STAT 8140 STUDY GUIDE Class 2

I. Fundamental Six Sigma Considerations Setting Several tools and methods touch all areas of Six Sigma. Examples include: classification of data types, metrics, standard operating procedures, team dynamics, sigma level and SPC. Each of these areas is relevant to more areas of DMAIC. As such, they form a good foundation. Classification of Data Types It is useful to understand the classification of data types to facilitate communication with others. Also, later selection of analysis methods will depend on the data type. Figure 2.1 shows the common classifications. Figure 2.1 Classification of Types of Statistical Data Measurement Statistical Data Scales Qualitative Qualitative
Attribute/Count Categorical

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Quantitative
Continuous Measurement

Nominal

Ordinal

Interval

Ratio

1) Nominal Categories of information with no ordering, arithmetic operations are NOT meaningful. Ranking is not meaningful. Mode is the measure of centrality, not mean or median. Examples: 0/1 data, account numbers, zip codes, phone numbers 2) Ordinal Ordered categories in a series, arithmetic operations are NOT meaningful. Ranking is meaningful. Median is measure of centrality. Examples: course grades, burn degree categories, skill ratings 3) Interval Zero has no meaning, arithmetic operations are meaningful. Mode, median and mean are meaningful. Examples: temperature (20 isnt twice as warm as 10), hardness index 4) Ratio Zero is well-defined, arithmetic operations are meaningful. Examples: height, weight, age, RPM, salary

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III.

Common Six Sigma Metrics The first rule in selecting any metric for a Six Sigma study is to address what is strategically important to the organization. When this is found, there will be a cost saving associated with a project. Selecting a metric for study is the role of management and occurs in the preparation of a Project Charter. Many in management, when asked what is important, will focus on bottom line costs since their performance often depends on improving costs. Every project requires that cost be addressed. However, many Six Sigma practitioners feel that the likely causes for high costs should be the metric selected for a project. Some common metrics appear in Table 2.1. Table 2.1 Common Six Sigma Metrics Lean Strategic
Process Cycle Time Wait or Service Time Inventory Throughput Takt Time Customer Satisfaction Warranty Product Development Time

Six Sigma
Defects DPU, DPMO Yield FTY, RTY Process Capability Cpk , Ppk Cost Per Unit Categories-COPQ

Selecting the best metric is sometimes difficult. Some guidelines: 1) Work with management to define key interests. 2) Select what is important within the organizations control. 3) Define the adverse cost consequences of current levels. 4) Plan for a 75% improvement in levels, a breakthrough improvement. 5) Benchmark where possible.

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Standard Operating Procedures (SOP) One of the early steps in any improvement effort is to determine the baseline level of documentation that exists for the process generating the metrics of interest. Some examples of common SOPs are: Gage Instructions & Calibration Equipment Start-Up Procedures Equipment Set-Up Procedures Safety Procedures Billing Procedures Customer Complaint Resolution Processes With ISO9000 in widespread use, many requirements are documented. Some projects may conclude the first issue that needs to be addressed is to get back to process which says simply the documentation needs to be followed. A simple example is a gage study on a critical measurement. During a gage qualification period, it is common for gage vendors to work with engineers to develop a good set of gaging instructions that become part of a Gage SOP. Vendor payment often depends on meeting strict gage capability standards. Over time the original SOPs may not be followed in every detail. It is illogical to start an improvement effort that uses measurements from this gage without first getting back to process. Training in use of existing good SOPs may be an early activity in an improvement project. Other possibilities also exist for SOPs. None may exist or they may be inadequate. Too frequently, well-intentioned personnel change or adapt procedures in an attempt to do a good job. Evaluation of new procedures may not have occurred
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or the new methods are inappropriate. The Six Sigma belt may choose to make note of the concern and move on. A check of adequate SOPs is part of the later Improve phase. Alternatively, evaluating changed procedures may become part of the work plan. A general concept for documentation in ISO9000 is document what you do. Common sections of an SOP are: Scope what situation is addressed by the procedure Method numbered procedural steps Equipment & Supplies what is needed to perform the procedure Training & Qualifications personnel knowledge requirements An examination of relevant existing procedures and comparison to actual procedures are good early project activities. Frequently improvement opportunities surface with this step. V. Team Dynamics All Six Sigma Projects involve working in teams. Members of the team are likely employees working in the process, process suppliers or customers, and subject matter experts. Belts will be involved with teams, so team skills are essential. 1) Activities Prior to First Team Meeting Before a first meeting of team members, there must be agreements with key management stakeholders in different areas. Many of these issues will arise in preparation of a Project Charter: a) Expectations What is the goal? What does success look like? Is there a strategic benefit to the organization that can be quantified in terms of cost savings? b) Metrics Are there logical metrics that can be agreed to by everyone? c) Boundaries What constraints are present? Often projects involve interfaces with other organizations. What involvement is permissible? Talking with internal or external customers is often beneficial for VOC data. What are the boundaries? d) Team Membership Who should be on the team from within the organization? Who is needed from outside the organization? What subject matter experts are needed? Are people available? e) Time Allocation How much time for work on the project is expected from team members? Is work on the team additive to current assignments or will ongoing responsibilities be reduced? f) Reporting How often and in what form are updates expected? g) Roadblocks There are always organizational roadblocks that frustrate teams. How should these be addressed? 2) At the First Team Meeting Once agreement is gained with management stakeholders, it is necessary to get the team together and discuss the framework of the team process: a) Set expectations for the desired improvement the goal. b) How the team members were selected. Are additions needed? c) Encourage discussions with supervisors on needed changes to ongoing work assignments. d) Identify roles within the team (leader, facilitator, minutes, etc.) Rotation plans. e) Agree that everyones ideas will be heard. There are no bad ideas. Disagreements are ok. f) Identify meeting place, times and frequency. Define attendance expectations.
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g) Housekeeping: breaks, food, smoking, etc. h) Agenda who prepares? Address Project Charter quickly. 3) Tuckman Model for Team Development All teams go through developmental stages. This is expected. Belts must be familiar with the stages to manage the process. a) Forming Dependence of the leader Roles and responsibilities are unclear Processes sometimes ignored Tolerance of the leader tested b) Storming Members vie for position/influence Uncertainties persist Cliques and factions form Power struggles Leader coaches member c) Norming Members respond to leader Role and responsibilities are clear and accepted Big decisions made by group agreement Commitment and unity are strong Respect for leader Some leadership shared d) Performing Team knows why they exist Shared vision High autonomy Work toward achieving goal Members look after one another VI. SPC Many of the metrics in Table 2.1 are direct measures from a process. One of the most common tools used in an SPC project is Statistical Process Control (SPC). Typically, this , R charts for some type of process measure. Recall that SPC term is given to the use of was one of the Japanese 7 simple statistical tools advocated for use by all employees. SPC should not be confused with the term Statistical Quality Control (SQC) which refers to the many statistical tools used to improve quality including SPC. A complete discussion of SPC appears in Chapter 6 of Introduction to Statistical Quality Control by Montgomery (course text for Stat 8110, a prerequisite). Some key considerations are: 1) Rational Subgroups (Shewhart) select a sampling plan to minimize within subgroup variation and maximize between subgroup variation. This will minimize the average , which reduces the width of the control limits subgroup range, + A2 UCL = - A2 LCL =

is the grand mean and A2 is a control chart constant depending on subgroup size, n. where

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2) Out-of-Control Signals The most common out-of-control (OOC) signal is a subgroup mean or range beyond the control limits. However, The Western Electric Statistical Quality Control Handbook (1956) introduced run rules that also are indicators of rare events and are considered OOC signals. A control chart zone is one-third increments of and UCL and LCL as shown in Figure 2.2 the region between Figure 2.2 Western Electric Control Chart Run Rules
Zone A Zone B Zone C Zone C Zone B Zone A

2 out of 3 points in Zone A or ABOVE 4 out of 5 points in Zone B or ABOVE 8 in a row Zone C or ABOVE 8 in a row Zone C or BELOW 4 out of 5 points in Zone B or BELOW 2 out of 3 points in Zone A or BELOW

UCL

LCL

3) Common and Special Cause Variation Deming developed the concept of common and special (also called assignable) cause variation. Common cause variation is the expected day-in and day-out variation due to the system. This variation is determined and s, the sample standard when there are no OOC signals and stable estimates of deviation, can be computed. This is variation within the control limits. When only common cause variation is present, estimates of process capability Cpk and sigma level can be reliably computed. With only common cause variation, prediction of process performance is possible. Special cause variation is indicated by OOC signals. These are out of system variation from special/assignable events. These events may be unknown. Eliminating these events reduces process variation, improving performance. 4) Stable Process A process is said to be stable if only common cause variation is present. A stable process may not produce all output to specification. Stability does not imply capability. 5) Short and Long-Term Variation Short-term (ST) variation is random variation associated with common causes and is estimated by / d2 = Where d2 is a control chart constant depending on the subgroup size n. Long-term variation is non-random variation associated with special causes if present. Not all special causes result in OOC signals so between subgroup variation can increase. Thus, long-term (LT) variation is quantified by the sample standard deviation: = s The differences between short- and long-term variation will become important when process capability is assessed for a stable process.
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SPC Implications for Process Improvement Once meaningful metrics are established, use of SPC chart is common in process improvement efforts. There are many reasons for this practice: Involvement maintaining SPC charts requires involvement of people that use and maintain a process. With this involvement, comes ownership of the improvement activity. This ownership can lead to the identification of problem areas and often possible solutions. Direction: Address the System When only common cause variation is present, continual tinkering with the process will lead to no improvement and typically increases process variation. Establishing that only common cause variation is present leads to the next advantage of SPC. Assessment of Process Capability When only common cause variation is present, the logical next question is whether the process is capable of producing only parts that meet customer requirements. This can be evaluated using process capability measures Cpk and Ppk. Direction: Eliminate Special Causes When OOC signals indicate special causes of variation are present, it is logical to eliminate these causes. Again, involvement of employees is essential. Finding these causes may not be easy. In some cases, increasing the sampling intensity can improve chart sensitivity and likelihood of detecting and finding special causes. In short, the effective use of SPC can greatly assist the improvement effort. The type of improvement effort is suggested by SPC results: (a) improve the process, or (b) eliminate special causes. What Is a Six Sigma Process and Sigma Level? Any metric should be monitored over time, typically using an SPC chart. The chart enables determination of stability of a process. Only with the absence of special causes can a process be judged as stable. When a process is stable, it is possible to predict its future performance. A fundamental measure in Six Sigma studies is determining the sigma level of a process. This measure is only meaningful for a stable process. The sigma level determines the expected on-going level of defects. Assume that a process has a normal distribution with known mean and standard deviation . The current projected defect rate for parts beyond USL or LSL uses the long-term z-score: ZLT =

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Since a two-sided failure is considered possible, the percentile for ZLT is doubled. If ZLT=3, the area beyond 3 is 0.0027 or a DPMO=2700. However, the sigma level calculation does not use only the long-term calculation. The sigma level assumes there is a possibility of a 1.5 shift. In terms of the z-score, the short-term z value is: ZST = ZLT + 1.5 The new defect level is the area beyond 1.5 in the above example which is P(Z>1.5)=0.66807 (DPMO=66,807) as shown in Table 2.3. Note the lower tail is ignored in this estimate since it has very low probability with a 1.5 shift up. Calculation of a process sigma level first computes the defect rate in terms of defects per million operations (DPMO) and then uses a table (book p.1090) to convert to sigma level. The goal of Six Sigma projects is to have a centered process with 6 at LSL and USL or beyond. The projected defect rate of a Six Sigma level process is then
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P(Z>4.5)=0.0000034 from Appendix E (p. 1040) or DPMO=3.4. This is a critical benchmark for Six Sigma studies. Process Sigma: ( from http://www.howardgitlow.com/sixsigmadictionary.htm ) Process sigma is a measure of the process performance determined by using defects per million opportunities (DPMO) assuming a stable normal distribution. Process sigma is a metric that allows for process performance comparisons across processes, departments, divisions, companies and countries, assuming all comparisons are made from stable processes whose output follows the normal distribution. In Six Sigma terminology, the sigma level of a process is a metric used to indicate DPMO, a measure of process defects. DPMO is thought to indicate how well the process is performing with respect to customer needs and wants. Table 2.2 relates defects to sigma level. Note that a Six Sigma process has 3.4 defects per million operations (DPMO). Table 2.2 Relationship of Defects to Sigma Level (Wikipedia)
Sigma Level 1 2 3 4 5 6 7 Percentage Yield 31% 69% 93.30% 99.38% 99.98% 100.00% 100.00% Short-Term Cpk 0.33 0.67 1.00 1.33 1.67 2.00 2.33 Long-Term Cpk 0.17 0.17 0.50 0.83 1.17 1.50 1.83

DPMO 691,462 308,538 66,807 6,210 233 3.4 0.019

% Defective 0.69000000 0.31000000 0.06700000 0.00620000 0.00023000 0.00000340 0.00000002

The left side of Table 2.3 is used to translate DPMO statistics for a stable, normally distributed process with no shift in its mean (0.0 shift in mean) over time into a process sigma metric, assuming that defects occur at only one specifications limit. The right side of Table 2.3 is used to translate DPMO statistics for a stable, normally distributed process that has experienced a 1.5 sigma shift in its mean over time into a process sigma metric.

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Table 2.1 Six Sigma Defect Levels

Process Level
0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20 1.30 1.40 1.50 1.60 1.70 1.80 1.90 2.00 2.10 2.20 2.30 2.40 2.50 2.60 2.70 2.80 2.90 3.00 3.10 3.20

Assume 0.0 sigma shift in mean Process Process Process DPMO Level DPMO
460,172.1 420,740.3 382,088.6 344,578.3 308,537.5 274,253.1 241,963.6 211,855.3 184,060.1 158,655.3 135,666.1 115,069.7 96,800.5 80,756.7 66,807.2 54,799.3 44,565.4 35,930.3 28,716.5 22,750.1 17,864.4 13,903.4 10,724.1 8,197.5 6,209.7 4,661.2 3,467.0 2,555.2 1,865.9 1,350.0 967.7 687.2 Process Level 4.80 4.90 5.00 5.10 5.20 5.30 5.40 5.50 5.60 5.70 5.80 5.90 6.00 Defect per billion opportunities 794.4 479.9 287.1 170.1 99.8 58.0 33.4 19.0 10.7 6.0 3.3 1.8 1.0 3.30 3.40 3.50 3.60 3.70 3.80 3.90 4.00 4.10 4.20 4.30 4.40 4.50 4.60 4.70 483.5 337.0 232.7 159.1 107.8 72.4 48.1 31.7 20.7 13.4 8.5 5.4 3.4 2.1 1.3

Assume 1.5 sigma shift in mean Process Process Process Process Level DPMO Level DPMO
0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20 1.30 1.40 1.50 1.60 1.70 1.80 1.90 2.00 2.10 2.20 2.30 2.40 2.50 2.60 2.70 2.80 2.90 3.00 919,243.3 903,199.5 884,930.3 864,333.9 841,344.7 815,939.9 788,144.7 758,036.4 725,746.9 691,462.5 655,421.7 617,911.4 579,259.7 539,827.9 500,000.0 460,172.1 420,740.3 382,088.6 344,578.3 308,537.5 274,253.1 241,963.6 211,855.3 184,060.1 158,655.3 135,666.1 115,069.7 96,800.5 80,756.7 66,807.2 3.10 3.20 3.30 3.40 3.50 3.60 3.70 3.80 3.90 4.00 4.10 4.20 4.30 4.40 4.50 4.60 4.70 4.80 4.90 5.00 5.10 5.20 5.30 5.40 5.50 5.60 5.70 5.80 5.90 6.00 54,799.3 44,565.4 35,930.3 28,716.5 22,750.1 17,864.4 13,903.4 10,724.1 8,197.5 6,209.7 4,661.2 3,467.0 2,555.2 1,865.9 1,350.0 967.7 687.2 483.5 337.0 232.7 159.1 107.8 72.4 48.1 31.7 20.7 13.4 8.5 5.4 3.4

For example, suppose a process has 3 independent steps, each with a 95% yield. The RTY for the process is 85.74% (0.95 X 0.95 X 0.95) and the DPO is 0.1426 (DPO = 1.0 RTY = 1.0 - 0.8574), assuming each step has only one opportunity so that DPU and DPO are the same. The DPMO for the process is 142,600 (DPMO = DPO X 1,000,000). The process sigma metric is obtained, assuming a 1.5 sigma shift in the process mean over time, by looking down the DPMO column to the two numbers bracketing to 142,600. The actual process sigma metric lies between the corresponding two bracketing process sigma metrics. In this example, 142,600 is bracketed by a DPMO of 135,661 and a DPMO of 158,655. The corresponding bracketing process sigma metrics are 2.60 and 2.50. Hence, the actual process sigma metric is approximately 2.55.

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IX.

Notes for Book Reading 1) Voice of the Customer (VOC p .53, 71) Every Six Sigma project identifies the customer of a process. This may be an internal or external customer. It is desirable to obtain any customer data. A formal Quality Function Deployment (QFD) method will be used when complete redesign is needed. 2) Kano Model (p. 54) Goal is to anticipate customer needs. Axes of a two-dimensional model are customer satisfaction vs. presence of a product feature. Different satisfaction level curves result from anticipating needs (delighters) and not meeting expected features (dissatisfiers). 3) Scorecards (p. 59) Various visual displays are used to depict metrics (financial, customer, internal process or Six Sigma progress). Green colors are positive trends, red are negative trends, yellow are not trend metrics. 4) SPC (p.204-230) See above discussion. Review material and Montgomery Ch 6.

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