In introduction to Key Performance Indicators

QI-SSM-E-DN-VERSION 2.01QI-SSM-E-DN-VERSION 2.01 1 of 77

Key Performance Indicator Key Performance Indicator &&

Balance ScorecardBalance Scorecard


OutlineOutline - A strategy for sustained success - A strategy for sustained success - Key concepts of the KPI & BSC- Key concepts of the KPI & BSC - Why BSC is succeeding where- Why BSC is succeeding where Total Quality failed Total Quality failed - Applying BSC to Service and Manufacturing - Applying BSC to Service and Manufacturing - The Six Sigma Roadmap- The Six Sigma Roadmap - Twelve Keys to Success- Twelve Keys to Success


IntroductionsIntroductions Our backgroundOur background Our qualificationsOur qualifications


NameName Job Title/ResponsibilityJob Title/Responsibility Your CompanyYour Company What Quality Initiatives are in placeWhat Quality Initiatives are in place

(ISO?, TQM?, SPC?, etc)(ISO?, TQM?, SPC?, etc) Reasons/Objectives for AttendingReasons/Objectives for Attending

Delegate IntroductionsDelegate Introductions


The Evolution of Quality The Evolution of Quality StandardsStandards

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Guilds (C

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Indust

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ndards)

BS 5750

BS 5750

ISO

ISO 9000

9000

30003000B.C.B.C.

MiddleMiddleAgesAges

1850s1850s 19141914 19391939 19791979 1987-19941987-1994 20002000

6Q6Q

JITJIT

TQMTQM

CICI QCQC

SPCSPC


Kaplan & Norton Kaplan & Norton 1900 - 19931900 - 1993 Went to Japan in 1951 to Went to Japan in 1951 to

improve qualityimprove quality Focused on Process Focused on Process

improvement through improvement through the reduction in the reduction in variationvariation

Motivated the Japanese Motivated the Japanese to be a leaderto be a leader

Japan set the “stage” for Japan set the “stage” for a world-wide re-focus on a world-wide re-focus on quality and quality and improvementimprovement


The F Test..The F Test..

You’re going to take You’re going to take a small test.a small test.

Follow the tutor’s Follow the tutor’s instructions and see instructions and see how well you do.how well you do.


Count the number of times the Count the number of times the letter “f” appears in the following:letter “f” appears in the following:

Finished files are the result of years Finished files are the result of years of scientific study combined with of scientific study combined with the experience of yearsthe experience of years

Count the number of times the Count the number of times the letter “f” appears in the following:letter “f” appears in the following:

Finished files are the result of years Finished files are the result of years of scientific study combined with of scientific study combined with the experience of yearsthe experience of years

HOW GOOD IS INSPECTION?HOW GOOD IS INSPECTION?


Inspection Inspection does notdoes not insure a insure a quality product or servicequality product or service Too many variables.Too many variables. Will not give us the Will not give us the

level of quality level of quality necessary for necessary for incoming or final incoming or final product.product.

Processes need to be Processes need to be as “fool-proof” as as “fool-proof” as possible. (6possible. (6))


Exercise: Discussion…..Exercise: Discussion…..20 Minutes20 Minutes

• What are some of the quality improvementWhat are some of the quality improvement programs that your company has tried?programs that your company has tried?

• How successful was it?How successful was it?

• What were some of the problems?What were some of the problems?

• What would have done differently?What would have done differently?

Is it enough just to satisfy our customers?Is it enough just to satisfy our customers?(no..satisfaction is not enough…otherwise (no..satisfaction is not enough…otherwise they will go somewhere else!!)they will go somewhere else!!)


The Need for progressThe Need for progress

The questions isn’t “How do we succeed?” The questions isn’t “How do we succeed?”

It’s .. “How do we stay successful?It’s .. “How do we stay successful?

Several companies Several companies have already moved have already moved to a more successful to a more successful approach..approach..

Six Sigma (6Six Sigma (6))


Six Sigma Success StoriesSix Sigma Success Stories General Electric:General Electric:

““Six Sigma has forever changed GE. Everyone—Six Sigma has forever changed GE. Everyone—from the Six Sigma zealots emerging from the from the Six Sigma zealots emerging from the Black Belt tours, to the engineers, the auditors, Black Belt tours, to the engineers, the auditors, and the scientists, to the senior leadership that and the scientists, to the senior leadership that will take this company into the new millenniumwill take this company into the new millennium—is a true believer in Six Sigma, the way this —is a true believer in Six Sigma, the way this company now works,”company now works,”

-- GE Chairman John F. Welch-- GE Chairman John F. Welch


Six Sigma Success StoriesSix Sigma Success StoriesImprovements fromImprovements from Services to ManufacturingServices to Manufacturing

GE’s Lighting UnitGE’s Lighting Unit GE Capital ServiceGE Capital Service GE Power SystemsGE Power Systems GEMS – Medical SystemsGEMS – Medical Systems GE Capital MortgageGE Capital Mortgage


The Actions behind the Results The Actions behind the Results at GEat GE “ “The best Six Sigma projects begin not inside the The best Six Sigma projects begin not inside the

business but outside it, focused on answering the business but outside it, focused on answering the question— ‘How can we make question— ‘How can we make the customerthe customer more competitive? What is critical to the more competitive? What is critical to the customer’scustomer’s success?’ success?’

One thing we have discovered with certainty is One thing we have discovered with certainty is that anything we do that makes the customer that anything we do that makes the customer more successful inevitably results in a financial more successful inevitably results in a financial return for us.”return for us.”

- Address to General Electric Company Annual Meeting, - Address to General Electric Company Annual Meeting, Charlotte, NC, April 23, 1997 by Jack WelchCharlotte, NC, April 23, 1997 by Jack Welch


…….and more successes!!.and more successes!! Motorola – and some Six Sigma HistoryMotorola – and some Six Sigma History

In 1980 and early 1990 Motorola like other In 1980 and early 1990 Motorola like other companies were losing business to Japan companies were losing business to Japan

A program that was necessary for survival of A program that was necessary for survival of the company.the company.

The objective of “Six Sigma” was important, The objective of “Six Sigma” was important, but more importantly, was the “rate” of but more importantly, was the “rate” of improvementimprovement

More than a set of tools…it was a “business More than a set of tools…it was a “business transformation..”transformation..”


AlliedSignal/HoneywellAlliedSignal/Honeywell Saving more than $600 million/yr (1999)Saving more than $600 million/yr (1999) Time from design to certification reduced Time from design to certification reduced

from 42 to 33 monthsfrom 42 to 33 months 6 percent productivity increase in 19986 percent productivity increase in 1998 Profit margins at 13%Profit margins at 13% Market value climbed to a compounded 27% Market value climbed to a compounded 27%

per year (1998)per year (1998)

…….and still more successes!!.and still more successes!!


Review…Review… Improving the quality of Improving the quality of

products and services will help products and services will help you gain a competitive you gain a competitive advantage.advantage.

The history of quality The history of quality improvement in the twentieth improvement in the twentieth century is based on inspection - century is based on inspection - a highly inefficient method that a highly inefficient method that is competitive only when is competitive only when everyone else is practicing the everyone else is practicing the same method.same method.


Review…Review… The decade of the 1980s was The decade of the 1980s was

marked by frantic efforts to marked by frantic efforts to become more efficient in become more efficient in improving quality.improving quality.

While many approaches to While many approaches to improvement can work, fact-improvement can work, fact-based, data-driven based, data-driven improvement is best.improvement is best.

In the past 20 years, companies In the past 20 years, companies like Motorola, AlliedSignal, like Motorola, AlliedSignal, and now General Electric have and now General Electric have used the Six Sigma approach to used the Six Sigma approach to improvement.improvement.


The Six Sigma WaveThe Six Sigma Wave

Developing New ProductsDeveloping New Products Sending the Message Faster and CheaperSending the Message Faster and Cheaper Providing a prompt answerProviding a prompt answer Thinking outside the BoxThinking outside the Box

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The Benefits of KPIThe Benefits of KPI

Generates sustained successGenerates sustained success Sets a performance goal for everyoneSets a performance goal for everyone Enhances value to customersEnhances value to customers Accelerates the rate of improvementAccelerates the rate of improvement Promotes learning and “cross-Promotes learning and “cross-

pollination”pollination” Executes Strategic ChangeExecutes Strategic Change


The Tools and Themes of 6The Tools and Themes of 6 Continuous improvementContinuous improvement Process Design/RedesignProcess Design/Redesign Analysis of Variance (ANOVA)Analysis of Variance (ANOVA) Balanced ScorecardsBalanced Scorecards Voice of the Customer (VOC)Voice of the Customer (VOC) Creative ThinkingCreative Thinking Design of Experiments (DOE)Design of Experiments (DOE) Process ManagementProcess Management Statistical Process Control (SPC)Statistical Process Control (SPC)


Six ThemesSix Themes

Genuine Focus on the CustomerGenuine Focus on the Customer Data- and Fact-Driven ManagementData- and Fact-Driven Management Process focus, Management and Process focus, Management and

ImprovementImprovement Proactive ManagementProactive Management Boundaryless CollaborationBoundaryless Collaboration Drive for perfection; tolerance for Drive for perfection; tolerance for

failurefailure


Where do you stand?Where do you stand?

Exercise: Scorecard…where are we Exercise: Scorecard…where are we now..where do we have to go?now..where do we have to go?

Part One: Is Six Sigma Right for us Now?Part One: Is Six Sigma Right for us Now?

Part Two: How and Where should we start our efforts?Part Two: How and Where should we start our efforts?


Key Concepts of the Six Sigma Key Concepts of the Six Sigma SystemSystem

““What is Six Sigma?”What is Six Sigma?”

““Why Six Sigma?”Why Six Sigma?”

““Why do I care?”Why do I care?”


99% Good is Not Good Enough99% Good is Not Good Enough

5,000 incorrect surgical 5,000 incorrect surgical procedures each weekprocedures each week

20,000 lost articles of mail 20,000 lost articles of mail each houreach hour

No electricity for almost 7 No electricity for almost 7 hours each monthhours each month

Unsafe drinking water for Unsafe drinking water for almost 15 minutes each dayalmost 15 minutes each day

50 dropped newborn babies 50 dropped newborn babies each dayeach day


A Six Sigma Vision of Business A Six Sigma Vision of Business LeadershipLeadership Creating a Closed-Loop SystemCreating a Closed-Loop System

Biking and the Art of Six Sigma Biking and the Art of Six Sigma ManagementManagement

Your companyYour company

SuccessSuccess

Customer, Customer, Market Info, Market Info, Process Data,Process Data,

Strategic &Strategic &OperationalOperational

DecisionsDecisions

RESULTSRESULTS


A Six Sigma Vision of Business A Six Sigma Vision of Business LeadershipLeadership System Alignment: System Alignment:

Tracking the Xs and YsTracking the Xs and Ys

InputsInputs ProductsProducts

Organization/ProcessOrganization/Process


A Six Sigma Vision of Business A Six Sigma Vision of Business LeadershipLeadership System Alignment: System Alignment:

Tracking the Xs and YsTracking the Xs and Ys

InputsInputs ProductsProducts

X

Organization/ProcessOrganization/Process

Y = f(x)Y = f(x)Y = f(x)Y = f(x)

xxxx xx

xxxx xx

X

XX

X

XX YY

YY

YY


An Introduction Sigma An Introduction Sigma Measurement (“the Big Y”)Measurement (“the Big Y”) Sigma, Standard Deviation, and Sigma, Standard Deviation, and

Eliminating VariationEliminating Variation The Evils of VariationThe Evils of Variation The Advantages of taking a variation The Advantages of taking a variation

perspectiveperspective


What to do with the Vital Few. . . . .What to do with the Vital Few. . . . .

Process

KPIV

KPIV

KPIVKPOV

CTQ , Critical to Quality

Vital Few

KPIV

Note: Statistically proven relationships between Inputs and Outputs

(KPIV = Key Process Input Variable , KPOV = Key Process Output Variable)

Manage the INPUTS and good OUTPUTS will follow


Narrow the Scope of Input Variables Narrow the Scope of Input Variables Identified KPIV’sIdentified KPIV’s

Optimized Process

30 - 50

10 - 15

4-8

Key Process InputVariables (KPIVs)

8 - 10 KPIVs

Critical KPIVs

3-6 Key Leverage KPIVs

Inputs Variables

Measure Phase

Analyze Phase

Improve Phase

Control Phase


Michael J. Harry TheoryMichael J. Harry Theory

Concept : Reduce Variation from Noise EffectNote : PPM = Part Per Million

LSL USL

6

-15+/ .

3.4 PPM

12


Customers, Defects, and Customers, Defects, and Sigma LevelsSigma Levels

Sigma Yield DPMOSigma Yield DPMO

A defect is any instance or event in which the product A defect is any instance or event in which the product or process fails to meet a customer requirement.or process fails to meet a customer requirement.


Summary of Sigma Measure Summary of Sigma Measure BenefitsBenefits Start with the customerStart with the customer Provide a consistent metricProvide a consistent metric Link to an ambitious goalLink to an ambitious goal

Examples:Examples: Typos in a documentTypos in a document Long hold times in a Call CenterLong hold times in a Call Center Late deliveriesLate deliveries Incomplete shipmentsIncomplete shipments Medication errorsMedication errors

Power OutagesPower Outages Systems crashesSystems crashes Parts shortagesParts shortages Post-sale repairsPost-sale repairs Expense check discrepanciesExpense check discrepancies


Sigma Measures: Sigma Measures: Considering Your Option.Considering Your Option. The “Sigma Scale” is not mandatory. The “Sigma Scale” is not mandatory.

You can use any type of measurement You can use any type of measurement methods.methods. For Six Sigma measures to be effective, For Six Sigma measures to be effective,

guidelines need to be establishedguidelines need to be established Sigma measures are not “static”..they Sigma measures are not “static”..they

change with customer requirements (usually change with customer requirements (usually worse)worse)

You’ll need to set priorities on what can and You’ll need to set priorities on what can and should be measuredshould be measured


Six Sigma Improvement and Six Sigma Improvement and Management StrategiesManagement Strategies

1.1. Process Improvement: Process Improvement: Finding Targeted solutionsFinding Targeted solutions

2.2. Process Design/Redesign: Process Design/Redesign: Building a better businessBuilding a better business

3.3. Process Management: The Process Management: The Infrastructure for Six Sigma Infrastructure for Six Sigma LeadershipLeadership

ProcessProcessImprovementImprovement

ProcessProcessDesign/Design/RedesignRedesign

ProcessProcessManagementManagement

11 22

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1. Process Improvement: 1. Process Improvement: Finding Targeted solutionsFinding Targeted solutions

An effort that seeks to An effort that seeks to fix fix a problem while leaving a problem while leaving the basic structure.the basic structure.

The emphasis is on The emphasis is on finding and targeting finding and targeting solutions to address the solutions to address the “vital few” factors (the “vital few” factors (the Xs) that cause the Xs) that cause the problem or pain (the Y). problem or pain (the Y).


Team Exercise: 20 minutesTeam Exercise: 20 minutes Your team will have Your team will have

to consider what can to consider what can be done to “improve be done to “improve the process” to meet the process” to meet customer customer requirements.requirements.

Evaluate what is Evaluate what is required and come required and come up with some up with some recommendationsrecommendations


Improvement programs in the past didn’t Improvement programs in the past didn’t bring the desired pace of improvement that bring the desired pace of improvement that was expected. It created the “re-was expected. It created the “re-engineering” fadengineering” fad

Incremental improvements alone don’t Incremental improvements alone don’t allow you to keep up with the rapid pace of allow you to keep up with the rapid pace of change in the areas of technology, customer change in the areas of technology, customer demands, and competition.demands, and competition.

Six Sigma brings both Process Six Sigma brings both Process Improvement and Design/Redesign bringing Improvement and Design/Redesign bringing them together for sustained success.them together for sustained success.

The objective is not to “The objective is not to “fix” fix” but to but to “replace” “replace” a process or part of a processa process or part of a process

2.2. Process Design/Redesign: Process Design/Redesign: Building a better businessBuilding a better business


Team Exercise: 20 minutesTeam Exercise: 20 minutes Your team will have to Your team will have to

consider what can be consider what can be done to “design or done to “design or redesign” to meet redesign” to meet customer requirements.customer requirements.

Evaluate what is requiredEvaluate what is required

and come up with some recommendationsand come up with some recommendations


3. Process Management: 3. Process Management: The Infrastructure for Six Sigma LeadershipThe Infrastructure for Six Sigma Leadership

Processes are documented.Processes are documented. Customer requirements are clearly defined.Customer requirements are clearly defined. Measures of outputs, process activities, and Measures of outputs, process activities, and

inputs are thorough and meaningful.inputs are thorough and meaningful. Managers and associates (including process Managers and associates (including process

owners) use measures and process knowledge owners) use measures and process knowledge to assess performance in “real time”..and take to assess performance in “real time”..and take action to address problems.action to address problems.

Process Improvement and Process Process Improvement and Process Design/Redesign is built around the Design/Redesign is built around the improvement tools of Six Sigma.improvement tools of Six Sigma.


Team Exercise: 20 minutesTeam Exercise: 20 minutes Your team will have Your team will have

to consider what has to consider what has to be done to now to to be done to now to continue to meet our continue to meet our customer’s customer’s anticipated anticipated requirements.requirements.

Evaluate what you think is required and come Evaluate what you think is required and come up with some recommendationsup with some recommendations


The DMAIC Six Sigma The DMAIC Six Sigma Improvement ModelImprovement Model ““Plan-Do-Check-Act” (PDCA) is the Plan-Do-Check-Act” (PDCA) is the

foundation for most “improvement foundation for most “improvement models”models”

Six Sigma uses a five-step approach: Six Sigma uses a five-step approach:

““Define-Measure-Analyze-Improve-Control”Define-Measure-Analyze-Improve-Control”

(DMAIC)(DMAIC)(pronounced: “deh-MAY-ihk”)(pronounced: “deh-MAY-ihk”)


3. Analyze

2. Measure5. Control

1. Define

??

BSCBSC


Six Sigma TeamworkSix Sigma Teamwork

1. Champion 1. Champion

2. Master Black Belt2. Master Black Belt

3. Black Belt3. Black Belt

4. Green Belt4. Green Belt

5. Employees5. Employees


Defining the “Six Sigma Defining the “Six Sigma Organization?Organization?

““An organization that is An organization that is activelyactively workingworking to build the themes and to build the themes and

practices of Six Sigma into its practices of Six Sigma into its daily daily management activitiesmanagement activities, and is , and is

showing showing significant improvementssignificant improvements in in the the process performance and process performance and

customer satisfactioncustomer satisfaction.”.”


The 6The 6 Organization Notes: Organization Notes:

1.1. To Qualify, To Qualify, you you do notdo not need to have need to have achieved actual Six Sigma Levels of achieved actual Six Sigma Levels of performance (99.9997 percent perfect) performance (99.9997 percent perfect) on any process.on any process.

2.2. Simply using Sigma measures or a few Simply using Sigma measures or a few tools tools does notdoes not qualify a company to be a qualify a company to be a “Six Sigma Organization” either.“Six Sigma Organization” either.

3.3. You You don’t don’t have to call it “Six Sigma” to have to call it “Six Sigma” to be a Six Sigma Organization.be a Six Sigma Organization.


Why is Six Sigma Succeeding Why is Six Sigma Succeeding where Total Quality Failedwhere Total Quality Failed TQM was the foundation for later quality initiativesTQM was the foundation for later quality initiatives As Dr. Deming used to say, “Who is the ‘father’ of As Dr. Deming used to say, “Who is the ‘father’ of

TQM?” TQM?” TQM has many different approaches and many TQM has many different approaches and many

different results…some good, and some not so good.different results…some good, and some not so good. Many companies are using TQM today without Many companies are using TQM today without

gaining the benefits necessary in today’s competitive gaining the benefits necessary in today’s competitive global marketplace.global marketplace.


TQM Pitfalls 6TQM Pitfalls 6 Solution Solution

Lack of IntegrationLack of Integration Links to the Business and Personal “Bottom Line

Leadership ApathyLeadership Apathy Leadership is at the very top

A “fuzzy” ConceptA “fuzzy” Concept A consistently Repeated, Simple Message

An Unclear GoalAn Unclear Goal Setting a NO-Nonsense, Ambitious Goal



Purist Attitudes and a Technical Zealotry

Adapting Tools and Degree of Rigor to the Circumstances

Failure to Break Down Internal Barriers

Priority on Cross Functional Process Management

Incremental vs. Exponential Change

Incremental Exponential Change

Ineffective Training Blackbelts, Greenbelts, Master Blackbelts


Focus on Product QualityFocus on Product Quality Attention to All Business Attention to All Business ProcessesProcesses


The final “Pitfall”…..The final “Pitfall”…..


Applying 6Applying 6 to Service and to Service and ManufacturingManufacturing

What is “Service” and/or “Service and What is “Service” and/or “Service and Support” processes?Support” processes?

“…“…any part of a company not directly involved any part of a company not directly involved in designing or producing tangible products.in designing or producing tangible products.

Examples: sales, finance, marketing, procurement, customer support, logistics or human resources.

Sometimes referred to as: transactional, commercial, nontechnical, support and administrative.


Team Exercise: 15 minutesTeam Exercise: 15 minutes You’ve been divided into You’ve been divided into

manufacturing and manufacturing and service “teams”service “teams”

In your team, discuss In your team, discuss what you think are the what you think are the measures of success, in measures of success, in the view of the customer the view of the customer of:of:

A Manufacturing A Manufacturing company orcompany or

A Service based A Service based company?company?


Applying 6Applying 6 to Service and to Service and ManufacturingManufacturing

What are “Manufacturing” processes?What are “Manufacturing” processes?

“…“…any part of a company whose activities are any part of a company whose activities are related to the development and production of related to the development and production of tangible products.tangible products.

Other Terms referred to: plant floor, production, a fab, engineering, product development


The Changing Role of The Changing Role of Manufacturing:Manufacturing: There are very few “pure” manufacturing companies.There are very few “pure” manufacturing companies. Many competencies need to be mastered:Many competencies need to be mastered:

Keeping track of new technologiesKeeping track of new technologies Understanding new customer needsUnderstanding new customer needs Establishing new supplier networks for timely deliveryEstablishing new supplier networks for timely delivery Taking, processing and filling customer orders accuratelyTaking, processing and filling customer orders accurately Adapting to shifting market conditions.Adapting to shifting market conditions.

The “trend” is to more service-based organizations:The “trend” is to more service-based organizations: In the USA in 1970 65% were service, in 1990s 80%In the USA in 1970 65% were service, in 1990s 80%


Service Process Opportunities:Service Process Opportunities:- (and the Realities)- (and the Realities)

The costs of poor quality in service (rework, The costs of poor quality in service (rework, mistakes, abandoned projects, etc) is about mistakes, abandoned projects, etc) is about 50% of budget (in manufacturing 10-20%).50% of budget (in manufacturing 10-20%).

This means that administrative and service This means that administrative and service processes are performing in the range of 1.5 to processes are performing in the range of 1.5 to 3 sigma (yields of 50-90 percent).3 sigma (yields of 50-90 percent).

Analysis shows that less than 10% of total Analysis shows that less than 10% of total process cycle time is devoted to real work on process cycle time is devoted to real work on tasks that are important to our customers. tasks that are important to our customers.

(The rest is waiting, rework, moving things around, inspecting (The rest is waiting, rework, moving things around, inspecting to catch defectsto catch defects))


What makes 6What makes 6 Services more Services more Challenging?Challenging?1.1. Invisible work processesInvisible work processes

2.2. Evolving workflows and proceduresEvolving workflows and procedures

3.3. Lack of facts and dataLack of facts and data

4.4. Lack of a “head start”Lack of a “head start”


Making Six Sigma work in Making Six Sigma work in services: services: Service Tips:Service Tips: Start with the processStart with the process Fine-tune the problemFine-tune the problem Make good use of facts and data to Make good use of facts and data to

reduce ambiguityreduce ambiguity Don’t overemphasize StatisticsDon’t overemphasize Statistics


A Manufacturing complaintA Manufacturing complaint

Hey, that’s not fair. Hey, that’s not fair. Why do we have to do a Why do we have to do a lot of statistics and lot of statistics and people in service don’t?people in service don’t?


Manufacturing ChallengesManufacturing Challenges

Adopting a Broader PerspectiveAdopting a Broader Perspective Moving Past “Certification” to Moving Past “Certification” to

ImprovementImprovement Adapting Tools to your manufacturing Adapting Tools to your manufacturing

environmentenvironment


How to make Six Sigma work How to make Six Sigma work for you…for you… If a consultant, expert, author tells you, If a consultant, expert, author tells you, “Here’s “Here’s

how your have to do it….!!”how your have to do it….!!” – Leave the room. – Leave the room. The best answer on how best to implement a six The best answer on how best to implement a six

sigma program is.. sigma program is.. “It depends.”“It depends.” You can be successful if you remember that six You can be successful if you remember that six

sigma is a strong system (not a program or sigma is a strong system (not a program or technique). It is an approach to help make technique). It is an approach to help make your business more responsive, efficient, your business more responsive, efficient, competitive and profitable.competitive and profitable.


The Six Sigma RoadmapThe Six Sigma Roadmap

A five step approach for establishing A five step approach for establishing the Six Sigma system and launching the Six Sigma system and launching improvements:improvements:1.1. Identify core processes and key Identify core processes and key

customerscustomers2.2. Define customer requirementsDefine customer requirements3.3. Measure current performanceMeasure current performance4.4. Prioritize, analyze, and Prioritize, analyze, and

implement improvements.implement improvements.5.5. Expand and integrate the Six Expand and integrate the Six

Sigma SystemSigma System


1. Identify core processes and 1. Identify core processes and key customerskey customers

P1P1 P2P2 P3P3 P4P4

Step One: OverviewStep One: Overview

Applicable to an entire organization or Applicable to an entire organization or any segment of it.any segment of it.


2. Define customer requirements2. Define customer requirements Getting good customer input on your Getting good customer input on your

company's needs and requirements may be the company's needs and requirements may be the most challenging aspect of the Six Sigma most challenging aspect of the Six Sigma approach.approach.

If you don’t know what customers want, it’s If you don’t know what customers want, it’s pretty hard to give it to them.pretty hard to give it to them.

Big problem: “We know what’s best for the Big problem: “We know what’s best for the customer” mentality.customer” mentality.

In the 21In the 21stst century, it will be the companies century, it will be the companies that really listen to their customers that are that really listen to their customers that are most likely to see long-term survival and most likely to see long-term survival and success.success.


3: Measure current performance3: Measure current performance

Measurement systems should also Measurement systems should also capture data on the efficiency of your capture data on the efficiency of your processes: cost per output, energy or processes: cost per output, energy or material consumption, rework, etc.material consumption, rework, etc.

You You cancan have very happy customers and have very happy customers and a a highly inefficient operation highly inefficient operation -- an -- an unprofitable formula.unprofitable formula.


A key to success in the Six Sigma system A key to success in the Six Sigma system is to choose your improvements priorities is to choose your improvements priorities carefully and not to “overload” the carefully and not to “overload” the organization with more activities than it organization with more activities than it can handle.can handle.

4. Prioritize, analyze, and 4. Prioritize, analyze, and implement improvementsimplement improvements


5. Expand and integrate the Six 5. Expand and integrate the Six Sigma SystemSigma System

66

The job of building a long-term vision of The job of building a long-term vision of a Six Sigma organization – is to consider a Six Sigma organization – is to consider the possibility of the possibility of not not doing it.doing it.


Where do we go from here?Where do we go from here?20 Minutes20 Minutes You’ve been given a broad You’ve been given a broad

overview of the role that Six overview of the role that Six Sigma can provide to your Sigma can provide to your company.company.

In your team, outline the In your team, outline the steps you would take to steps you would take to initiate a Six Sigma program initiate a Six Sigma program and the timeframes to do so.and the timeframes to do so.

Record your ideas to share Record your ideas to share with the rest of the group.with the rest of the group.


SummarySummary

Definition of Six SigmaDefinition of Six Sigma Six Essential ThemesSix Essential Themes HistoryHistory Results and OpportunitiesResults and Opportunities ImplementationImplementation


Summary: Summary: 1. Definition of Six Sigma1. Definition of Six Sigma A process of measuring processes.A process of measuring processes. A goal of near-perfection represented by 3.4 A goal of near-perfection represented by 3.4

Defects per Million Opportunities.Defects per Million Opportunities. A broad and comprehensive A broad and comprehensive systemsystem for building for building

and sustaining business performance.and sustaining business performance. The “integration” of many sound practices: The “integration” of many sound practices:

systems thinking, continuous improvement, systems thinking, continuous improvement, knowledge management, mass customization, knowledge management, mass customization, and activity based management.and activity based management.


Summary:Summary:2. Six Essential Themes2. Six Essential Themes A genuine focus on the customer.A genuine focus on the customer. Data – and fact-driven management.Data – and fact-driven management. Process focus, management, and Process focus, management, and

improvement.improvement. Proactive Management.Proactive Management. Boundaryless collaboration.Boundaryless collaboration. A drive for perfection, and yet a A drive for perfection, and yet a

tolerance for failure.tolerance for failure.


Summary:Summary:3. History and Evolution3. History and Evolution Developed at Motorola in the late 1980’s.Developed at Motorola in the late 1980’s. System developed and expanded System developed and expanded

especially by GE and AlliedSignal.especially by GE and AlliedSignal. The advantages of Six Sigma overcome The advantages of Six Sigma overcome

the disadvantages of TQM.the disadvantages of TQM.


Summary:Summary:4. Results and Opportunities4. Results and Opportunities Six Sigma helped bring Motorola from the Six Sigma helped bring Motorola from the

brink of failure.brink of failure. GE and AlliedSignal have received billions of GE and AlliedSignal have received billions of

dollars in gains in less than four years.dollars in gains in less than four years. Opportunities will depend on current Opportunities will depend on current

performance and “defect-levels” .performance and “defect-levels” . Service based organizations may have greater Service based organizations may have greater

potential for improvement.potential for improvement. Six Sigma is not a “magic bullet” for failing Six Sigma is not a “magic bullet” for failing

companies (GE Appliance’s program has taken companies (GE Appliance’s program has taken longer to deliver results than hoped).longer to deliver results than hoped).


Summary:Summary:5. Implementation5. Implementation Identify core processes and key Identify core processes and key

customers.customers. Define customer requirements.Define customer requirements. Measure current performance.Measure current performance. Prioritize, analyze, and implement Prioritize, analyze, and implement

improvements.improvements. Manage processes for Six Sigma Manage processes for Six Sigma

performance.performance.


Twelve Keys to SuccessTwelve Keys to Success

1.1. Tie Six Sigma efforts to Business Strategy Tie Six Sigma efforts to Business Strategy and Prioritiesand Priorities

2.2. Position Six Sigma as an Improved Way to Position Six Sigma as an Improved Way to Manage for TodayManage for Today

3.3. Keep the Message Simple and ClearKeep the Message Simple and Clear

4.4. Develop your own path to Six SigmaDevelop your own path to Six Sigma

5.5. Focus on Short-Term resultsFocus on Short-Term results

6.6. Focus on Long-Term Growth and Focus on Long-Term Growth and DevelopmentDevelopment


Twelve Keys to Success - 2Twelve Keys to Success - 2

7.7. Publicize Results, Admit Setbacks, and learn Publicize Results, Admit Setbacks, and learn from Bothfrom Both

8.8. Make an Investment to make it HappenMake an Investment to make it Happen

9.9. Use Six Sigma Tools WiselyUse Six Sigma Tools Wisely

10.10. Link Customers, Process, Data, and Link Customers, Process, Data, and Innovation to build the Six Sigma SystemInnovation to build the Six Sigma System

11.11. Make Top Leaders Responsible and Make Top Leaders Responsible and AccountableAccountable

12.12. Make Learning an Ongoing ActivityMake Learning an Ongoing Activity


Update..Update..


Phase 1 – Define ToolsPhase 1 – Define Tools

Project CharterProject Charter Stakeholder analysisStakeholder analysis SIPOCSIPOC

In introduction to Key Performance Indicators

Leadership & Management

Transcript of In introduction to Key Performance Indicators