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Six Sigma

(A Strategy for Achieving World ClassPerformance)

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Purpose of Presentation

Share concepts and application of SixSigma with a case study;

Deployment of Six Sigma as a strategyto achieve World Class Performance;

Integration of Six Sigma with EF!

framewor";#essons #earnt

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World Class Performance

With $$ %uality

With Six Sigmauality

For every &'''''letters delivered

&(''' misdeliveries ) misdelivery

For every wee" of *+,roadcasting perchannel

)-./ hours of dead air )-/ seconds of deadair 

0ut of every 1''('''

computer restarts

2)'' crashes #ess than 3 crashes

Source: The Six Sigma Way by Peter Pande and Others

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4ased on teachings of Dr- Walter Shewhart(Dr- W- E- Deming 5 Dr- 6- 6uran-• Process Control;

• Plan Do Chec" 7ct;

• Common and Special Causes;

• Improvement can ,e done pro8ect ,y pro8ect

• Statistical tools

•

9awthorne Plant ExperiencesDeveloped ,y 4ill Smith at !otorola in )$/'s

What is Six Sigma :

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What Is Six Sigma:

• Degree of variation;• #evel of performance in terms of

defects;• Statistical measurement of process

capa,ility;• 4enchmar" for comparison;• Process improvement methodology;• It is a oal;• Strategy for change;•  7 commitment to customers to achieve

an accepta,le level of performance

 

Sigma is a letter

in the Greek

Alphabet

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Six Sigma Definitions

4usiness Definition 7 ,rea" through strategy to significantly

improve customer satisfaction andshareholder value ,y reducing varia,ility inevery aspect of ,usiness-

*echnical Definition

 7 statistical term signifying 3.4 defects permillion opportunities-

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Sigma

Level

Defects Per Million

Opportunities

Rate of

mprovement

1 6!"#"""

2 3"$#""" 2 times

3 66#$"" 5 times

4 6#21" 11 times

5 23" 27 times

6 3%4 6$ times

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4an" of 7merica < SS Experience

&oals – ' 1 in (ustomer Satisfaction –

)orl*s+ most a*mire* compan, – )orl*s+ largest -an. 

Strateg, / 0 Develop -usiness process ecellence -, appl,ing voice of te customer to i*entif, an*

engineer critical fe -usiness processes using SiSigma(reate* ualit, Pro*uctivit, Division

Source: Best Practices Report 

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4an" of 7merica < SS Experience

)ante* results in 1 ,ear ire* more tan 225 M88 88s from &9# Motorola#

:llie* Signal for rapi* *eplo,ment Develope* 2 ee. &reen 8elt training programs ntro*uce* computer simulation of processes ;raine* 3767 &reen 8elts# certifie* 123" / Minimum value

target per &8 pro 25"?  ;raine* 3"5 8lac. 8elts# certifie* 61 / Minimum value

target per 88 pro 1 million ;raine* 43 M88# 1"17 in D@SS $" A of 9ecutive ;eam traine* in &8 an* 5" A (ertifie*

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4an" of 7merica < SS Experience

Results of first 2 ,earsBRe*uce* :;M it*raal losses -, 2!%7 ARe*uce* counterfeit losses in nationi*e cas

vaults -, 54A(ustomer *eligt up 2"A:**e* 2%3 million customer ouseol*s 1%3 million feer customer ouseol*s

eperience* pro-lemsStoc. value up 52AC 2""2 = 8O: name* 8est 8an. in S 9uro

mone,Es )orl*s Most mprove* 8an. 

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9igh #evel 4usiness !etrics

0perating #evel !etrics

•  =evenue•

 Capital >tili?ation•  =eturn on 7ssets•  Profits

•  uote *ime•  Defect =ate•  Waste•  0n *ime Delivery•  Inventory;•  !achine >tili?ation

Strategically@ >sed ,y #eadership as a vehicle to developsustaina,le culture of Customer( uality( +alue and Continuousimprovement-

0perationally@ 4y uality !anagers to reduce cycle times( costs(errors( rewor"( inventory( eAuipment downtime-

Deployment across all types of processes and industries -worldwide

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Six Sigma & EFQM/ DQA Framework

es!lts

"nno#ation an$ %earning

Eno!raging

& enabling people

'o partiipate in

"mpro#ement

(ersonall)

ati#el)

"n#ol#e$ in

impro#ement

eogni*ing

"n$i#i$!al &'eam e++ort

"$enti+)ing &$esigning

 proesses to $eli#er 

strateg)

De#eloping

'eam skills

Aligning

"n$i#i$!al &

,rgani*ation

Goals

eogni*ing

(eopleEstablishing

(roess

management

S)stem to be

!se$

"mplementing

(roess

Meas!res

"mpro#ing

proesses

to satis+) an$

Generate #al!eFor !stomers

Deli#er)-

al!e-

reliabilit)

ep!rhase

satis+ation

esponse

'ime to

!stomers

'ime to

Market

Satis+ation

"n#ol#ementeognition

ompeten)

(ro$!ti#it)

>tilityconsumption*imelinessInventory

(roess )le time

(roess osts

De+et rates

(ro$!ti#it)

ash +low

Maintenane ost

et!rn on assets

Gross margins

0et pro+it

Sales

Market Share

%ea$ership

(oli) & Strateg)

(eople

(roesses

(eople

es!lts

Society

Results(artnerships

eso!res

1e) (er+ 

es!lts

Customer Results

Enablers

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Who is Implementing Six Sigma

 7t least 31% of the fortune 3'' claim tohave a serious six sigma program B MichaelHammer.

Financial B 4an" of 7merica( E Capital(Electronics B 7llied Signal( Samsung(

SonyChemicals B Dupont( Dow Chemicals!anufacturing B E Plastics( 6ohnson

and 6ohnson( !otorola( o"ia(

!icrosoft( Ford- 7irline B Singapore( #ufthansa(4om,ardier 

 7nd hundreds of others in 7mericas(Europe( Su, Continent-

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Six Sigma =esults

ompan) Ann!al Sa#ings

eneral Electric 3-' ,illion

6P !organ Chase )-1 ,illion Gsince inception in)$$/H

!otorola ). ,illionGsince inception in )$/'sH

6ohnson 5 6ohnson 1'' million

9oneywell .'' million

Six Sigma Savings as % of revenue vary from 2. to 4. 5For &' millionyr sales < Savings potential &.'(''' to )-&1 million-

Investment@ salary of in house experts( training( process

redesign-

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Six Sigma Pro8ect !ethodology

ontrolontrolDe+ineDe+ine Meas!reMeas!re Anal)*eAnal)*e "mpro#e"mpro#e

Establishstandards

to maintainprocess;

Design thecontrols,implementandmonitor.

Evaluatefnancialimpact othe project

Identiy,evaluate

and selectprojects orimprovement

Set goalsForm

teams.

ollectdata on

si!e o theselectedproblem,

identiy"eycustomerre#uirements,

Determine"eyproductandprocesscharacteristic.

$naly!edata,

establishandconfrm the% vital e&%determinants o theperormance.

'alidatehypothesis

Improvement strategy

Developideas toremoveroot causes

Design andcarry oute(periments,

)ptimi!etheprocess.

Finalsolutions

(ro6et (hases

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Six Sigma < Case StudyService 0rganisation

4ac"ground

!s 7lpha Inc- manages out ,ound cargo froma distri,ution centre to different stores-

Deliveries made on truc"s B owned and hired- Customers dissatisfied at delivery schedules- #eadership decision to deploy Six Sigma; *eam of ) 4lac" 4elt and & reen 4elts

formed Sponsor of the pro8ect < Distri,ution !anager 

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Define B Critical to uality GC*H

Focus on customers generating annualrevenue of >SD 2''('''B-

Customerneeds

Improved deliveryperformance

#evel ) C* *imely delivery

#evel 3 C* 0n time delivery to schedule

#evel & C* Delivery within B ) hour ofscheduled delivery time

Current process sigma level - 2.4 or !"#$$% &P'

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Define B oal Statement

=educe num,er of delayed deliveries ,y1' % ,y &)st Decem,er J 3''3 to

,etter meet customer reAuirement oftimely delivery defined as within B )hour of scheduled delivery-

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Define B Performance Standards0utput unit  7 scheduled delivery of freight

0utputcharacteristic

*imely delivery

Pro8ect J measure Process starts when an order is received

Ends when goods are received 5 signedfor at customers des"-

Process measurement < Deviation fromscheduled delivery time in minutes-

Specification limits #S# K B.' minutes

>S#K .' minutes

*arget Scheduled time or ?ero minutesdeviation

Defect Delivery earlier or later than ) hour-

o- of defectopportunities per

unit

) opportunity for a defect per scheduleddelivery of freight-

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Define B SIP0C Diagram

Supplier  Stores !anager "nput Stores 0rder 

(rocess StepsGhigh levelH

=eceive order 

Plan delivery

Dispatch Driver with goods

Deliver goods to stores

=eceive delivery

,utput =eceived freight withDocuments

ustomer  Store !anager 

•  Detailed process maps drawn

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!easure and 7naly?e

Driver and Distance identified as "eyfactors influencing delivery performance-

Driver selected for focus-

Potential root causes as to why Driverinfluenced the time@ – Si?e of the vehicle – *ype of engine – *ype of tyres – Fuel capacity

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Experiments designed and conductedusing truc" type and tyre si?e-

Findings@ – #arger tyres too" longer time at certain

routes where area was cramped and timelost in maneuvering-

 – 9igh incidence of tyre failures since tightturns led to stress on tyres thus increasingnum,er of flat tyres-

*eam modified planning of dispatchprocess ,y routing smaller truc"s atmore restrictive areas-

Improve

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*est implementation-Process sigma level up from 3-2& or

)L1//$ DP!0 to 3.74 or 833 DP!0-Performance still fell short of ,est in class

2-&3 or 32'' DP!0- Improvement led to significant customersatisfaction-

Process continually monitored and data onnew cycle times( tyre failure collected asper defined methods and freAuency(analysed and monitored-

Customer satisfaction measured andmonitored-

Control 

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Mey #essons #earnt

Define – Difficulty in identifying the right pro8ect anddefining the scope;

 – Difficulty in applying statistical parameters

to +oice of the Customers; – *rou,le with setting the right goals;

!easure – Inefficient data gathering; – #ac" of measures; – #ac" of speed in execution;

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Mey #essons #earnt

Anal)se

 – Challenge of identifying ,est practices – 0veruse of statistical tools under use of practical

"nowledge – Challenge of developing hypotheses

"mpro#e – Challenge of developing ideas to remove rootcauses

 – Difficulty of implementing solutions  ontrol

 – #ac" of follow up ,y !anagers Process 0wners – #ac" of continuous +oice of the Customer

feed,ac" – Failure to institutionali?e continuous improvement-

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Mey #essons #earnt

N Define N ran"ed most important step ,utgets the lowest resource allocation

Pro8ect scoping and its definition is critical toits success failure; N!easureO is considered most difficult step

and also gets the highest resources

Source *reen+ich Associates Study , 22 

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+ersatile 4rea"through improvements Financial results focus Process focus Structured 5 disciplined pro,lem solving

methodology using scientific tools and techniAues Customer centered Involvement of leadership is mandatory- *raining is mandatory; 7ction learning G31% class room( L1 %

applicationH Creating a dedicated organisation for pro,lem

solving G/11' =uleH-

What !a"es Six Sigma Different:

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4enefits of Six Sigma

enerates sustained success

Sets performance goal for everyone

Enhances value for customers; 7ccelerates rate of improvement;Promotes learning across ,oundaries;

Executes strategic change

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Thank you