1 Introduction to Six Sigma 458 k Ppt4941 (1)

8/3/2019 1 Introduction to Six Sigma 458 k Ppt4941 (1)

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Max Zornada (2005) Slide 1

Introduction to Six SigmaIntroduction to Six Sigma

Business Process Improvement through Six

Sigma


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What is Six Sigma?What is Six Sigma?

q

Six Sigma is a statistical measure of quality:q It is based on rigourous process based performance measures.

q A Process for Continuous Improvement:q Six Sigma is a generic structured methodology for

continuous improvement, that can be used to improve anyprocess in any business.

q An Enabler of Cultural Change:q Six Sigma changes the way organisations work and the way

they think.q A disciplined process focussed on delivering near

perfect products and services.


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Six SigmaSix Sigma: A Definition: A Definition

A comprehensive and flexible system for achieving,

sustaining and maximising business success. Six

Sigma is uniquely driven by close understanding of

customer needs, disciplined use of facts, data andstatistical analysis, and diligent attention to managing,

improving and reinventing business processes.

The Six Sigma Way,by Pande, Newman and Cavanaugh


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Six Sigma is a measure of excellenceSix Sigma is a measure of excellence

q Six Sigma is a statistical measure of quality, whichreflects process capability;

q It set the goal of achieving capability levels of 3.4

defects per million opportunities.q Focuses on driving out variation in business

processes - this is what the customer feels!

q Sigma is the Greek symbol used for Standard

Deviation of a population.q Why Six Sigma?


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A 6 Sigma ProcessA 6 Sigma ProcessCustomer target

Lower Specification Limit Upper Specification Limit

66

0.00034% of points will be outside of the specification limits ie. defects

(= 3.4 parts per million out of spec.)

= 99.7966% of data inside the limits (Cp = 2)

0.00017%

1.7 ppm0.00017%

1.7 ppm


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9

Relating Sigma to Defect LevelsRelating Sigma to Defect Levels

Six SigmaSix Sigma 3.43.4 99.9997%99.9997%

Five SigmaFive Sigma 233233 99.977%99.977%

Four SigmaFour Sigma 6,2106,210 99.4%99.4%

Three SigmaThree Sigma 66,81066,810 93%93%

Two SigmaTwo Sigma 308,500308,500 69%69%

One SigmaOne Sigma 691,500691,500 31%31%

DPMO (Defects PerDPMO (Defects PerMillion Opportunities)Million Opportunities) Error Free RateError Free Rate


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Putting Six Sigma in Perspective!Putting Six Sigma in Perspective!

If you played 100 rounds of golf per year, and

played at:

2 sigma - you'd miss 6 putts per round 3 sigma - you'd miss 1 putt per round 4 sigma - you'd miss 1 putt every 9 rounds 5 sigma - you'd miss 1 putt every 2.33 years

6 sigma - you'd miss 1 putt every 163 years!


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History of Six SigmaHistory of Six Sigma

1985 1990 1995 2000

Motorola launches its

Six Sigma program

Allied Signal introduces

its Six Sigma program

GE introduces its Six Sigma

program and adds the D in

DMAIC

1987

q Dupont, 3M, Sun Microsystems,Raytheon, Boeing, Lockheed-Martin, Bank-of-America,American Express, HSBC, SASInstitute the list keeps growingevery day.

Who Else?q GE - All 300,000+ GE employees

must be Six Sigma certified. All newGE products developed using theDesign for Six Sigma approach.

q 3M - CEO (from GE) requires allemployees to become Six Sigmacertified.


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Six Sigma at DupontSix Sigma at Dupont

Many companies consider productivity to be a cost-saving operational issue.We at DuPont have elevated productivity to the strategic level because we

believe that it is central to our efforts in sustainability. As a sign of our

commitment in this area, we have adopted six-sigma methodology, a stringent

approach that strives to reduce manufacturing defects to just several per

million. At the end of last year, we had 1,100 black belts and 1,700 green belts(employees who have undergone weeks of training in the six-sigma

methodology) working on 4,200 projects.

In one of them, DuPont was able to increase the production rate of its plant in

Buffalo, New York, by 10% without any capital investments. The result:

$26 million in additional revenue last year. This number might not seem huge

for a company with $30 billion in sales, but DuPont has thousands of such

projects, and we are adding 200 new ones each month. Altogether, our

projects using six-sigma methodology are responsible forsavings of more

than $1 billion a year.Source: Holliday, C. (2001). Sustainable growth the DuPont way. Harvard Business Review, Sept, pp 132


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Bottom Line Impact of Six SigmaBottom Line Impact of Six Sigma

q In dollar amounts, Six Sigma delivered more than$300 million to GEs 1997 operating income and

more than $600 million in 1998;

q Raytheon - Six Sigma has generated a net benefit of

$776 million for 1999-2003;

q Honeywell:q 1998--$500 Million

q 1999--$600 Millionq 2000--$700 Million+


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Six Sigma in the Services SectorSix Sigma in the Services Sector

q Sustaining the intensity of our Six Sigma work is critical forBank of America to achieve its strategic goals. Six Sigma has

enabled us to generate more than $300MM in first-year

productivity gains for the company. It has also had a

significant impact upon the leadership team with our personaleducation and certification as Six Sigma Green Belts. As we

look to the future, our leadership charge is to keep Six Sigma

a top priority and use it to produce organic customer revenue

growth. - Ken Lewis (10/9/02)

q Failing to implement Six Sigma in commercial areas with the

same force that the company implemented it in its industrial

sectors cost Motorola $5 billion over a four-year period.


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A Timeline of Key Events leading up to Six SigmaA Timeline of Key Events leading up to Six Sigma

19941920's 1931 1940's 1943 1950 1960 1970 1980 1990 2000

Shewhart's studies into variation at Bell Telephone Labs

Shewhart publishes book, "Economic Control of Quality of Manufactured Product

Widespread adoption of Shewhart's principles for War-time Production in the USIshikawa develops Ishikawa diagram and pioneers use of 7-tools

Widespread abandonment of Shewhart's principles in Post-War US.

Deming teaches Shewhart principles to Japanese

Deming develops management philosophy based on Shewhart concepts own ideasJapanese extend Deming's teachings, develop the "Total Quality concept

USA starts to copy Japan, called TQC (Total Quality Control) eventually

the term TQM (Total Quality Management) is used as the label.

US discovers Deming

Rapid spread TQM principles to US service industries

Pacific basin countries, excluding Australia commence adopting TQMWestern Europe discovers TQM

Developing countries rapidly adopting TQM

Australian services sector copies US with adoption of TQM

Australian manufacturing commences with TQM

Benchmarking emerges as a supporting practice

Business Process Reengineering

Team based approaches to work gaining

broad acceptance in industry

Organisational learning emerging

as a key competitive issue

1996

Renewed focus on Process Management

Widespread emergence ofBalanced Scorecard

6-sigma goes mainstream

2002


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Key Elements of Six SigmaKey Elements of Six Sigma

q

Process Orientationq Customer Focus

q Y = f(X)

q Data and Measurement Driven

q Focus on Variation Reductionq Statistical Rigour

q Project Orientation

q The DMAIC Process Improvement/Problem Solving Process

q Dedicated Personnel

q Bottom Line Results Focussed

q Data Driven Culture (In God we trust, all others bring Data)


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The Six Sigma ApproachThe Six Sigma Approach

DMAICDMAIC

Define the problem or

opportunity.

Measure the current

performance and

capability

Analyse to identify root

causes.

Improve by

implementing potential

solutions.

Control by

standardising solution

and monitoring

performance.

Define

Measure

Analyse

Improve

Control

6


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The Role of Statistics in Six SigmaThe Role of Statistics in Six Sigma

Define

Measure

Analyse

Improve

Control

6

Practical Problem

Statistical Problem

Statistical Solution

Statistical Control

Practical Solution


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Six Sigma Support StructureSix Sigma Support Structure

q Champions: Business leaders who lead the implementation of Six Sigmawithin the business;

q Sponsors/Process Owners: Business leaders responsible for the

implementation of process improvements and monitoring process

performance;

q Master Black Belts: Fully trained quality leaders responsible for SixSigma strategy, training, mentoring, deployment and results;

q Black Belts: Fully trained Six Sigma experts who lead improvement

teams, work on Six Sigma projects and mentor Green belts;

q Green Belts: Fully trained individuals who apply Six Sigma skills to

improvement projects;

q Team Members: (Yellow Belts) Individuals who support projects in their

areas.


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Implementing Six SigmaImplementing Six Sigma

Strategic Level

Tactical Level

Operational Level

Executive Steering Committee

Master Black Belts

Champions

Black Belts

Team Members

Stakeholders

Green Belts

Yellow Belts


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Relationship between Quality, Market ShareRelationship between Quality, Market Share

and ROI -and ROI - The Business Case for Six SigmaThe Business Case for Six Sigma

Relative Market Share

RelativeQuality

Low 25% 60% High Inferior

Superior

33 %

67%

Return on Investment (ROI) %

21

38

2029

27

20

13

7

14

Source: Buzzell, R.D. & Gales, B.T. (1987) The PIMS Principles


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Six Sigma Competitive Advantage

Improve

Quality

ExternalQuality

Customer

Satisfaction

Market

Share

Revenue

Internal

QualityOperating

Costs

Capital

Costs

Economies of

Scale

Higher Profit

Higher ROI

Products &

Services

Processes &

People


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How did leaders become leaders How did leaders become leaders A accumulation of competenciesA accumulation of competencies

Quality

Delivery

Cost

Flexibility

Nakane and Hall (1994)

Define

Measure

Analyse

Improve

Control

6

Six Sigma provides the on-ramp and the

mechanism to progress up the steps.


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In god we trust, all others bring data.In god we trust, all others bring data.

Grade your organisation on its use of dataGrade your organisation on its use of data

q Our organisation uses only tribal knowledge i.e. people experienceand the way we do things around here. We do not use data.

q Our organisation collects data so as to say we collect data but

the data is not used.

q Our organisation collects data and we sometimes look at the

numbers and use them to support problem solving and decisionmaking.

q Our organisation logically groups the data. We report it in the

form of charts.

q Our organisation uses sample data along with basic statistics.

q Our organisation uses sample data along with inferential statistics.

q Our organisation quantifies processes via predictive equations.

F

E

D

C

BA

A +


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Conclusion of introductionConclusion of introduction

1 Introduction to Six Sigma 458 k Ppt4941 (1)

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