficiency or yield

• Finding optimum process settings

• Locating sources of variability

• Correlating process variables with product characteristics

• Comparing different processes, machines, materials etc

• Designing new processes and products.

FICCI CE

Various terms used in Experimentation 

I th t t f di i i t l d i th

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In the context of discussion on experimental designs, the

common frequently used terms are :

• factor

• Level

• Treatment combination

• Response

• Effect

• Interaction

FICCI CE

Traditional approach 

The traditional approach to product and process

ti i ti i t d t i bl t ti

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optimization is to conduct one variable at-a-timeexperiments. This approach though simple to plan and

execute, suffers from several drawbacks. For instance,

varying factor „A‟  from its nominal value „A1‟  to some

other value „A2‟ may produce a given change in the qualityof the product, when other factor „B‟  is at a value „B1‟.

However a different change in the quality of the product

will result, when factor „B‟ is at a value „B2‟. This effect

known as interaction effect, can not be detected under

traditional approach..

FICCI CE

Statistically designed experiments 

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A statistically designed experiment permits simultaneous

consideration of all the possible factors that are suspected

to have bearing on the quality problem under investigation

and as such even if interactions effect exist, a validevaluation of the main effect can be made. Scanning a

large number of variables is one of the ready and simpler

objectives that a statistically designed experiment would

fulfill in many problem situations.

FICCI CE

Statistically designed experiments 

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Even a limited number of experiments would enable the

experimenter to uncover the vital factors as which further

trials would yield useful results. The approach has numberof merits, it is quick, reliable and efficient.

FICCI CE

Basic principles of experimentation 

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Basic principles of Experimentation are :

• Randomization

• Replication• Local Control

FICCI CE

Basic principles of experimentation 

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• Randomization :  is described as an insurance against

extraneous factors.

• Replication : increases the sensitivity of the experiment i.e

 power of detecting differences between treatments.

• Local Control : reduces the effect of natural variability of

materials, environmental conditions etc.

FICCI CE

Planning for experimentation 

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It is known widely that a properly well planned experiment

helps to achieve better efficiency and hence certain amount

of thinking must be done before deciding to carry out theexperiment and actually conducting the experiment.

FICCI CE

The various steps to be followed in this direction are listed

below :

Planning for experimentation 

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 below : Selection of area of study : Pareto analysis

Proof of the need for experimentation

Brain storming and Cause & Effect diagram : To list all the

 possible factors Classification of factors

Interactions to be studied

Response and type of model for analysis

Note : Pareto Analysis, Brain storming and Cause & Effect diagrams have

already been covered in the previous slides.

FICCI CE

Proof of the need for experimentation 

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After having selected the area for experimentation we have

to ensure that the problem is of „Break   through‟  or

„Improvement‟  nature  and not a problem of „control‟ 

nature. For this purpose past data should be suitably

analyzed and plotted on some process control chart tocheck whether the process is within statistical control or

not. If the analysis shows lack of control or statistical

instability, then it is a problem of „control‟  nature and

experimentation may not be needed.

FICCI CE

Proof of the need for experimentation 

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However if the problem is of chronic nature and there is

stability in the process, then it establishes the need for

experimentation. Before deciding to carry outexperimentation the need for experimentation must be

established.

FICCI CE

Classification of factors 

Tools like brainstorming and cause & effect diagrams

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Tools like brainstorming and cause & effect diagramshelps in identification of factors and preparing a complete

list of the factors involved in any experiment. Factors

listed can be classified into three categories :

1. Experimental Factors2. Control Factors

3. Error or Noise Factors

FICCI CE

Classification of factors 

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1.  Experimental factors  are those which we really

experiment with by varying them at various levels.

2. Control Factors are those which are kept at a constant(controlled) level throughout experimentation.

FICCI CE

3 Error or Noise factors are those which can neither be

Classification of factors 

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3. Error or Noise factors are those which can neither bechanged at our will nor can be fixed at one particular level.

Effect of these factors causes the error component in the

experiment and as such these factors are termed as error or

noise factors.

Note : At the planning stage itself all the factors viz. Experimental,

Control and error should be recognized. This will help to tackle them

appropriately during experimentation.

FICCI CE

Response and type of model for analysis 

The ultimate observations or data generated by the

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The ultimate observations or data generated by theexperiment is known as the response. The response may be :

• Continuous or measurement type and follows a normal

distribution

• Continuous or measurement type but does not follow normaldistribution

FICCI CE

7. Control phase 

Objectives of control phase

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Objectives of control phase

Tools for effective control system

Risk management

Mistake proofing techniques

Product design controls

FICCI CE

Objectives of control phase 

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• To ensure that our processes stay in control after the

improvement solution has been implemented and

• To quickly detect the out of control state and determine theassociated causes so that actions can be taken to control the

 problem before non-conformances are produced.

FICCI CE

Control phase 

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Having achieved the improvement, it needs to be sustained. There is ageneral tendency for all processes to degrade unless there is an

effective control mechanism which is able to detect incipient deviation

in the process, which are then analyzed and necessary corrective action

is taken to bring the process back to the state which was attained after

 planned improvement was effected. These control mechanisms must beintegrated in the form of a quality management system document

which should be made mandatory.

FICCI CE

Control phase 

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Unless we control the business processes in the form of

documentation and ongoing process controls, processes

will tend to degrade overtime and shall loose the gains

achieved in the improvement activities.

FICCI CE

Tools for effective control system 

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I. SPC - This has already been covered in “Measurement and

Analysis section”.

II. Risk management

III. Mistake proofingIV. Product design controls

FICCI CE

Risk management 

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FICCI CE

Risk management 

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Risk can be defined as the  probability  of an undesirable

event occurring and the impact/consequence of that event.

Risk management is a process of managing risk using riskabatement plans.

FICCI CE

Objectives of risk management plan 

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• To identify and quantify risk elements viz. Technical, cost, marketing

risk.

• To reduce risk by means of risk abatement plans integrated into

 processes• To Monitor progress of abatement plan

• To Highlight and manage risk as early as possible. 

FICCI CE

Key steps of a risk management process 

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• Identify risk elements and risk types

• Assign risk ratings i.e. probability and consequence of risk

• Prioritize risk as high medium and low

• Identify risk abatement plans for high and medium risks• Incorporate the risk abatement plans into work plans.

FICCI CE

Ways to identify risk  

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1. FMEA (This has been already discussed in the chapter on

“Measurement” 

2. Past experience

3. Brainstorming

Whatever be the method it is important to analyze risk in terms of

complex design issues, cutting edge technology issues, untested

techniques, new manufacturing processes and high cost uncertainties.

FICCI CE

Methods of risk abatement 

I l / li / f i /fi ld l i

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• Involve customers/suppliers/manufacturing/field early in

the process

• Model or simulate the process

• Use robust design• Test

• Conduct periodic project reviews

• Complete analysis earlier

• Assure proper resourcing

FICCI CE

Mistake Proofing 

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FICCI CE

Mistake proofing 

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Mistake proofing is a scientific technique for improvement

of operating systems including materials, machines and

methods with an aim of preventing problems due to human

error. The term “error”  means a sporadic deviation fromstandard procedures resulting from loss of memory,

 perception or motion.

FICCI CE

Defect Vs errors 

It is important to understand that defects and errors are not

the same thing. A defect is the result of an error, or an

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the same thing. A defect is the result of an error, or an

error is the cause of defects as explained below.

Error Defect

Cause Result

FICCI CE

Prevention of defects 

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Machine

orhuman error

Detect error

Take action

feedback

zero

defect

Stop errors fromturning into defects

Cause Intermediate result End result

FICCI CE

Types of error 

• Error in memory of PLAN : Error of forgetting the

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• Error in memory of PLAN  :  Error of forgetting the

sequence/ contents operations required or restricted in

standard procedures.

• Error in memory of EXECUTION  :  Errors of forgettingthe sequence/contents of operations having been finished.

• Error in PERCEPTION  of type  : Error of selecting the

wrong object in type or quantity. 

FICCI CE

Types of error 

• Error in perception of MOVEMENT  : Error of

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p pmisunderstanding/misjudging the shape, position, direction

or other characteristics of the objects.

• Error in motion of HOLDING : Error in failing to hold

objects.

• Error in motion of CHANGING :  Errors of failing to

change the shape, position, direction, or other

characteristics of object according to the standard. 

FICCI CE

Human error provoking situations 

• Inadequate written standards

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• Too many parts

• Mix up

• Too many steps

• Specifications or critical conditions• Too many adjustments

• Tooling change

• Frequent repetition

• Environmental factors

FICCI CE

Principles of mistake proofing

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The principles of mistake proofing can be categorized into groups:

A. Prevention of occurrence

B. Minimization of effects 

FICCI CE

A. Prevention of occurrence 

Methods under this principle aim to prevent the occurrence

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Methods under this principle aim to prevent the occurrence

of human errors from all stages of operations and make

corrections unnecessary.This can be done through the

following 3 methods :-

• Elimination

• Replacement

• Facilitation

FICCI CE

Elimination 

Elimination method aims to remove the system properties 

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y p p

which generate operations/restrictions susceptible to human

errors so as to make them unnecessary. Consider the error of

an operator touching a high temperature pipe and getting

 burnt. One method of preventing this error is to make the pipesafe by covering it with insulating material. This improvement

removes the property of the pipe which generates the

restriction.

FICCI CE

Replacement 

The replacement method aims to use more reliable methods

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The replacement method aims to use more reliable methods 

than operators and make it unnecessary for operators to

 perform such functions as memory, perception or motion.

The use of specially partitioned parts boxes holding specified

number of parts to prevent the error of supplying incorrectnumber of parts is an example of foolproof method based on

replacement.

FICCI CE

Facilitation 

The principles of elimination and replacement described

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The principles of elimination and replacement described

above make it unnecessary for operators to perform

operations or note restrictions. In contrast to these, the

 purpose of facilitation is to make such functions as

memory, perception and motion required in operations

easy for the operators, and thus reduce the occurrence

rate of human errors.

FICCI CE

B. Minimization of effects* 

M th d d thi i i l i t i i i th ff t f

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Methods under this principle aim to minimize the effects of

human error and focus on processes where the errors

develop into serious problems of quality,safety or

efficiency. This can be divided into two categories :-1. Detection and

2. Mitigation

*This principle is also known as Stop-in-time. 

FICCI CE

Detection 

The concept of detection is that even if a human error occurs,the deviations from standard states caused by it can be

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the deviations from standard states caused by it can be

detected and corrected in the succeeding operation  steps.

The methods of correcting the detected deviations are

classified into two types :-

1. Operators are informed  or find by themselves the

deviations and take necessary corrective action.

2. The deviations are automatically corrected  without

operators.

FICCI CE

Detection 

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There are two methods of informing the operator. The first

method is to bring to the operator‟s  notice by alarms  or

the remained parts and the second method is by making the

successive operations impossible.

FICCI CE

Mitigation 

The mitigation method aims to make operations redundant or incorporate shock absorbing/protecting materials so as to

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or incorporate shock absorbing/protecting materials so as to

mitigate the effects of human errors in their development

 process.

Example :  Consider the error of burning out the motor of a production machine by forgetting to switch off the power

supply. The mitigation countermeasure is to install a fuse

which cuts off the power supply when the temperature reaches

certain point.

FICCI CE

Product Design Controls 

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Product design controls can be categorized in 3 parts

• Means of knowing the product

• Means of testing designs

• Means of regulating designs

FICCI CE

Means of knowing the product 

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Do the designers know the variety of application  of the

 product.

Do they have complete information on the operatingenvironments. 

Do they have access to the user to discuss applications.

Do they know the potential field misuses of the product.

FICCI CE

Means of knowing the product 

Do they have clear understanding of product requirementon :-

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on :

Performance

Life

Warranty period

Reliability

Maintainability

Accessibility

Safety

Operating costs

FICCI CE

Means of knowing the product 

Have the non quantitative features of the product beendefined in some manner?

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defined in some manner?

Do the designers know the level of product

sophistication suitable for the user involved?

Are adequate design guidelines, standards, handbooks

and catalogues available?

Do the designers understand the interaction of their

 part of design with remainder of the design?

FICCI CE

Means of knowing the product 

Do the designers understand the consequences of a failure 

or other inadequacies of their designs on:-

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1. The functioning of the total system

2. Warranty costs and

3. User costs ?

Do they know the relative importance  of various

components & characteristics within components?

Do the designers know what are the manufacturing

capabilities relative to the design of tolerances?

FICCI CE

Means of knowing the product 

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Do the designers derive tolerances  based on

customer/functional needs or just use standard tolerances?

Do the designers know the shop and field costs  incurred because of incomplete design specifications or designs

required in change?

FICCI CE

Means of testing designs 

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Do the designers have the means of testing  their design

with regard to the following :- a. Performance & reliability tests

 b. Tests for unknown design interaction or effects

c. Pilot run

Is their an independent review of design?

Have the detailed drawings been checked?

FICCI CE

Means of testing designs 

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Do the designers record analysis for the design?

Do the designers receive adequate feedback   fromdevelopment tests, manufacturing tests, acceptance tests and

user experience?

Are the results quantified  where possible including

frequency of problems and costs to the manufacturer anduser?

FICCI CE

Means of testing designs 

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Does failure information contain sufficient technical detailson causes?

 Are the designers aware of material substitutions or

 process changes?

Do the designers receive notice when their designs

specifications are not followed in practice?

FICCI CE

Means of regulating Design 

Have the designers been provided with the means of

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g p

regulating the design process?

Are they provided with information on new alternative

materials or design approaches? Have they been given performance information on previous

designs?

Are the results of research efforts on new products transmitted

to the designers?

FICCI CE

Means of regulating Design 

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Are the approvals  required from the designers to use

 products from the new suppliers?

Do the designers participate in defining the criteria forshipment of the product?

Can the designers propose changes  involving trade-offs

 between functional performance, reliability and

maintainability?

FICCI CE

Means of regulating Design 

Are designers told of  changes to their designs before they are

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released?

Have causes of design failures been determined by thorough

analysis? Do designers have the authority  to follow their designs

through the prototype stage and make design changes where

needed?

Can the designers initiate design changes?

FICCI CE

Means of regulating Design 

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Are field reports reviewed with designers before making

decisions on design changes?

Do designers understand the procedures  and chain of

command for changing a design?

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Awareness of the present status

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  It is extremely important for an organization to carry out an

overall assessment of the present status to know their strengths

and weaknesses. The following steps are important in

conducting the assessment :-

FICCI CE

Steps in conducting assessment 

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Agree on the assessment parameters  and criteria. Whatever be the criteria, it is important to cover all the major aspects

like leadership, information and analysis, strategic planning,

human resource utilization, quality assurance, business

results and customer satisfaction.

FICCI CE

Steps in conducting assessment 

• Educate the management in the criteria and adapt the

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• Educate the management in the criteria and adapt the

criteria.

• Form the internal information gathering team.

• Train the team in the criteria and in the information

gathering process.

• Plan and conduct the information gathering process.

FICCI CE

Steps in conducting assessment 

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• Collate the information and write the factual report.

• Have objective external experts validate and assess the

facts and provide feedback to senior management.• Use this feedback as input to the strategic planning

 process, and plan the actions required to cause

improvement.

FICCI CE

Organizational assessment On the basis of business excellence model 

Please answer the following questions about your organization

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Please answer the following questions about your organization.

Each question must be rated on a scale of 1-5, 1 being lowest and

5 being highest.

Note: To enable the users to enter their score and arrive at overall ratings, a

separate utility package is also provided in MS Excel file “Scoresheet”  in this CD. 

FICCI CE

Leadership 

1. Is the top management having personal visible involvement in all aspects

of quality management?

2.  Do they actively participate  in creating and reinforcing customer focus

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throughout the organization?

3.  Do they provide active support  to the change program by providing

appropriate resources?

4. Do they actively involve themselves in  recognizing  the employee/ team

contributions?

Note: Please enter your score in MS Excel file “Scoresheet” given in this CD. 

FICCI CE

Strategic planning 

5. Does the company have a common vision which is shared by all theemployees in its true sense?

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p y

6. Does the company‟s  strategic planning address realignment of work

processes to improve customer focus and operational performance?

7.  Are the company‟s  strategies targeted for quantified measurableimprovement in important areas and Is building for future seen as more

important than short term benefits?

Note: Please enter your score in MS Excel file “Scoresheet” given in this CD. 

FICCI CE

Strategic planning 

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8. Is commitment to resources for new facilities, process improvements and

training done considering long term objectives?

9.  Does the company‟s  long term projections of operational performanceeffectively incorporate comparisons with competitors?

Note: Please enter your score in MS Excel file “Scoresheet” given in this CD. 

FICCI CE

Information management 

10 Does the company‟s orking s stem and proced res promote easy

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10.  Does the company‟s  working system and procedures promote easy

upward flow of information?

11. Do the employees feel free to share the information?

12. Is the company‟s  information management system accessible to every

one without any difficulty?

Note: Please enter your score in MS Excel file “Scoresheet” given in this CD. 

FICCI CE

Information management 

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13.  Does the company periodically update  its information

management system?

14.  Is the information system reliable and accurate  for people tomake decisions in time?

Note: Please enter your score in MS Excel file “Scoresheet” given in this CD. 

FICCI CE

Human resource focus 

15. Does the company‟s business plan consider human resource capabilities

for addressing quality leadership opportunities?

16 I h i i d ti d t i i d id d id i

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16.  Is the investment in education and training  decided considering

employee needs and future business needs?

17. Does the company evaluate its human resource planning using employee

feedback ? 

18. Does the company have an effective system for setting both quantitative

and qualitative targets? 

Note: Please enter your score in MS Excel file “Scoresheet” given in this CD. 

FICCI CE

Human resource focus 

19.  Are the employees generally aware and meet the expectedperformance standards?

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20. Does the company make effort to integrate employees job performance

with key quality improvement targets and business results?

21. Does the company have an effective appraisal system which takes careof the career progression of all the employees?

Note: Please enter your score in MS Excel file “Scoresheet” given in this CD. 

FICCI CE

Human resource focus 

22. Is the company concerned about employee well being?

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23. Is the good performance suitably rewarded?

24.  Is the employee motivation level  high and good performance

suitably rewarded ?

Note: Please enter your score in MS Excel file “Scoresheet” given in this CD. 

FICCI CE

Human resource satisfaction 

25. Is the company able to realize the full potential of its people and

 people‟s commitment to job is visible? 

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26.  Are the existing system of incentive and reward  adequate for  

maximum employee contribution?

27. Is the company‟s image as an employer good and the company is

able to attract the best talent? 

Note: Please enter your score in MS Excel file “Scoresheet” given in this CD. 

FICCI CE

Customer and market focus 

28.  Does the company address future needs taking into accountcompetitors and changing customer expectations?

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29. Does the company regularly evaluate and improve its processes

 based in changing customer expectations?

30.  Does the company set performance standards  and reviewsthem for further improvement?

31. Does the company trace system performance, with reference to

set expectation level, using quality measures?

Note: Please enter your score in MS Excel file “Scoresheet” given in this CD. 

FICCI CE

Customer and market focus 

32.  Does the company regularly evaluate  and improve their

commitments for service performance to match customerexpectations?

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33. Does the company promptly resolve all formal and informal

customer complaints?

34.  Does the company regularly determine  customer‟s  currentand expected requirements?

35. Does the company determine specific product feature and their

relative importance using customer listening techniques like

QFD?

Note: Please enter your score in MS Excel file “Scoresheet” given in this CD. 

FICCI CE

Customer and market focus 

36. Does the company analyze and use information on customerloss/gain and product performance to develop future strategies?

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37. Does the company effectively determine customer satisfaction

and make effective efforts to improve it further?

38. Does the company‟s customer satisfaction measure capture keyinformation that reflects their likely future behavior? 

39.  Is the customer satisfaction level effectively compared with

that of your key competitors by studies and independent surveys?

Note: Please enter your score in MS Excel file “Scoresheet” given in this CD. 

FICCI CE

Customer satisfaction 

40 Does the company improve its system of determining

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40.  Does the company improve its system of determining

customer satisfaction on a regular basis?

41. Does the company effectively use customer dissatisfaction 

indicators for making improvements?

42. Has the company achieved better customer satisfaction for

its products and services in relation to its key competitors? 

Note: Please enter your score in MS Excel file “Scoresheet” given in this CD. 

FICCI CE

Supplier focus 

43.  Does the company evaluate supplier performance  with specifiedrequirements/parameters through mutually agreed plans?

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44. Does the company effectively communicate its quality requirements to

the suppliers?

45. Does the company effectively evaluate if suppliers are meeting itsquality requirements?

46. Does the company organize training programs for the suppliers to

improve their ability to meet key requirements and response times? 

Note: Please enter your score in MS Excel file “Scoresheet” given in this CD. 

FICCI CE

Supplier focus 

47.  Does the company have a system to generate healthy competition

among suppliers of similar items to improve performance?

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48. What is the level of your supplier satisfaction?

49. Are the suppliers paid in time ?

50. Does the company constantly endeavor for development of capabilities

of its suppliers?

Note: Please enter your score in MS Excel file “Scoresheet” given in this CD. 

FICCI CE

Processes 

51. Does the company‟s product design consider customer‟s implied andfuture needs?

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52.  Does the company validate  its product designs taking into account

 performance, process and supplier capabilities?

53. Does the company evaluate and improve design and design processesso as to improve product quality and cycle/response time?

54. Does the company determine the cause of variation, make corrections

and integrate them into the process?

Note: Please enter your score in MS Excel file “Scoresheet” given in this CD. 

FICCI CE

Processes 

55. Does the company analyze processes to achieve better quality, reduced

cycle/response time and better operational performance? 

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56. Does the company regularly evaluate and the key business processes,

their requirements, quality and operational performance?

57.  Does the company regularly analyze and simplify  the processes toachieve better quality, cycle-time and operational performance?

58.  Does the company effectively use alternative technology  for

improvement?

Note: Please enter your score in MS Excel file “Scoresheet” given in this CD. 

FICCI CE

Processes 

59.  Does the company effectively use information  from customers for

b i d t i i t?

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 business and support service process improvement?

60. Does the company make efforts to find out information from best in the

class and make use of this information for process improvement?

61. Is the criterion of benchmarking well defined and documented?

Note: Please enter your score in MS Excel file “Scoresheet” given in this CD. 

FICCI CE

Processes 

62. Does the company‟s work culture ensure precedence to quality overcost and response time considerations?

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63. Is there a  judicious planning for balancing cost, quality and time in

every decision taken in the organization?

Note: Please enter your score in MS Excel file “Scoresheet” given in this CD. 

FICCI CE

Impact on society 

64. Is the company effectively satisfying  the needs and expectations of

the society at large?

65 Does the company effectively evaluate possible impacts of its

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65.  Does the company effectively evaluate possible impacts  of its

 products and operations on society?

66.  Does the company promote ethical conduct  in all activities hat it

does and are the company‟s ad-campaigns truthful and reflect facts?

67. Does the company effectively consider energy conservation and

preservation of global resources?

Note: Please enter your score in MS Excel file “Scoresheet” given in this CD. 

FICCI CE

Company specific business results 

68. Does your company enjoy product quality leadership for the range of products it deals with?

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69. Is the company‟s growth over the last financial year comparable with

the industry growth?

70. Are the overall financial results better that the last financial year and

have the shareholder expectations been met?

Note: Please enter your score in MS Excel file “Scoresheet” given in this CD. 

Analyze your score 

• 281 - 350 : Excellent. You are doing very well, but there is

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no room for complacency.

• 211 - 280 : Good. With a little effort you can do better.

• 141 - 210 : Average. Your direction is clear, but you need

to intensify your efforts to move up.

• Less than 140 : Serious situation. You may not survive

for a long time. Immediate action is required to change the

 present situation.

FICCI CE

Assessment report 

At the end of the assessment, management should have a

report that includes :

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report that includes :

• Factual account that sets out how the organization operates

today.

• A list of existing strengths and weaknesses  to build

upon.

• A list of present and future opportunities. 

• A list of six Sigma projects to be undertaken. 

FICCI CE

Critical issues & superior choices

in Six Sigma implementation. 

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FICCI CE

A. Method focus versus problem focus. 

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It is a general tendency amongst organizations to latch on the

ideas like SPC, JIT, QFD & DOE as if they were the panacea to

all the problems. As soon as the new quality tool is introduced it becomes the focus of the company. Nobody is willing to pose a

question of the real problem faced by the company. With the

 problem solving focus the question is “what is the problem?”.

A problem focus enables us to select the appropriate solutions.

FICCI CE

B. Focus on productivity versus focus on quality

improvement. 

Even with a lot of talk on quality management focus is

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Even with a lot of talk on quality, management focus is

generally directed towards productivity improvement with

quality improvement as a by product. Management by & large

has not understood that the focus on quality results inimproved productivity as a by product. For Six Sigma to be

really effective, organizations must focus on quality  with

 productivity as a by product & not vice-versa.

FICCI CE

C. Soft progress versus hard progress. 

Many organizations have a tendency to describe quality

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Many organizations have a tendency to describe quality

 progress in soft terms (intermediate results) instead of hard

terms(end results).  Once such a practice is considered

acceptable it almost becomes a norm. Some companies willdescribe how many black belts have been trained rather than

how many have actually resolved problems that has resulted

in breakthrough improvements. The top management must

require progress reports in hard terms  rather than softterms.

FICCI CED. Improvement of manufacturing systems versus

all other systems . 

Si Si ff ll lk d b i h

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Six Sigma efforts are usually talked about in the

manufacturing sense. Other areas of business, which are

equally important somehow receive scant attention. Many

times organizations fail to define measurement metrics for

marketing, Purchase, Quality assurance, Product engineering,

Suppliers, Employees & Customers. Please see chapter on

“Measurement of business excellence” for more details.

FICCI CE

Prerequisites of successful implementation 

Highly visible top down management commitment  to

the initiatives

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the initiatives.

A proper measurement system  to track the progress.

This weaves accountability into six sigma initiatives and

 provides tangible picture of the organization‟s efforts.

Internal and external  benchmarking  of the

organization's products, services and processes.

FICCI CE

Prerequisites of successful implementation 

Stretch goals to focus on changing the processes.

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Appointment and training of champions and black belts 

to promote initiatives . The champions must be able to

 provide necessary planning, teaching, coaching andconsulting at all levels in the organization.

Training and development at all levels.

FICCI CE

Creating Six sigma Focus 

Si Si j t b l t d th b i f

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Six Sigma projects can be selected on the basis of

any of the following criteria :- 

• Focus on project cost savings• Focus on Deliverables

• Focus on the processes

• Focus on the problems 

FICCI CE

Focus on project cost savings 

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Under this criteria the Six Sigma projects are selected for

 potential reductions in the fixed or var iable costs . The

organization should however be aware about the limitation

of this approach, particularly when they are trying to

 propagate quality.

FICCI CE

Focus on deliverables 

Under this approach the organization identifies the areas that

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Under this approach the organization identifies the areas that

are the greatest cause of customer dissatisfaction.  High

warranty costs is one area that the organization may want to

look into. However this approach is also short sighted as itfocuses on defects rather than the processes that create the

defects.

FICCI CE

Focus on the processes 

To select the Six Sigma projects by focussing on the processes

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is the best way to attack the root causes of defects and

customer satisfaction concerns . It is important for the

organization to identify critical processes which are operatingat low sigma levels.

FICCI CE

Focus on the problems 

Another way to select the Six Sigma project is to straightaway

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Another way to select the Six Sigma project is to straightaway

focus on the problem . Many a times there may be nothing

wrong with the process, but the products may still not be

doing very well. One example could be weak design of the product. The organization can straightaway focus on redesign

of the products.

FICCI CE

Six Sigma deployment schedule 

Week Activities

1 Champions create the vision of Six sigma in the organization

2-5 Define the road map with comprehensive training plan

6 Identify high impact Six sigma projects

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7 Class room training of Black belts on MEASURE phase

8-10 Black belts work on projects & apply knowledge gained in the MEASURE phase

11 Class room training of Black belts on ANALYZE phase

12-14 Black belts work on projects & apply knowledge gained in the ANALYZE phase

15 Class room training of Black belts on IMPROVE phase

16-18 Black belts work on projects & apply knowledge gained in the IMPROVE phase

19 Class room training of Black belts on CONTROL phase

20-22 Black belts work on projects & apply knowledge gained in the CONTROL phase

23-24 The Black belts review the results and select other areas of high impact

FICCI CE

9. Measuring business excellence 

Measures of business excellence

Non financial measures

Employee related

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Operations related

Customers related

Financial measures

FICCI CE

Measures of business excellence 

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After implementing Six Sigma, the organization must assess the

impact of the program on overall business results. Since six sigma has

an impact on all the business functions, the organization must measure

all the functions through quantifiable measures of excellence. Tofacilitate this assessment, sample measures of excellence for various

functions are given on the following slides. 

FICCI CE

Measures of business excellence 

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The measures of business excellence can be broadly

classified into following two categories :-

A. Non financial measures

B. Financial measures 

FICCI CE

A. Non financial measures 

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 Non financial measures can be further classified into threecategories :-

I. Employee related

II. Operations relatedIII. Customers related 

FICCI CE

I. Employee related 

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• Employee satisfaction

• Awards presented

• Internal promotions

• Employee turnover

• Safety and health

• Suggestions received and implemented

FICCI CE

II. Operations related 

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Operations related measures can be classified further into following categories:

• Marketing

• Purchase

• Manufacturing

• Product Engineering

• Quality Assurance• Product reliability

• Accounting

FICCI CE

Operations related :- Marketing 

1. Accuracy of forecast assumptions.

2. Number of incorrect order entries.

3 O t k d fi ld li

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3. Overstocked field supplies.

4. Contract errors.

5. Late deliveries.

6. Customer complaints.

7. Warranty cost as a percentage of sales.

FICCI CE

Operations related :- Purchase 

1. Premium freight cost/ demurrage charges.

2. Down - time because of parts shortages.

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3. Number of Off specification parts used to keep line going.

4. Cycle time from start of purchase request until items in house.

5. Excess inventory.

6. Percentage of purchased material rejected on receipt.

FICCI CE

Operations related :- Manufacturing 

1. Yield per ton of raw materials.

2. Percentage of parts scrapped.

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3. Percentage of parts reworked.

4. Percentage of parts accepted on concession.

5. Percentage of final product graded as seconds.

6. Production per man / machine.

FICCI CE

Operations related :- Product engineering 

1. Number of engineering changes per document.

2. Number of errors found during design review.

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3. Number of errors found in design evaluation test.

4. Percentage of time over- run compared to planned time for

development.

5. Percentage of cost over - run over estimated cost of development.

6. Number of tooling redesign after trial production. 

FICCI CE

Operations related :- Quality Assurance 

1. Percentage of lots rejected due to errors.

2. Percentage of products having defects detected by customers.

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3. Number of engineering changes that should have been detected in

design review.

4. Errors in inspection / test reports.

5. Cycle time to get corrective actions.

6. Percentage of appraisal cost compared to production cost.

FICCI CE

Operations related :- Product reliability 

• Mean time to failure.

• Failure rate.

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• Probability of failure occurrence during given time interval.

• Probability of failure non-occurrence during given time interval.

• Mean life time.

• Mean time to first generate overhaul.

• Mean time to repair.

FICCI CE

Operations related :- Accounting 

1. Percentage of late payments.

2. Time to respond to customer request for information.

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3. Billing errors.

4. Incorrect accounting entries.

5. Payroll errors.

6. Errors in cost estimates.

FICCI CE

III. Customer related 

• Market share

• Market penetration

• New markets identified

O ll t ti f ti

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• Overall customer satisfaction

• Customer complaints

• Customer retention

• R&D expenditure as a percentage of sales

• New products and services introduced

• Sales per employee

FICCI CE

B. Financial measures 

The normal business pressures in today‟s  world tend to

cause more time to be spent on financial measures than any

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p y

other element of business. We need to be sure that the

strong signals sent by this attention in no way

underestimates the importance of the non financial

measures as discussed in the previous slides to improve the

overall business performance.

FICCI CE

Financial measures 

In addition, to the standards set of revenue and costaccountancy measures, the organizations must reduce their

quality costs and eliminate all the non value adding

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q y g

activities from their system.

Various categories of quality cost are given on the

following slides :-

FICCI CE

Quality costs - Prevention costs 

• Market research

• Quality training programs.

• Contract review

• Design review

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• Field trials

• Supplier evaluation

• Process plan review

• Process capability review

• Design and manufacture of jigs and fixtures

• Preventive maintenance

FICCI CE

Quality costs - Appraisal costs 

Proto type testing

Vendor surveillance

Incoming material inspection

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co g ate a spect o

Process inspection/control

Final inspection

Laboratory testing / measurement

Quality audits

FICCI CE

Quality costs - Internal failure 

Design changes/ corrective action

Scrap due to design changes

Excess inventory

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Rectification / reject disposition of purchased material

Rework/rejection in manufacturing

Downgrading of end product

Downtime of plant & machinery

Trouble-shooting & investigation of defects

FICCI CE

Quality costs - External failure 

Processing / investigation of customer complaint

Repair/replacement of sold goods

Warranty claims

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y

Product liability & litigation costs

Interest charges on delayed payment due to quality problems Loss of customer goodwill & sales 

FICCI CE

Size of categories of quality costs 

In most of the organizations working at 2 or 3 sigma there

is less emphasis on prevention, and their main quality

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efforts are on appraisal with very little control on internal

and external failure costs. Organizations must intensify

their efforts on the preventive costs to reduce their overall

cost of quality.

FICCI CE

1-10-100 Rule 

1

10

Rs

Rs

Prevention

Correction

S   t  a  g  e  s

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100

Rs

Rs

Rs

Failure

   S

FICCI CE

Amount Percentage

Prevention Costs

Quality Administration

QualityEngineering

Reliability Engineering

T i i

Computing cost of poor quality 

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Training

Total Prevention

Appraisal Costs

Inspection

Test

Vendor Control

Measurement Control

Materials ConsumedQulaity Audits

Total Appraisal

FICCI CE

Amount Percentage

Internal Failure Costs

Scrap

Repair & rework

Vendor Losses

Computing cost of poor quality 

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Failure Analysis

Total internal

External Failure Costs

Failures-manufacturing

Failures-Engineering

Failure-Sales

Warranty charges

Failure Analysis

Total External

Total Quality Costs

FICCI CE

Financial measures 

• Cost of quality as a percentage of sales

• Profit before interest and financial charges

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• Profit before and after tax

• Growth in profits over last year

• Return on assets

• Return on capital employed

• Return on sales

FICCI CE

General H.LAL 

General H.Lal is a mechanical engineer. In 1971 he joined the Defence

Quality Organization and held important appointments till in 1987 he

was appointed Director General, Defence Quality AssuranceOrganization. After retirement he was appointed Director General,

Bureau of Indian Standards. In addition to standards he pioneered the

Source of information and advice 

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quality movement in India. By his sustained efforts through TV, print

media and seminars he brought quality into national focus.

He is also an internationally recognized quality expert and his new book “ISO  9000 : Guidelines for developing countries”  has recently

 been published by ISO and UNCTAD/GATT. He is the chairman of

MSD Council of BIS which formulates national standards of quality

management . He is also an adviser to the UNITED NATIONS

DEVELOPMENT ORGANIZATION( UNIDO ).He is currently the Director General , FICCI Quality Forum.

FICCI CE

Research, Artwork, Design and Development 

Pravin Rajpal Mr.Pravin Rajpal is a Chartered Accountant with more than 15 years

of work experience in some of the best professionally managed

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p p y g

companies in India. He worked for Eicher Consultancy Services, a

 premier management consultany company in India for 4 years.

At present he is the CEO of Competitive Edge, ManagementConsultants.

FICCI CE

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