Six Sigma stands for Six Standard Deviations (Sigma is the Greek letter used to represent

standard deviation in statistics) from mean. Six Sigma methodology provides the
techniques and tools to improve the capability and reduce the defects in any process.

It was started in Motorola, in its manufacturing division, where millions of parts are
made using the same process repeatedly. Eventually Six Sigma evolved and applied to
other non manufacturing processes. Today you can apply Six Sigma to many fields such
as Services, Medical and Insurance Procedures, Call Centers.
Six Sigma methodologies improve any existing business process by constantly reviewing
and re-tuning the process. To achieve this, Six Sigma uses a methodology known as
DMAIC (Define opportunities, Measure performance, Analyze opportunity, Improve
performance, Control performance).
Six Sigma methodologies can also be used to create a brand new business process from
ground up using DFSS (Design For Six Sigma) principles. Six Sigma Strives for
perfection. It allows for only 3.4 defects per million opportunities for each product or
service transaction. Six Sigma relies heavily on statistical techniques to reduce defects
and measure quality.
Six Sigma experts (Green Belts and Black Belts) evaluate a business process and
determine ways to improve upon the existing process. Six Sigma experts can also design
a brand new business process using DFSS (Design for Six Sigma) principles. Typically its
easier to define a new process with DFSS principles than refining an existing process to
reduce the defects.

Six Sigma incorporates the basic principles and techniques used in Business, Statistics,
and Engineering. These three form the core elements of Six Sigma. Six Sigma improves
the process performance, decreases variation and maintains consistent quality of the
process output. This leads to defect reduction and improvement in profits, product quality
and customer satisfaction.
Six Sigma methodology is also used in many Business Process Management initiatives
these days. These Business Process Management initiatives are not necessarily related to
manufacturing. Many of the BPM's that use Six Sigma in today's world include call
centers, customer support, supply chain management and project management.

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Key Elements of Six Sigma
Customer requirements, design quality, metrics and measures, employee involvement and
continuous improvement are main elements of Six Sigma Process Improvement.

The three key elements of Six Sigma are:

Customer Satisfaction

Defining Processes and defining Metrics and Measures for Processes

• Using and understanding Data and Systems
• Setting Goals for Improvement

Team Building and Involving Employees

Involving all employees is very important to Six Sigma. The company must involve all
employees. Company must provide opportunities and incentives for employees to focus
their talents and ability to satisfy customers.
Defining Roles: This is important to six sigma. All team members should have a well
defined role with measurable objectives.

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 Six Sigma in Business
Even though Six Sigma was initially implemented at Motorola to improve the
manufacturing process, all types of businesses can profit from implementing Six Sigma.
Businesses in various industry segments such as Services industry (Example: Call
Centers, Insurance, Financial/Investment Services), Ecommerce industry (Example:
B2B/B2C websites), Education can definitely use Six Sigma principles to achieve higher
quality. Many big businesses such as GE and Motorola have successfully implemented
Six Sigma but the adaptation by smaller businesses has been very slow.
GE is a pioneer in using Six Sigma. This article on Six Sigma GE Experiences explains
how various GE divisions adopted and benefited from Six Sigma.
Here are some of the reasons to consider:

• Bigger companies have resources internally who are trained in Six Sigma and also
have 'Train the Trainer' programs using which they churn out many more Six Segma
instructors. Also many bigger companies encourage the employees to learn Six Sigma
process by providing Green Belts/Black Belts as mentors.
• Effectively applying the Six Sigma techniques is difficult compared to actually
learning the techniques in a class.
• Big companies make Six Sigma as part of the Goals for employees and provide
incentives for employees who undergo training and mentor colleagues.

Many assume that that Six Sigma works for bigger companies only as they produce in
volumes and have thousands of employees. This notion is not true and Six Sigma can be
effectively applied for small businesses and even companies with fewer than 10
employees.

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 Six Sigma Engineering

• A Six Sigma Engineer develops efficient and cost effective processes to improve the
quality and reduce the number of defects per million parts in a
Manufacturing/Production environment.
• Six Sigma Engineers determine and fine tune manufacturing process. Once a process
is improved, they go back and re-tune the process and reduce the defects. This cycle is
continued till they reach 3.4 or less defects per million parts.
• Six Sigma is all about knowledge sharing. If a company has more than one
manufacturing unit/plant, its more than likely that one of the plants produces better
quality than others. The Six Sigma team should visit this higher quality plant and learn
why its performing better than others and implement the techniques learned across all
other units.
• Research/Design department within a company can use the above techniques to learn
from another R&D departments in the same company or affiliate companies and
implement those techniques.
• Motorola developed a five phase approach to the Six Sigma process called DMAIC.

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 DMAIC

• Define opportunities
• Measure performance
• Analyze opportunity
• Improve performance
• Control performance

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Six Sigma Statistics

Six Sigma uses a variety of statistics to determine the best practices for any given
process.
Statisticians and Six Sigma consultants study the existing processes and determine the
methods that produce the best overall results.
Combinations of these methods will be tested and upon determining that a given
combination can improve the process, it will be implemented.
Six Sigma stands for "Six Standard deviations from the arithmetic mean".
Six Sigma statistically ensures that 99.9997% of all products produced in a process are of
acceptable quality.
Six Sigma allows only 3.4 defects per million opportunities.
If a given process fails to meet this criteria, it is re-analyzed, altered and tested to find out
if there are any improvements.
If no improvement is found, the process is re-analyzed, altered and tested again.
This cycle is repeated until you see an improvement.
Once an improvement is found, its documented and the knowledge is spread across other
units in the company so they can implement this new process and reduce their defects per
million opportunities.

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 Six Sigma Confidence Intervals
Confidence intervals are very important to Six Sigma methodology.
To understand Confidence Intervals better, consider this scenario:
Acme Nelson, a leading market research firm conducts a survey among voters in USA
asking them whom would they vote if elections were to be held today. The answer was a
big surprise! In addition to Democrats and Republicans, there is this surprise independent
candidate, John Doe who is expected to secure 22% of the vote.
We asked Acme, how sure are you? In other words how accurate is this prediction?
Their answer: "Well, we are 95% confident that John Doe will get 22% (plus or minus
2%) vote"
In the statistical world, they are saying that John Doe will get a vote between 20% to 24%
(also known as Confidence Range) with a probability of 95% (Confidence Level).

Definition of Confidence Interval

According to University of Glasgow Department of Statistics, Confidence Interval is
defined as:
A confidence interval gives an estimated range of values which is likely to include an
unknown population parameter, the estimated range being calculated from a given set of
sample data. If independent samples are taken repeatedly from the same population, and
a confidence interval calculated for each sample, then a certain percentage (confidence
level) of the intervals will include the unknown population parameter. Confidence
intervals are usually calculated so that this percentage is 95%, but we can produce 90%,
99%, 99.9% (or whatever) confidence intervals for the unknown parameter.
In our Acme Nelson survey example

• The confidence interval is the range 20 to 24

• The confidence level is 95%
• The confidence limits are 20 (lower limit) and 24 (upper limit)
• The unknown population parameter is the 'percentage of the total vote' John Doe is
expected to Get

The width of the confidence interval, in our case 24-20=4 is a measure that is directly
proportional to the precision.

Consider this scenario..

What if Acme Nelson's survey predicted that John Doe will get 22% plus or minus 20%
vote. In other words Acme is saying John Doe will get between 2% and 42% of the vote.
How good is this number? Even a monkey can predict that. This is a very wide
confidence range and in order to reduce the Confidence Interval, Acme needs to collect
more samples.

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 Confidence Limits
Confidence limits are the lower and upper boundaries of a confidence interval.
In our Acme example, the limits were 20 and 24.

Confidence Level
The confidence level is the probability value attached to a given confidence interval. It
can be expressed as a percentage (in our example it is 95%) or a number (0.95).

Confidence Interval for a Mean

A confidence interval for a mean is a range of values within which the mean (unknown
population parameter) may lie.
Examples of Confidence Interval for a Mean

• A Web master who wishes to estimate her mean daily hits on a certain webpage.
• An environmental health and safety officer who wants to estimate the mean monthly
spills.

Confidence Interval for the Difference Between Two Means

A confidence interval for the difference between two means specifies a range of values
within which the difference between the means of the two populations may lie.
Examples of Confidence Interval for the Difference Between Two Means

• A Web master who wishes to estimate her difference in mean daily visitors between
two websites.
• An environmental health and safety officer who wants to estimate the difference in
mean monthly spills between two production sites.

Confidence Intervals Summary

Confidence intervals are very crucial to Six Sigma. Confidence intervals provide crucial
information as they give us a range of possible values and attach a confidence level to the
interval.

Confidence Intervals in Six Sigma

When we calculate a statistic for example, a mean, a variance, a proportion, or a

correlation coefficient, there is no reason to expect that such point estimate would be
exactly equal to the true population value, even with increasing sample sizes. There are
always sampling inaccuracies, or error.
In most Six Sigma projects, there are at least some descriptive statistics calculated from
sample data. In truth, it cannot be said that such data are the same as the population's true
mean, variance, or proportion value. There are many situations in which it is preferable
instead to express an interval in which we would expect to find the true population value.
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This interval is called an interval estimate. A confidence interval is an interval, calculated
from the sample data that is very likely to cover the unknown mean, variance, or
proportion.
For example, after a process improvement a sampling has shown that its yield has
improved from 78% to 83%. But, what is the interval in which the population's yield lies?
If the lower end of the interval is 78% or less, you cannot say with any statistical
certainty that there has been a significant improvement to the process.
There is an error of estimation, or margin of error, or standard error, between the sample
statistic and the population value of that statistic. The confidence interval defines that
margin of error.
The next page shows a decision tree for selecting which formula to use for each situation.
For example, if you are dealing with a sample mean and you do not know the
population's true variance (standard deviation squared) or the sample size is less than 30,
than you use the t Distribution confidence interval. Each of these applications will be
shown in turn.
Decision Tree for selecting What Formula to use:

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Six Sigma Z Confidence Intervals for Means

Z Confidence Interval for Means applies to a mean from a normal distribution of variable
data. Use the normal distribution for the confidence interval for a mean if the sample size
n is relatively large (≥ 30), and σ is known.
The confidence interval (C.I.) includes the shaded area under the curve in between the
critical values, excluding the tail areas (the α risk). The entire curve represents the most
likely distribution of population means, given the sample's size, mean, and the
population's standard deviation.

Here we are making an assumption that the underlying data we are working with is
distributed like the bell curve shown.

The most common confidence interval used in industry is probably the 95% confidence
interval. If we were to use its formula on many sets of data from the population, then
95% of the intervals would contain the unknown population mean that we are trying to
estimate. And 5% of the intervals would not contain the population mean. 2.5% of the
time, the interval would be low, and 2.5% of the time, the interval would be too high.

The probability is 95% that the interval contains the population parameter. The 95%
value is the confidence coefficient, or the degree of confidence. The end points of the

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interval are called the confidence limits. In the graphic on the previous page, the
endpoints are defined by

Example - Z Confidence Interval for Means

Calculate a 95% C.I. on the mean for a sample (n = 35) with an x-bar of 15.6" and a
known σ of 2.3 "

This interval represents the most likely distribution of population means, given the
sample's size, mean, and the population's standard deviation. 95% of the time, the
population's mean will fall in this interval.

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Six Sigma t Confidence Interval for a Variance

Use the c2 (chi-squared) distribution for the confidence interval for the variance

The confidence interval (C.I.) includes the area under the curve in between the critical
values, excluding the tail areas (the α risk). The entire curve represents the most likely
distribution of population variances (sigma squared), given the sample's size and
variation.

Six Sigma t Confidence Interval for a Variance Example

Calculate a 95% C.I. on variance for a sample (n = 35) with an S of 2.3"

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This interval represents the most likely distribution of population variances, given the
sample's size and variance. 95% of the time, the population's variance will fall in this
interval

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Z Confidence Intervals for Proportions

This Z Confidence Interval for Proportions applies to an average proportion (which is

from a binomial distribution).

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Example - Z Confidence Interval for Proportions

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 DPO, DPMO, PPM, DPU Definitions - Six Sigma Defect Metrics

What Is DPO? What Is DPMO?

A unit of product can be defective if it contains one or more defects. A unit of product can
have more than one opportunity to have a defect.

• Determine all the possible opportunities for problems

• Pare the list down by excluding rare events, grouping similar defect types, and
avoiding the trivial
• Define opportunities consistently between different locations

Proportion Defective (p):

p = Number Of Defective Units / Total Number of Product Units

Yield ( Y1st-pass or Yfinal or RTY)

Y=1-p
The Yield proportion can converted to a sigma value using the Z tables

Defects Per Unit - DPU, or u in SPC

DPU = Number Of Defects / Total Number Of Product Units

The probability of getting 'r' defects in a sample having a given dpu rate can be predicted
with the Poisson Distribution

Defects Per Opportunity - DPO

DPO = no. of defects / (no. of units X no. of defect opportunities per unit)

Defects Per Million Opportunities (DPMO, or PPM)

DPMO = dpo x 1,000,000
Defects Per Million Opportunities or DPMO can be then converted to sigma &
equivalent Cp values (see sigma table)

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 Six Sigma Capability Improvement

Defect Based Six Sigma Metrics - Example

If there are 9 defects among 150 invoices, and there are 8 opportunities for errors for
every invoice, what is the dpmo?

dpu = no. of defects / total no. of product units = 9/150 = .06 dpu

dpo = no. of defects / (no. of units X no. of defect oppurtunities per unit)
= 9/(150 X 8) = .0075 dpo
dmpo = dpo x 1,000,000 = .0075 X 1,000,000 = 7,500 dpmo

What are the equivalent Sigma and CP values? See Sigma Table.

Converting Yield to sigma & Cp Metrics - Example

Given: a proportion defective of 1%

• Yield = 1 - p = .990
• Z Table value for .990 = 2.32σ
• Estimate process capability by adding 1.5 σ to reflect the 'real-world' shift in the
process mean

2.32σ + 1.5σ = 3.82σ

• This σ value can be converted to an equivalent CP by dividing it by 3σ :

CP = 3.82σ/3σ = 1.27

Note: Cpk cannot be estimated by this method

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Six Sigma Capability Improvement

Sigma Table
Yield dpmo Sigma (σ) Cp Equiv. COPQ (Cost of Poor Quality)
.840 160,000 2.50 0.83 40%
.870 130,000 2.63 0.88
.900 100,000 2.78 0.93
.930 70,000 2.97 0.99
.935 65,000 3.01 1.00
.940 60,000 3.05 1.02
.945 55,000 3.10 1.03 30%
.950 50,000 3.14 1.05
.955 45,000 3.20 1.06
.960 40,000 3.25 1.08
.965 35,000 3.31 1.10
.970 30,000 3.38 1.13
.975 25,000 3.46 1.15
.980 20,000 3.55 1.18 20%
.985 15,000 3.67 1.22
.990 10,000 3.82 1.27
.995 5,000 4.07 1.36
.998 2,000 4.37 1.46
.999 1,000 4.60 1.53 10%
.9995 500 4.79 1.60
.99975 250 4.98 1.66 5%

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.9999 100 5.22 1.74
.99998 20 5.61 1.87
.9999966 3.4 6.00 2.00

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