1

Six Sigma

Experience sharing

&

Cases

Six Sigma is a Performance Target

• Six Sigma is a PERFORMANCE TARGET that applies

to a single Critical-to-Quality (CTQ) characteristic – not

to the total product.

What is Six Sigma? • Six Sigma is a business process that allows companies to drastically

improve their bottom line by designing and monitoring everyday business

activities in ways that minimize waste and resource use while increasing

customer satisfaction.

• Six Sigma guides companies into making fewer mistakes in everything they

do and eliminating lapses in quality at the earliest possible occurrence.

• Quality Control programs have focused on detecting and correcting

commercial, industrial, and design defects and on conformance to standards.

• Six Sigma encompasses something broader: It provides specific methods to

re-create the process so that defects and errors do not arise in the first place .

• Some companies using Six Sigma: Motorola, AlliedSignal, General

Electric, American Express, Sony, Honda, Maytag, Raytheon, Texas

Instruments, Bombardier, Canon, Hitachi, Lockheed Martin, and Polaroid.

CASE 1

Motorola

Six Sigma Origins • “The real problem at Motorola is that our quality

stinks!” (Motorola Executive, Art Sundry in 1979)

• Led to discovery of the crucial correlation between

higher quality and lower development costs in

manufacturing products of all kinds.

• This “pre-dates” the “rediscovery by America of Dr. W.

Edwards Deming” that occurred in the 1980 White

Paper, If Japan Can, Why Can’t We?

Six Sigma Origins • At a time when most American companies believed that quality

cost money, Motorola realized that – done right – improving

quality would actually reduce costs and that the highest-quality

producer could and should be the lowest-cost producer.

• Motorola was then generally spending 5%-10% (sometimes as

much as 20%) of annual revenues correcting poor quality –

that is -- $800 million to $900 million. With higher-quality

processes this money could be returned to the bottom line.

Within the first four years MOTOROLA SAVED $2.2 BILLION.

• Ultimately, this led to a focus on PROCESS (design &

production), rather than simply PRODUCT quality. … That is, a

PROACTIVE, rather than simply REACTIVE approach to

quality.

2

SIX SIGMA QUALITY

DEFINITION

•Quality is a state in which value entitlement is realized for the

customer and provider in every aspect of the business relationship.

•Business Quality is highest when the costs are at the absolute

lowest for both the producer & consumer.

•Six Sigma provides maximum value to companies in the forms of

increased profits and maximum value to consumers with high-

quality products and services at the lowest possible cost.

● At the beginning of 80’s, In the Japanese

market, Motorola’s beeper lost its name

value because of the quality difference

compared to Japan’s

● In 1981 they tried to meet a challenge to

improve quality 5 times in 5 years and they

couldn’t.

● They developed a consistent process base

on statistical knowledge.

● In 1987, they established 6σ goal

as a key initiative.

● Quality Cost Down by

$3.2billion

● Origin of 6σ

●(Quality level elevated 100

times in 4 years)

●Culture harmony Western &

Oriental

4. 6s Case Study Ⅱ. Why 6s?

Start : Motorola OUTCOME

Start & Prosperity

Motorola reached 5.5σ level in 1992.

Outcome is $3.2billion from1987 to 1992.

Motorola Motorola

Robert W. Galvin, former Motorola CEO

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.

How Big is the

Service Sector Anyway? MISTAKEN BELIEFS:

Some companies still believe that improving commercial processes is less

important than improving industrial processes

or that seemingly intangible commercial processes can’t be controlled.

BOTH ARE WRONG:

Customers are more likely to take their business elsewhere because of poor

service than poor products.

Companies like GE have shown that improving internal and external

commercial processes adds to the bottom line and to customer satisfaction

significantly

Case 2: Six Sigma and General

Electric

General Electric CEO, Jack Welch, describes Six Sigma as “the most

important initiative GE has ever undertaken.” GE’s operating income, a

critical measure of business efficiency and profitability, hovered around

10% for decades.

In 1995 Welch mandated that each GE operation from credit card services

to aircraft engine plants to NBC-TV work toward achieving Six Sigma. GE

was averaging about 3.5s when it introduced the program.

Case 2: Six Sigma and General

Electric

With Six Sigma embedding itself deeper into GE’s processes, they

achieved the previously “impossible” operating margin of 16.7% in 1998 –

up from 13.6% in 1995.

In dollar amounts, Six Sigma delivered more than $300 million to GE’s

1997 operating income and more than $600 million in 1998.

3

● Quality Cost Down

by $3.8 billion

● Adopt to all Biz.

●Train and do

projects

4. 6s Case Study Ⅱ. Why 6s?

Prosperity :GE OUTCOME

Start & Prosperity

● In 1995 GE launched 6σ process

to overcome a difficult business

environment and to challenge

World Class Quality.

● They made new processes such as

Productivity,Inventory Return etc,

but improvement was delayed

because of defects in processes.

● GE thinks World Class Quality is

big challenge. GE now focuses on

6σ process for next generation .

G E G E

Case 3: AlliedSignal • 70,000 Employees

• Chemicals, Fibers, Plastics, Aerospace Products,

Automotive Products.

• Larry Bossidy came from GE to become CEO in 1991

• Market Value = $4 billion in 1991

• Market Value = $29 billion by the end of 1998

• Market Value = $38 billion by 2000.

AlliedSignal • 1996 GOALS:

• 6% productivity increase

• Reduced Inventory

• Full-Capacity Utilization

• Little or no Overtime

• Reliable Products

• 5s Manufacturing

• 5s Designs

• Predictable Cash Flow

• 5s Suppliers

• BY END OF 1998:

• Total Impact of Six Sigma Within AlliedSignal Reached $2 Billion.

• Six Sigma Profits in Service Areas including: – Order Processing

– Shipping

– Procurement

– Product Innovation

We can’t tell other organizations how to do Six Sigma, but we can tell

them how not to do it. Allied has made mistakes along the way and, in

the process, learned some tremendous lessons.

• LESSON 1: The Organization’s

Leadership Must Own Six Sigma

• Upper management supported Six

Sigma, managers below those at

the top saw it as a “flavor of the

month”.

• Black Belts seen as a nuisance.

• Black Belts were using “Six Sigma

jargon” while managers were using

business vocabulary. This led to

confusion.

• SOLUTION: Introduce ALL levels

of management to Six Sigma.

• Management had weeklong training sessions to understand the methods of the Breakthrough Strategy and how Black Belt training and experience could be leveraged. ALSO … how various initiatives “fit together”.

• BEGAN TO FOCUS ON PROCESSES – NOT PEOPLE as the source of problems. Also, understanding of the Breakthrough Strategy provided a “plan of action”, rather than just a “command” to make something happen.

Six Sigma Changed the Company Culture and

One of the flaws at Allied is that we had too much vertical mobility.

Managers inch up the same smokestack, learning more and more

about less and less. But companies that train promising individuals

as Black Belts circumvent the vertical flow and move people

around horizontally, having them serve time in as many major

businesses or divisions as possible to give them a kaleidoscopic

view of the organization and the benefit of being mentored by a

variety of new blood.

Linked AlliedSignal’s

Goals, Vision & Activities.

Lesson Two: A Beginning Without an End

Having recognized the need to train managers in the Six Sigma Breakthrough Strategy, Allied dedicated the next year to training 1,000 leaders in the organization in how Six Sigma worked, and in its potential financial impact.

Training sessions lasted 3.5 days and emphasized Six Sigma’s impact on:

Profitability through improved processes;

The Crucial role of Black Belts, RATHER THAN teaching statistical processes involved in achieving Six Sigma.

Initially trained top managers at each

of Allied’s 11 Strategic Business

Units and gradually worked their way

down the organization to middle

management, line supervisors, and

so on.

COMPLAINTS FROM BLACK

BELTS WITHIN SIX MONTHS:

Management turnover and too much

promotion of Black Belts into

management before benefit from the

training and skills could be realized.

SO … training had to be ongoing.

Allied is not in the business of measuring activity. We are in the business of measuring results.

IF something doesn’t have a positive impact on customer satisfaction, our shareholders, and employees,

and in the process makes a lots of money, THEN we just flat out aren’t going to do it.”

RICHARD A. JOHNSON, Director of Six Sigma at AlliedSignal

4

Lesson Three: Black Belt Retention AlliedSignal’s goal: send Black Belts with a minimum of 18-24 months

experience mastering the Breakthrough Strategy back into the organization to create Six Sigma behavior & thinking.

40% of Black Belts were promoted to departmental or plant managers. Others left AlliedSignal for higher-paying jobs at suppliers. Others completed only one or two projects before they were pulled back into their previous assignments with leadership not properly reviewing projects and properly acting upon financial opportunities created by Black Belts so that managers felt that Six Sigma wasn’t particularly important.

50% of Black Belts were absorbed back into the organization within six months.

NOW … BLACK BELTS must work at least 18-24 months on a series of Six Sigma projects prior to a change of roles. TIME & EXPERIENCE ARE VIEWED AS CRITICAL TO SIX SIGMA SUCCESS AND THE MATURITY OF THE BLACK BELT.

Lesson Three - Continued AlliedSignal’s Champions & Master

Black Belts

3.5 Day Executive Overview followed

by the traditional Four-Month Black

Belt training process.

MASTER BLACK BELTS are selected

from the best of the Black Belts.

Each of these trains and mentors 10

Black Belts

Each Black Belt trains and mentors 10

Green Belts.

NOW: All Salaried Employees are

Expected to Undergo the 26 Hours of

Training Required for Green Belt

Certification by 2000.

CHAMPIONS 20

Master Black Belts 70

Black Belts 2000+

Green Belts 18,000

Total # of Employees 70,000

Lesson Four: Supplier Capability is Critical to the

Success of the Breakthrough Strategy

The Majority of AlliedSignal’s

Suppliers were operating at

about three sigma.

This prevented the company

from realizing the full benefits of

Six Sigma.

AlliedSignal recognized that

they needed to view suppliers

as their partners.

AlliedSignal began TRAINING

its suppliers and offering other

technical assistance.

To achieve Six Sigma it is important to minimize the number of suppliers, limiting these to those that have been trained in the Breakthrough Strategy.

Not only does AlliedSignal provide training, BUT then follows up by dedicating ITS OWN BLACK BELTS to mentor and work with critical suppliers. AlliedSignal estimates that for every 300 Black Belts it trains, 100 are either customers or suppliers.

Deming: End the Practice of Awarding Business on Price Tag Alone.

Lesson Five: There is No Such Thing as Operator Error

It is PROCESSES – not

PEOPLE that Fail.

This maps to one of

Deming’s 14 Points for

Management: “DRIVE

OUT FEAR”.

Focus on Processes

implies that people are not

accused, but rather, that

they are able to investigate

processes and be “part of

the solution”.

Lesson Six: Focus on Bottom-Line Improvement

The number one source of failure in deploying Six Sigma is the result of

LACK OF COMMITMENT FROM THE ORGANIZATION’S LEADERSHIP.

The FINANCE DEPARTMENT must be involved so that the impact of Six

Sigma Projects on the Bottom-Line is apparent.

Black Belts, the Finance Department, and Executive Leadership must

work in tandem.

While BLACK BELTS create opportunities for cost reduction and

increased profitability, the company’s LEADERSHIP must make sure that

Black Belts focus on the right projects and take action on the savings

opportunities they generate. FINANCE provides closure to the effort by

ensuring that the savings are returned to the organization’s bottom line.

Lesson Seven: Initiative Overload • LARRY BOSSIDY, CEO:

• One of the things I have trouble with is

… nonfinancial objectives. Often

they’re just as obscure and vacuous as

they sound.

• FIVE ACTIONS TO PERPETUATE

SIX SIGMA:

• 1. TRAINING: Allied’s employee base

changes enough every nine to ten

months that maintenance of Six Sigma

culture requires that new employees

be trained in the Breakthrough

Strategy.

• 2. Senior management

involvement.

• 3. Continued on-site leadership

training, and alignment of goals

among divisions to reinforce

Breakthrough Strategy thinking

and goals.

• 4. Requiring Black Belts to

dedicate a minimum of two years

to working on Six Sigma

projects.

• 5. Supplier involvement and

improvement in Six Sigma

initiatives.

Products and services should be improved ONLY to the degree that customer value is increased.

Six Sigma is a program designed to generate money for the company, either through savings

resulting from reduced costs, or from boosting sales by increasing customer satisfaction.

5

AlliedSignal: Hindrances to Six Sigma Success

Working on too many improvements at the same time.

Not having someone accountable for the problem.

Not being a process-based company.

A lack of trained and experienced people.

Middle managers who fear uncertainty about future roles.

Lack of metrics focused on customer value-added processes.

Lack of integrated information and financial systems.

Fragmented, staff-driven approaches.

Six Sigma

Six Sigma is a way

of achieving world class

performance by focusing on

customers' needs and

eliminating defects

Six Sigma is a quantitative

statistical measurement

that means not more than

3.4 defects

per million opportunities

Case Study :

Tata Chemical

Failure Mode & Effects

Analysis

Process Mapping & Failure Mode

and Effects Analysis

Agenda • Introduction to TCL

• Context and Need for FMEA

• Introduction to FMEA

• Definition of terms

• Steps in performing an FMEA

• Introduction to the FMEA & S-O-D Tables

• Methodology Adopted

• Deliverables from FMEA

• Action Plan

6

GEOGROPHICAL LOCATION

OF MITHAPUR GEOGROPHYCAL MAP

Where

We are

PROFILE • One of the major units of TATA Group

• Started in 1939

• Largest Inorganic Chemical Complex in ASIA

• Largest manufacturer of Soda Ash in INDIA

• Other products are

Sodium Bicarbonate, Vacuum Iodised Edible Salt, Caustic Soda Lye, Liquid Chlorine, Hydrochloric Acid, Liquid Bromine, Inorganic Bromides, Portland & Pozzolana Cement

• Gas based fertilizer complex at Babrala U.P.

• Extensive rail siding within Mithapur works.

• Produces wealth from waste

• Acquired Certification of

– ISO - 9001 : 2000 ; ISO - 14001

– Commendation for NQ Award

The New Economy

Competitive Environment

• Gradual evolutionary change

• Stability

• Clearly defined industry boundaries

• Power from incumbency

• Domestic markets

• Employee loyalty

Competitive Environment

• Frequent, discontinuous change

• Creative destruction

• Competitive advantage hard to sustain

• Global markets

• Instant access to unlimited employment opportunities

The Old Economy

Winds of Change in Tata Chemicals

Winds of Change in Tata Chemicals

Customised demands

on product specs

More players crowd

the marketplace

Environment laws

Become more stringent

ANSAC targets India

Chinese start dumping SA

Import duties

keep dropping

Customer does

backward integration

Competitor

enhances capacity Govt. committed to

deregulate Urea in the next five years

Unstable national policy/

environment - Urea

Intense price competition

Our

Cultural

Pillars

Sp

ee

dy

Ex

ec

utio

n

Co

lla

bo

rativ

e R

esp

on

siv

en

ess

Re

len

tle

ss C

ost

Fo

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s

CompetitiveExcellence

TATA CHEMICALS LIMITED

Cost of Poor Quality

Hidden

Failure

Costs

Commonly

measured

failure costs

Scrap,

Rework

Warranty

Engineering Time

Management Time

Shop & Field Downtime

Increased Inventory

Decreased Capacity

Delivery problems

Lost orders

7

6s

8-D Problem Solving Tech.

S P C

F M E A D O E

(Statistical Process Control)

Process Mapping Bench Marking

Failure Mode and Effects Analysis

(FMEA)

• Structured analysis for identifying ways & methods in

which the product or processes can fail and then plan

to prevent those failures.

• FMEA is a proactive tool for reducing defects and non-

conformities.

• A “before-the-event” action, not an “after-the-fact”

exercise.

Advantages of FMEA

1. Identifies process deficiencies

2. Identifies the critical characteristics and helps in developing control plans

3. Establishes a priority of corrective actions

4. Assists in the analysis of the process

5. Documents the rationale for changes

Introduction

FMEA is a structured approach in :-

• Identifying ways in which a product / process can fail

to meet critical customer requirements.

• Estimating the risk of causes with regard to these

failures.

• Preparing control plan for preventing these failures.

• Prioritizing the actions for improving the process.

• FMEA is an extremely important tool for each phase of

Six Sigma strategy viz. Measure, Analyze, Improve,

Control.

Definition of terms

• 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, Off specification parts

(Oversized, Undersized) etc.

Definition of terms

• 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.

8

Definition of terms

• Effect : Effect is the impact on the customer (both

internal & external) if the failure mode is not prevented

or corrected.

• Examples : Customer dissatisfaction, Frequent product

breakdowns, Customer downtime.

Relationship of Cause, Failure mode

& Effect

Cause Failure Mode Effect

(Failure)

Failure Mode

Causes Causes Causes

Causes Causes Causes

Effect (Failure)

Prevent or Detect

Steps in FMEA process

• Develop a process map & identify process steps.

• List key process inputs for each process.

• List key process outputs for satisfying process requirements.

• List ways the process inputs can vary (causes) and identify associated failure modes & effects.

• Assign severity occurrence and detection rating for each cause.

Steps in FMEA process

• Calculate risk priority number ( RPN) for each

potential failure mode.

• Determine recommended actions to reduce RPN’s.

• Establish time frame for corrective actions.

• Take corrective actions.

• Put all controls in place.

Ranking Parameters

employed • 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 to detect 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

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Severity-Occurrence-Detection Tables 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

the adverse effect will be detected & prevented

before reaching 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 dissatisfied 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 potential

supporting documents failure reach next customer

Rating Degree of Severity Likelihood of Occurrence Ability to detect

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

supporting documents or prevent the potential failure

from 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 certainRemote chances of Existing

controls will not detect

customer the potential failure

10 Negative impact on the Assured failureIt is certain Existing controls will

not detect

customer, people & society the potential failure

1 2 3 4 5 6 7 8 9

ProcessPotential

failure mode

Potential

failure effectSEV

Potential

causesOCC

Current

ControlsDET RPN

Part No.

1

2

3

4

5

List failure

modes for each

step

List effects

of each

failure mode

List causes

for each failure

mode

Rank severity

on 1 to 10

scale

Rank occurrence

on a 1 to 10

scale

List how the cause

is presently

being controlled

RPN=

SEV*OCC*DET

Rank how well

cause/failure

can be detected

on 1 to 10 scale

FMEA Table: ( Column 1 to 9 )

10 11 12 13 14 15

Actions

Recommended

Responsib

ilitySEV OCC DET RPN

List actions

recommended

on RPN pareto

Designates people

responsible for

corrective action

RPN is recalculated

on completion of

corrective action

Methodology Adopted

• Step-1 • Identification of processes.

• Step-2 • Walking the process.

• Step-3 • Generation of Process Flow Diagram.

PROCESS FLOW DIAGRAM

• Step-4 • Validation of Process Flow Diagram.

Methodology Adopted

Step-5

Listing the Potential Failure Modes, Effects, Causes and

Current Controls.

Step-6

Determining the ratings for Severity, Occurrence and

Detection.

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PROCESS

FUNCTION

REQUIRE

MENTS

POTENTIAL

FAILURE

MODES

POTENTIAL

EFFECTS OF

FAILURES

SE

V

POTENTIAL

CAUSES OF

FAILURES

O

CC

CURRENT

PROCESS

CONTROLS

DE

T

RP

N

POTENTIAL FAILURE MODE AND EFFECT ANALYSIS

Kiln

Operation

Refractory

lining

failure

-Improper

firing;

-Abnormal

flame

propagation

4 2 64

Shell temp.

scanning,

Pyrometer

& visual

inspection

8

Kiln

Shutdown;

Process

failure

Improper

air

supply

excessive

CO

formation

7 Low air flow

rate & hence

low O2 3

monitoring

of air flow

rate in DCS

2 42

Improper

clinker

formation

6

Low ID Fan

Step &

Damper

Position

3 monitoring

of air flow

rate in DCS

2 36

PROCESS

FUNCTION

REQUIRE

MENTS

POTENTIAL

FAILURE MODES

POTENTIAL EFFECTS

OF FAILURES

SEVE

RITY

POTENTIAL

CAUSES OF

FAILURES

OCC

URE

NCE

CURRENT

PROCESS

CONTROLS

DE

TE

CTI

ON

RPN

Refractory lining

failureplant shutdown 8

improper firing,

abnormal flame

propagation

4

Shell temp.

scanner, visual

and pyrometer

inspection

2 64

excessive CO formation 7Low air flow rate

and hence low O23

DCS monitoring

air flow rate2 42

Improper clinker

formation6

Low ID Fan Step &

Damper Position3

DCS monitoring

air flow rate2 36

Main drive hang up Plant shutdown 8electrical/mechanic

al/instrumental 3 DCS Monitoring 2 48

Pier support

malfunctionPlant shutdown 8 Mechanical 3

Creep

measurement

every shift

3 72

Limited fuel stock plant shutdown 7 Improper planning 4Daily inspection &

stock checking1 28

ESP failure

Environmental hazards

leading to plant shut

down

10Mechanical /

electrical 3

DCS monitoring &

interlocking, PM

schedule

2 60

Improper air

supply

Kiln operation

POTENTIAL FAILURE MODE AND EFFECT ANALYSIS

Methodology Adopted

Step-7

Find out Critical Tasks on the basis of RPN.

FMEA Table

Step-8 Preparing the critical task table and identification of KPM’s for the

Critical Tasks.

CRITICAL TASK TABLE

Departments Covered

• Cement Plant (10)

• Salt Vacuum (5)

• Power Plant (4)

• Soda Ash (9)

• Analytical Lab (5)

• Marine (7)

• SAMG (5)

• CCG* (6)

• SCM* (5) * Processes are mapped,FMEA to be performed

Deliverables of FMEA

-A list of potential failure modes ranked by the RPN.

-A list of critical and/or significant parameters to track.

-A list of recommended actions to address the critical

tasks and failure modes.

-A potential list to eliminate the cause of failure modes,

reduce their occurrence, and improve defect detection.

Action Plan

• Critical tasks that have been identified for each process

should be targeted for improvement.

• Recommendation & implementation of actions to

reduce the occurrence of the cause of failure and/or improving the current controls for detection of cause or failure mode

• Track the Key Performance Indicators (KPI’s) of the critical tasks.

11

Action Plan

• Identify causes creating disturbances in the process

based on the analysis of the charts.

• Once the actions implemented yield satisfactory results,

the next iteration of the FMEA is to be performed.

Case: Shipping logistics

• Situation: – GE Appliance products, such as microwave ovens and air

conditioners, are being produced in Asia and shipped to US customers, such as Wal-Mart

– Delivery performance is very erratic and the average on-time delivery is about 85%

Source: Yan Wang, University of Iowa

Shipping logistics (cont.)

• Situation: – Product arrives in the US

at Los Angeles

– From the port, the product is taken either to a GE distribution center or to a customer designated forwarder

– Product is then cross docked and sent on to final distribution centers via rail, truck-on-rail, or truck

Shipping logistics (cont.)

Process map

Shipping logistics (cont.)

DMAIC steps

Define

Phase

A team is assembled to attack this problem. The

team includes suppliers, 3rd party vendors, GE

logistics people, finance, sales, and customers

The supply chain process is mapped from the

supplier to the end customer

Measure

Phase

The current performance is measured by looking at

data from the previous 6 months. Capability of this

process is 1.5 sigma currently

Analyze

Phase

All of the many inputs are examined and it appears

that 2 areas are the vital inputs, the shipping

decision by the supplier and getting the product

through the port of LA

Improve

Phase Further investigation by the team yields some

changes in procedure that reduces the problem

Control

Phase Documentation and procedures are updated

Shipping logistics (cont.)

Process improvement

Old Procedure

New Procedure

GE specifies when products

produced and shipped

GE specifies when products

produced and delivered to US

Supplier would comply by selecting

first ship going to the US

Supplier complies by selecting

the “right” ship

Shipping time 8 to 18 days

Shipping time 8 days

Supplier notifies GE system (often

delayed) and freight forwarder with

paperwork

Supplier notifies freight

forwarder with paperwork, and

freight forwarder communicates

through GE system

12

Shipping logistics (cont.)

• Results:

– On time delivery increased to 97%

– Transportation costs reduced by $300,000

– Inventory (cash flow) reduced by $1,000,000

– Capability Raised to 3.5 sigma

What’s the point? There are two aspects to six sigma – the

statistical aspect and the business aspect. Both are important

and complementary.

“Typical” costs/benefits w.r.t. 6s

So what is 6s?

• Fundamentally, it is an old idea – consistent with TQM.

• It is a culmination of

– Continuous improvement (no organization is 6s); Get it right the first time; Share and learn and do that transparently and collectively; It is usually the “next step” in quality; Customer focused (remember defects?); Very well packaged; No particular certification process (if you looking for a normative framework, you may end up being disappointed)

• I like it because it covers the entire gamut of

– Philosophy, methodology, technique and tool

• A measure of capability of a process

• A goal for improvement

• A system of management to achieve lasting business leadership and top performance

Six sigma is

Six Sigma Applies to Products & Services,

Not the Companies Who Create Them

• A company with six sigma is not

assured financial success.

• We must distinguish between six

sigma products and processes, and

six sigma companies.

• The six sigma strategy creates

specific improvement goals for

every process within an

organization, allowing them to

understand and incorporate

technological advances lurking on

the horizon.

• Six Sigma forces organizations to

reexamine the way in which work

gets done, rather than tweaking

existing systems.

It simplifies systems and processes,

improves capability, and ultimately finds a

way to control systems and processes

permanently.

Even a six sigma product will fail if brought

to market too late or into a market with no

demand.

THIS IS WHY companies must achieve Six

Sigma in everything they do.

Quality Function Deployment • Is a structured method that is intended to

transmit and translate customer requirements,

that is, the

• Voice of the Customer

• through each stage of the product development

and production process.

• These requirements are the collection of

customer needs, including all satisfiers,

exciters/delighters, and dissatisfiers.

The House

of Quality Quality Function Deployment’s

House of Quality

Customer

Perceptions

Relationships

between

Customer Needs

and

Design Attributes

Imp

ort

an

ce R

an

kin

gs

Customer

Needs

Design

Attributes

Costs/Feasibility

Engineering Measures

Correlation

Matrix

1

2

3

4

5

6

7

8

13

Building the House of Quality

1. Identify Customer Attributes

2. Identify Design Attributes / Requirements

3. Relate the customer attributes to the design attributes.

4. Conduct an Evaluation of Competing Products.

5. Evaluate Design Attributes and Develop Targets.

6. Determine which Design Attributes to Deploy in the

Remainder of the Process.

1. Identify Customer Attributes These are product or service requirements IN THE

CUSTOMER’S TERMS.

Market Research;

Surveys;

Focus Groups.

“What does the customer expect from the product?”

“Why does the customer buy the product?”

Salespeople and Technicians can be important sources of

information – both in terms of these two questions and in

terms of product failure and repair.

OFTEN THESE ARE EXPANDED INTO Secondary and

Tertiary Needs / Requirements.

2. Identify Design Attributes. Design Attributes are Expressed in the Language of

the Designer / Engineer and Represent the TECHNICAL Characteristics (Attributes) that must be Deployed throughout the DESIGN, MANUFACTURING, and SERVICE PROCESSES.

These must be MEASURABLE since the Output will be Controlled and Compared to Objective Targets.

The ROOF of the HOUSE OF QUALITY shows, symbolically, the Interrelationships between Design Attributes.

3.Relating Customer & Design Attributes

Symbolically we determine whether there is NO relationship, a

WEAK one, MODERATE one, or STRONG relationship

between each Customer Attribute and each Design Attribute.

The PURPOSE it to determine whether the final Design

Attributes adequately cover Customer Attributes.

LACK of a strong relationship between A customer attribute

and any design attribute shows that the attribute is not

adequately addressed or that the final product will have

difficulty in meeting the expressed customer need.

Similarly, if a design attribute DOES NOT affect any customer

attribute, then it may be redundant or the designers may have

missed some important customer attribute.

4. Add Market Evaluation & Key Selling Points

This step includes identifying importance ratings for

each customer attribute AND evaluating existing

products / services for each of the attributes.

Customer importance ratings represent the areas of

greatest interest and highest expectations AS

EXPRESSED BY THE CUSTOMER.

Competitive evaluation helps to highlight the absolute

strengths and weaknesses in competing products.

This step enables designers to seek opportunities for

improvement and links QFD to a company’s strategic

vision and allows priorities to be set in the design

process.

5. Evaluate Design Attributes of

Competitive Products & Set Targets. This is USUALLY accomplished through in-house testing and

then translated into MEASURABLE TERMS.

The evaluations are compared with the competitive evaluation of

customer attributes to determine inconsistency between customer

evaluations and technical evaluations.

For example, if a competing product is found to best satisfy a

customer attribute, but the evaluation of the related design

attribute indicates otherwise, then EITHER the measures used are

faulty, OR else the product has an image difference that is

affecting customer perceptions.

On the basis of customer importance ratings and existing product

strengths and weaknesses, TARGETS and DIRECTIONS for each

design attribute are set.

14

6. Select Design Attributes to be Deployed

in the Remainder of the Process

This means identifying the design attributes that:

have a strong relationship to customer needs,

have poor competitive performance,

or are strong selling points.

These attributes will need to be DEPLOYED or TRANSLATED into the language of each function in the design and production process so that proper actions and controls are taken to ensure that the voice of the customer is maintained.

Those attributes not identified as critical do not need such rigorous attention.

Using the House of Quality The voice of the customer MUST be carried

THROUGHOUT the production process.

Three other “houses of quality” are used to do this and,

together with the first, these carry the customer’s voice

from its initial expression, through design attributes,

on to component attributes, to process operations, and

eventually to a quality control and improvement plans.

In Japan, all four are used.

The tendency in the West is to use only the first two.

1

Cu

sto

mer

Att

rib

ute

s

Design Attributes

2

Des

ign

Att

rib

ute

s

Component Attributes

3

Co

mp

on

ent

Att

rib

ute

s

Process Operations

4

Quality Control Plan

15

The Cascading Voice of the Customer

Product or Service

Start

Date

Business

Areas of

Emphasis

Metrics Supplier

Involvement

Training

Emphasis

Reward

System

Amount of

Cultural

Change

Return on

Investment

Motorola 1987 Production Defects Intimidation Six Sigma

Basics and

Statistics

Black Belt

Recognition

Low £1.4 Billion

in 7 Years

DSEG

(Raytheon/TI) 1990 Production Defects and

Cycle Time

Training Suppliers

in the Tools

Low Not

Published

AlliedSignal 1992 Production

and Design

Training

Suppliers

Black

Belts

Six Sigma

Basics,

Statistics,

KISS for

Suppliers

General

Electric

1995 Production,

Design,

R&D, and

Transactional,

i.e., the whole

organisation

Training

Suppliers

Black Belts

Black Belt,

Green Belt,

and

Management

Promotions,

Bonuses,

and

Stock

Options

High

Black Belt

Recognition

Black Belt

Recognition

Monetary

Rewards

Six Sigma

Basics,

Statistics,

and Soft

Skills

Defects,

Cycle Time,

COPQ,

Cost

Reduction

Six Sigma

Basics,

Statistics,

Soft Skills,

Finance

Skills,

Defects,

Cycle Time,

Cost Reduction,

Stable

Operations,

Annual

Operating ROI

(Intellectual

Capital)

Medium £1.4

Billion in

4 Years

Evolution of Six Sigma

£3 +

Billion in

4 Years

(Taken

from

1999

Annual

Report)

What Six Sigma Tells Us • We don’t know what we don’t know.

• We can’t do what we don’t know.

• We won’t know until we measure.

• We don’t measure what we don’t value.

• We don’t value what we don’t measure.

• TYPICAL RESULTS: companies that properly implement Six Sigma have seen profit margins grow 20% year after year for each sigma shift (up to about 4.8s to 5.0s. Since most companies start at about 3s, virtually each employee trained in Six Sigma will return on average $230,000 per project to the bottom line until the company reaches 4.7s. After that, the cost savings are not as dramatic.

• HOWEVER, improved profit margins allow companies to create products & services with added features and functions that result in greater market share.

TQM Focus vs. Six Sigma Focus

• Total Quality Management

• TQM programs often focus on

improvements in individual

operations with unrelated

processes.

• The consequence is that with

many quality programs,

regardless of how

comprehensive they are, it

takes many years before all

the operations within a given

process are improved.

• Six Sigma

• Six Sigma architects focus on

making improvements in all

operations within a process,

producing results more rapidly

and effectively.

A process is any activity or group of activities that: * takes an input, * adds value to it,and

* provides an output to an internal or external customer.

An industrial process is any process that depends on machinery for its

creation and comes into physical contact with materials that will be

delivered to an external customer. It does not include shipping,

distribution, or billing processes.

A commercial process, such as ordering materials, payroll, or processing

customer orders, supports industrial processes, or may stand on its own as a

separate and unique business.

When at least 80% or more of a process depends on human activity, we

consider this a commercial process.

•What is a Process?

Roles of Six Sigma Champions Create the vision of Six Sigma for the company.

Define the path to implement Six Sigma across the organization.

Develop a comprehensive training plan for implementing the Breakthrough

Strategy.

Carefully select high-impact projects.

Support development of “statistical thinking”.

Ask Black Belts many questions to ensure that they are properly focused.

Realize the gains by supporting Six Sigma projects through allocation of

resources and removal of roadblocks.

Hold the ground by implementing Black Belt recommendations.

Make sure that project opportunities are acted upon by the organization’s

leadership and the finance department.

Recognize people for their efforts.

Champion training is one week.

16

Roles of Master Black Belts Understand the big business picture.

Partner with the Champions.

Get certified as Master Black Belts.

Develop and deliver training to various levels of the organization.

Assist in the identification of projects.

Coach and support Black Belts in project work.

Participate in project reviews to offer technical expertise.

Help train and certify Black Belts.

Take on leadership of major programs.

Facilitate sharing of best practices across the corporation.

Master Black Belt training consists of two one-week sessions.

Roles of Black Belts Act as Breakthrough Strategy experts and be Breakthrough Strategy

enthusiasts.

Stimulate Champion thinking.

Identify the barriers.

Lead and direct teams in project execution.

Report progress to appropriate leadership levels.

Solicit help from Champions when needed.

Influence without direct authority.

Determine the most effective tools to apply.

Prepare a detailed project assessment during the Measurement phase.

Get input from knowledgeable operators, first-line supervisors, and team leaders.

Teach and coach Breakthrough Strategy methods and tools.

Manage project risk.

Ensure that the results are sustained.

Black Belts Perform the Following Tasks

MENTORS: Cultivate a network of Six Sigma individuals at the local organization or site.

TEACH: Provide formal training of local personnel in new strategies and tools.

COACH: Provide one-on-one support to local personnel.

TRANSFER: Pass on new strategies and tools in the form of training, workshops, case studies, and local symposia.

DISCOVER: Find application opportunities for Six Sigma strategies and tools, both internal and external (e.g. suppliers and customers).

IDENTIFY: Highlight / surface business opportunities through partnerships with other organizations.

INFLUENCE: Sell the organization on the use of Six Sigma strategies and tools.

Characteristics of Six Sigma Black Belts

Highly respected by superiors, peers, and subordinates.

Understands the “big picture” of the business.

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

Speaks the language of management (money, time, organizational dynamics, etc.)

Committed to doing whatever it takes to excel.

Sponsored by a vice president, director, or business unit manager.

Is an expert in his or her specific field.

Possesses excellent communication skills, both written and verbal.

Inspires others to excel.

Challenges others to be creative.

Capable of consulting, mentoring, and coaching.

Drives change by challenging conventional wisdom, developing and applying new

methodologies, and creating innovative strategies.

Possesses a creative, critical, out-of-the-box intellect.

Allows room for failures and mistakes with a recovery plan.

Characteristics of Six Sigma Black Belts

Accepts responsibility for choices.

Views criticism as a kick in the caboose that moves you a step forward.

Encourages commitment, dedication, and teamwork.

Unites and inspires a team to a core purpose.

Able to communicate all sides of an issue.

Solicits diverse ideas and viewpoints.

Empathizes.

Promotes win-win solutions.

Disagrees tactfully and does not overreact.

Acts decisively under pressure.

Anticipates and confronts problems early and corrects causes..

Effectively identifies priorities from a business standpoint.

Manages limited resources in a highly efficient and effective manner.

Careful not to assign an unrealistic number of tasks to any team member.

Characteristics of Six Sigma Black Belts

Understands and respects that people have limitations.

Displays a genuine concern and sensitivity toward others.

More concerned about business success than personal gain.

Does not lord her or his expertise over others.

Recognizes that results count more than fancy titles.

How Many Black Belts Does an Organization Need?

•Revenues/(1 million) = Number of Black Belts

•Number of Black Belts/(10) = Number of Master Black Belts

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A Black Belt’s Course of Study The Twelve M-A-I-C Objectives

MEASURE Select CTQ Characteristics;

the frequency Define Performance Standards; of

defects Validate Measurement Systems.

ANALYZE Establish Product Capability; when and

where Define Performance Objectives; defects

occur Identify Variation Sources.

IMPROVE Screen Potential Causes;

the process Discover Variable Relationship;

Establish Operating Tolerances.

CONTROL the Validate the Measurement System;

process so that Determine Process Capability;

it stays fixed Implement Process Controls.

Roles of Green Belts

Function as Green Belts on a part-time basis, while

performing their regular duties.

Participate on Black Belt project teams in the context of

their existing responsibilities.

Learn the Six Sigma methodology as it applies to a

particular project.

Continue to learn and practice the Six Sigma methods and

tools after project completion.

Green Belt training consists of two three-day sessions with

three weeks in between.

Thank You !