Lean Six Sigma Introduction

ASU Green Belt DMAIC Training

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Objective
To understand Lean Six Sigma methodology and deployment. Key Topics Why and What is Lean Six Sigma Improvement process (DMAIC) Process Management

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Vital questions need to be asked in an increasingly competitive business world

Are you consistently fulfilling customers requirements ... or are there gaps in your performance? Do your improvement efforts continue to repay your investment ... or have the financial benefits of these efforts already been realized, with innovation and competitive gains now stalled? Are you satisfied with how quickly you see measurable bottom-line results from improvement efforts ... or are technological advances, competitors, and Wall Street forcing you to demonstrate improvement results in months rather than years? Is your organization truly prepared to commit to continuous improvement as well as revenue growth ... or are processes still out of alignment with dynamic market requirements costing you business success?
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Why Lean Six Sigma

It Works Proven Track Record It is needed Successful companies have mandated some

form of Continuous Process Improvement (CPI)

Many different methods of CPI available, but

none have a more balanced approach than Lean Six Sigma

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Right Training. Right Attitude.

Lean Six Sigma is not rocket science you can do this Lean Six Sigma is not easy it requires dedication and effort

Foundation of Lean 6 Sigma

If you cannot express what you know in numbers, you dont know much about it; If you dont know much about it, then you cant control it; If you cant control it, you are at the mercy of chance.

Foundation of Lean 6 Sigma

Definitions of Insanity: Doing the same thing over and over and expecting a different outcome! AND Using the same logic to get out of the trouble that got you there in the first place! -Albert Einstein

Considerations
The world around us continues to change

Middle East Technology Economy Political/Military Situation

Are our organizations agile enough to face the next crisis?

What gets dropped from your current work load Do your people and processes have the capacity to adapt immediately

Are you ready?

Work/life balance

The status quo is unacceptable

The History of 6 Sigma

Frederick W. Taylor in 1880s and early 1900s Taylors systematic study of workers use of time and motion prefigured Walter Shewharts application of statistical methods to control manufacturing quality World War I Application of mathematics to problems of production and quality control helped decrease failure rate Management became interested in continuing quality control programs after the war W.E. Deming and Joseph Juran took quality control to Japan in 1953. The 1960s saw a surge in the growth of quality in Japan In the 1980s, the NBS White Paper If Japan Can Why cant We sparked increased interest in quality and total quality management

The History of 6 Sigma

Mid-1980s Motorola started 6 Sigma Focused on creating strategies to reduce defects in own products Discovered that problems with high first-pass yield (the amount of products that make it through defect-free) seldom failed in use Won Baldrige Award 1988 Lead by Mikel Harry, Motorola partnered with IBM, ABB (Asea Brown Boveri), Texas Instruments, Allied Signal, and Kodak to found the Six Sigma Research Institute Late 1990s, Mikel Harry began commercializing 6 Sigma and successfully applied its techniques to a non-manufacturing environment Current popularity due in part to publicity of General Electrics former CEO Jack Welchs commitment to achieving 6 Sigma capability

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A Thought

Change is not a

requirement because survival is not mandatory.

W. Edwards Deming

A Thought
Effectiveness is the

foundation of success Efficiency is a minimum condition for survival after effectiveness has been achieved. Effectiveness is doing the right things. Efficiency is doing things right.
Peter F. Drucker

Overview of Excellence Initiatives

Six Sigma and Lean were developed in response to the same problems: Increased costs Missed schedules Lack of flexibility

Applicable to EVERY Business Function

Any process that produces an output has downstream customers (external or internal) Traditional manufacturing processes Transactional processes
SERVICE DESIGN PURCH. 6 Sigma Methods MFG. MAINT.
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ADMIN.

QA

Companies have demonstrated Impressive Growth - mainly Fuelled by Acquisitions

ILLUSTRATIVE

Revenue Growth Rescue phase Inorganic growth phase As acquisition prospects get scarce, inorganic growth is becoming harder to sustain

Focus

on rescuing Main levers: Performance Mgmt

1990 Year

Focus on growth Main levers: Asset portfolio Commercial optimisation

2007
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However, the Organization is Finding it Harder to Live up to its Expectations

Situation

Complications

Shareholders want more Customers expect more Employees deserve more Competitive environment is heating up

Successful achievement of big top down targets via incrementalism has bred a norm Confusion on the need for and scale of change (hundreds of projects/initiatives) Lack of data/facts and root cause analysis to point the way forward

Capital intensity of the

business is increasing

Organizational bias toward strategy, not execution

The base infrastructure struggles to support a company of our scale and aspirations Several Group initiatives, have significant impact

We have drained the major benefits of our current operating model

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Who Uses Six Sigma?

US DoD

LSS is the CPI industry standard Increase throughput Shorten cycle times Reduce defects Lower costs
Siebe Foxboro Lockheed Martin Bombardier John Deere Whirlpool GenCorp Nokia Sony Siemens Compaq Seagate PACCAR Toshiba DuPont Dow Chemical

Motorola ABB TI IBM DEC Kodak AlliedSignal GE

Maytag Praxair Ford Air Products Honeywell Johnson Controls Johnson & Johnson

Fannie Mae Bank Of America Intuit AXA Equitable United Health Group Cardinal Health Blue Cross Providence Health Home Depot

Wells Fargo Robert Half Fifth Third Bank CitiGroup

1992

1995

2000

17 Today

What is Lean Six Sigma?

Lean Six Sigma: A flexible yet comprehensive enterprise approach founded on Six Sigma, Lean and Process Management principles to developing dynamic operational capabilities that consistently and continuously deliver the following results: Improvements in customer satisfaction Increased efficiencies and consistency Increased value to the customer Growth in revenue Reduction in costs (inventory, waste, defects, etc.) Improvements in productivity Gains in innovation Organizational focus on customers, value and processes (not silos)

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Lean Six Sigma can transform the operations of an enterprise, or serve as the engine for focused change
The Lean Six Sigma model is designed to facilitate operational transformation and tactical process improvement, depending on our clients needs: TRANSFORMATIONAL CHANGE Leverage end-to-end, enterprise-wide Lean Six Sigma model for operational transformation to:
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Create more robust and quantifiable operational capabilities to drive from strategy to action Provide an in-house operational improvement approach tied to strategy and focused on the customer Create cultural change by implementing the necessary systems to focus on performance (create a way of life) Build leadership accountability through a management-by-fact approach Enhance shareholder value by delivering hard benefits

TARGETED IMPROVEMENT

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Lean Six Sigma can transform the operations of an enterprise, or serve as the engine for focused change
The Lean Six Sigma model is designed to facilitate operational transformation and tactical process improvement, depending on our clients needs: TRANSFORMATIONAL CHANGE TARGETED IMPROVEMENT Use select Lean and Six Sigma tools and techniques from IBMs Lean Six Sigma model to address a specific problem(s) when you want to:

Identify and eliminate the real root cause of a specific problem(s) Measure existing process performance using rigorous statistical analysis Implement a robust and fact-driven methodology for analyzing or designing processes Accelerate results of technology implementations Build internal capability of specialists to apply proven tools and techniques Identify the measures required to control process performance moving forward Demonstrate proof of concept

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Lean Six Sigma differentiates itself from traditional quality methods by starting with the customer
Traditional methods
INSIDE-OUT By focusing internally on the inefficiencies in the system, improvements are made in speed, delivery cost, & other dimensions. However, this internal focus will not identify if the entire system itself is not addressing customer needs. It may just facilitate faster and cheaper delivery of something that isnt satisfactory to the customer.

Lean Six Sigma methods

OUTSIDE-IN Starting with customer requirements and critical to quality attributes, an assessment is made of the larger systems effectiveness in delivering products or services that meet customers needs. With this external focus, targeted initiatives are launched to improve performance in areas that will generate the most significant value. These initiatives are rigorously managed by expert consultants trained in Lean Six Sigma.
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Lean Six Sigma requires continuous and rigorous cooperation and coordination
Full-time Sets direction Creates business deployment plan Deployment Champions Owns vision, direct, integration, overall results Leads change Executive /Dept Leadership Line staff who work on a process Process Partners Contributors Part time on projects Provide process expertise

Project owner Oversees solution handover Helps BB break down barriers

Project Sponsors

Understand vision All Employees Apply concepts to their job and work area
Process Owner

Yellow Belts

Full-time Trains and coaches Black Belts and Six Sigma Green Belts Assist Yellow Belt training

Green Belts

Master Black Belts

Support Roles

Supports Black Belts and Project Sponsors Sustains and leverages gains Sometimes is also the Sponsor

Part Time Line managers/ Black Belts staff Run projects Integrate methods Full-time and behaviours Facilitates problem solving into line work Trains and coaches Project Teams

Program Management 9/24/2013

Finance Manager

IT Support Manager

Change Manager 22

What is Process Management?

Process management is the continuous improvement management system that enables an enterprise to sustain and accelerate the gains achieved through implementation of Lean Six Sigma. Consider the following questions to determine if Process Management is applicable to your enterprise: 1. Within your own organization, how many Six Sigma/Lean project teams do you plan to charter this year? 2. How much ongoing savings/revenues have you committed to generating as a result of these teams? 3. How many of the new/improved processes will be used and useful 1 - 2 years after implementation? 4. How can you: Leverage? Sustain the gains?
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These complementary methods can be used in concert to achieve maximum results

Six SigmaTM Methodologies
Product or Service Outputs

Customer-driven

Increase efficiency Increase consistency Simplify work flows Reduce variation Focus on high-value steps Eliminate defects Eliminate waste In a Six Sigma enterprise, everyone is focused on Customer-driven A Lean enterprise is one that identifying and delivers value to its eliminating defects. stakeholders with little or no wasteful consumption of resources.

As-Is Flow

To-Be Flow

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Lean Methodology

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Relationship between Lean and Six Sigma ( % defect free)

6 Sigma
# of Parts (Steps) 1 7 10 20 40 60 80 100 150 200 300 400 500 600 700 800 900 1000 1200 3000 17000 38000 70000 150000 OVERALL YIELD vs SIGMA (Distribution Shifted 1.5) 3 4 5 93.32% 61.63 50.08 25.08 6.29 1.58 0.40 0.10 ----------------------------99.379% 95.733 93.96 88.29 77.94 68.81 60.75 53.64 39.38 28.77 15.43 8.28 4.44 2.38 1.28 0.69 0.37 0.20 0.06 ------99.9767% 99.839 99.768 99.536 99.074 98.614 98.156 97.70 96.61 95.45 93.26 91.11 89.02 86.97 84.97 83.02 81.11 79.24 75.88 50.15 1.91 0.01 6 99.99966% 99.9976 99.9966 99.9932 99.9864 99.9796 99.9728 99.966 99.949 99.932 99.898 99.864 99.830 99.796 99.762 99.729 99.695 99.661 99.593 98.985 94.384 87.880 78.820 60.000
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L E A N

Source: SIX SIGMA RESEARCH INSTITUTE Motorola University Motorola, Inc.

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Lean and Six Sigma

Lean/Sigma combines the strengths of each system into one:

Lean Six Sigma Guiding principles based Focus on voice of the operating system customer Relentless elimination of all Data- and fact-based waste decision making Creation of process flow and Analytical and statistical demand pull rigor Resource optimization Variation reduction to near Simple and visual perfection levels
Strength: Efficiency Effectiveness
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Strength:

An extremely powerful combination!

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Combined effect of Lean and Six Sigma

Lead times
70

better customer service reduction in unit costs increase in capacity

60

Lean reduces average lead time

50

40
Days

Six Sigma reduces variation

lead time (days) mean UCL

30

LCL

20

10

0
02 .0 2. 20 05 04 .0 2. 20 05 06 .0 2. 20 05 08 .0 2. 20 05 10 .0 2. 20 05 12 .0 2. 20 05 14 .0 2. 20 05 16 .0 2. 20 05 18 .0 2. 20 05 20 .0 2. 20 05 22 .0 2. 05 24 .0 2. 05 26 .0 2. 05 28 .0 2. 05 02 .0 3. 05 04 .0 3. 05

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Lean Definition
Lean is an operating philosophy and system focused on the elimination of waste to improve operational and financial performance.

Lean focuses on identifying and enhancing value for the customer, which leads to identifying and eliminating waste throughout the entire system.
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Toyotas 4P Model
(Jeffrey Liker, Toyota Way)

Toyotas Terms

Problem Solving (continuous Improvement and Learning) People and Partners (Respect, Challenge and Grow them)

Continual organizational learning through Kaizen Go see for yourself to thoroughly understand the situation (Genchi Gembutsu) Make decisions slowly by consensus, thoroughly considering all options; implement rapidly Grow leaders who live the philosophy Respect, develop and challenge your teams Respect, challenge and help your suppliers Create process flow to surface problems Use pull systems to avoid overproduction Level out the work load Heijunka Stop when there is a quality problem Jidoka Standardize tasks for continuous improvement Use visual controls so no problems are hidden Use, only reliable, thoroughly tested technology Base management decisions on long term philosophy even at the expense of short-term financial goals

Process (Eliminate Waste)

Philosophy (Long-Term Thinking)

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Lean starts with 5 S

Definition: A process designed to organize the workplace, keep it neat and clean, maintain standardized conditions, and instill the discipline required to enable each individual to achieve and maintain a world class work environment.

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The Basics of 5S
The 5Ss: Japanese Translation
Seiri Seiton Seiso Seiketsu Shitsuke Proper Arrangement Orderliness Cleanliness Cleanup Discipline

English
Sort

Stabilize/Simplify Shine/Sweep Standardize Self Discipline

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Lean: Value-added Analysis and Wastes

UNUSED TALENT Not using or being aware of peoples talent WAITING Any non-work time waiting for tools, supplies, parts, etc..

DEFECTS Repair or Rework MOTION

Any wasted motion to pick up invoices or stack them. Also wasted walking
OVERPRODUCTION INVENTORY Maintaining excess inventory of raw matls, parts in process, or finished goods. OVERPROCESSING Doing more work than is necessary Producing more than is needed before it is needed

Additional toxic effects of waste:

Physical fatigue Emotional fatigue Increased frustration Increased stress Placement of blame Decreased selfworth Indecisiveness
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TRANSPORTATION
Wasted effort to transport materials, parts, or finished goods into or out of storage, or between processes.

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Principles of Lean
Elimination of waste Simplifying product flow Quality is achieved by managing the process, not the product (In-process Inspection) Produce to demand Material flow / Kanban Batching vs. single-piece flow TAKT time and line balancing Visual controls Standard work Continuous improvement Respect for people - teamwork

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What is Six Sigma the methodology?

A vehicle for strategic change ... an organizational approach to performance excellence. TRANSFORMATIONAL CHANGE Across-the-board. Large-scale integration of fundamental changes throughout the organization -- processes, culture, and customers --- to achieve and sustain breakaway results. TRANSACTIONAL CHANGE Business processes. Tools and methodologies targeted at reducing variation and defects, and dramatically improving business results.
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TM

Six Sigma provides a comprehensive approach to organizational excellence.

Leveraging
Business Goals Variation Based Analysis

Progression:

Six Sigma Tools

DFSS Benefit

1) Internal 2) Suppliers and Partners 3) Customers

Change Management Subject Matter Expertise

DMAIC Traditional Project Rapid Mgmt Expense Reduction

Business as Usual

6s

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Commitment/Sustainability

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Six Sigma Nearly Perfect Products & Services

A statistical term3.4 defects per million A business strategy for maximizing success Driven by o Understanding customer needs o Disciplined use of facts and data o Statistical analysis o Managing, improving, and reinventing processes Yields financial results in all areas not just manufacturing

What is 6 Sigma?

A systematic and disciplined approach to identify and reduce variation in customer critical processes A Six Sigma way that consists of following steps: o Define o Measure o Analyze o Improve o Control

Used at process level to improve current processes. Focuses on root causes that drive CTQ Performance. Reduces variation in customer CTQs (Critical To Quality) Identifies and manages key process input variables

Whats It Based On ?
Customer ..... Anyone Who Receives Product, Service, or Information

Opportunity ..... Every Chance to Do Something Either Right or Wrong

Successes Vs. Defects ..... Every Result of an Opportunity Either Meets the Customer Specification or it Doesnt

Strategy
Know Whats Important to the Customer

Reduce Defects

Center Around Target

Reduce Variation
Breakthrough Improvement - Not Incremental!

Six Sigma Decision Chart

Define

DESIGN
No
Process Exists?

DMAIC
Yes

LEAN
Measure

Steps To Design A New Product/ Service Or Redesign Existing Product/ Service

Measure

Analyze

Improve an Existing Process by Reducing Variation

No

No Analyze Is Solution Obvious?

Design

Is Incremental Improvement Enough?

Yes Yes Improve

Verify

Control

Why is Six Sigma different than other quality and process improvement methodologies?

The extensive focus on customer requirements. The direct link to business strategy and financial results. The required commitment of top leadership up-front and continuously through years of implementation. Each project delivers bottom line results in a short time. The disciplined improvement methodology based on measurement and analysis. Full-time Six Sigma team leaders (Black Belts) who are extensively trained in statistical thinking as well as team and project skills. The integration of Six Sigma thinking into the business infrastructure through incentives and rewards.
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Why Six Sigma?

Why have we set this target? A number of factors have come together that cause companies to decide that World Class Quality is the next great challenge and an opportunity:

Customers are demanding better quality as they were trying to provide better quality for their customers. Employees believe we could be better. A number of companies (Motorola, GE, Texas Instruments, several Japanese companies and AlliedSignal) had achieved dramatically better quality levels through a disciplined, rigorous approach that has yielded better customer satisfaction and total cost productivity. After several years of tremendous progress, improvement in many initiatives -productivity, inventory turns, NPI have slowed due to defects in our processes.
Our quality levels today are equal to or better than our competitors our customers tell us so.

World class companies have demonstrated we can be much better if we take a rigorous approach to quality improvement. World Class Quality is our next great opportunity as a company, and we will be focused on 6 Sigma for the next generation of our careers.

Metrics
Metric

Sigma is a statistical unit of measure that reflects how well a process is performing. As the number of defects in a product or process decreases, the yield and the sigma value increases.
By definition, Six Sigma is a quantitative statistical measurement meaning fewer than four defects per million opportunities. Performing at the Six Sigma level means that products and processes satisfy the customer 99.99966% of the time.

Six Sigma Methodology

Strategy Six Sigma strategy contains two rigorous analytical methods that employ statistical tools either to design products and processes (DFSS) or to improve existing products and processes (DMAIC). Each method requires that we optimize the outputs of a process by focusing our efforts on the inputs. Mathematically, this is stated as f(X), or Y is a function of X. Y=

To achieve Six Sigma levels of quality, we must ultimately understand the inputs and causes, not just the outputs and symptoms.

What Is Process Sigma?

A Measurement Scale That Compares The Output Of A Process (Y Performance) To The Customers CTQs (Performance Standards)

Sigma(ZST): Statistical unit of measure that reflects process capability

Why 6

? Order Of Magnitude

Sigma Is A Statistical Unit Of Measure That Reflects Process Capability

Sigma 3 4 5 6 Spelling Money Time DPM 66,807

1.5 Misspelled $2.7 Million Indebtedness3 1/2 Months Per Century Words Per Page In A Book Per $1 Billion In Assets 1 Misspelled Word Per 30 $63,000 Indebtedness Per 2 1/2 Days Per Century Pages In A Book $1 Billion In Assets 1 Misspelled Word In A $570 Indebtedness Per Set of Encyclopedias $1 Billion In Assets 1 Misspelled Word In All $2 Indebtedness Per The Books In A Small $1 Billion In Assets Library 30 Minutes Per Century

6,210

233 6 Seconds Per Century 3.4

Increase In

Requires Focused Process Improvement

What is Sigma the Statistical Unit of Measure?

Sigma is the Greek letter that is a statistical unit of measurement used to define the standard deviation of a population. It measures the variability or spread of the data.

Six Sigma is also a measure of variability. It is a name given to indicate how much of the data falls within the customers requirements. The higher the process sigma, the more of the process outputs, products and services, meet customers requirements or, the fewer the defects.

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The Many Facets of Six Sigma

Vision:

Vision
Philosophy Goal

Becomes part of the company culture: I want the company to be known as the best company. Six Sigma Customer Service: Only 3.4 repeat calls per million calls received. Framework for disciplined problem solving management by fact.

Goal:

Benchmark
Methodology Metric Tool Symbol

Methodology:

Metric:

Something we can calculate and measure for any process to indicate performance levels.
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Two Meanings of Sigma

The term sigma is used to designate the distribution or spread about the mean (average) of any process or procedure. For a business or manufacturing process, the sigma capability (z-value) is a metric that indicates how well that process is performing. The higher the sigma capability, the better. Sigma capability measures the capability of the process to perform defect-free work. A defect is anything that results in customer dissatisfaction.

As defects go down...

the Sigma Capability goes up

What Is 6 ? CTQ, Defect, Opportunities

Concept Critical To Quality Characteristics (CTQ) Definition Customer Performance Requirements Of A Product Or Service Any Event That Does Not Meet The Specifications Of A CTQ Any Event Which Can Be Measured That Provides A Chance Of Not Meeting A Customer Requirement

Defect Defect Opportunity

Concept Of Defects At The Core Of 6

What Is 6

? Sigma Scale

Sigma Is A Statistical Unit Of Measure That Reflects Process Capability

6 5 4 3 2
Process Capability

DPMO
3.4 233 6,210 66,807 308,537
Defects Per Million Opportunities

Increase In Sigma Requires Exponential Defect Reduction

Quality
The Classical View of Quality The Six Sigma View of Quality 99.99966% Good (6s) Seven lost articles of mail per hour One minute of unsafe drinking water every seven months

99% Good (3.8s)

20,000 lost articles of mail per hour Unsafe drinking water almost 15 minutes each day 5,000 incorrect surgical operations per week 2 short or long landings at most major airports daily 200,000 wrong drug prescriptions each year No electricity for almost 7 hours each month

1.7 incorrect surgical operations per week

One short or long landing at most major airports every five years 68 wrong drug prescriptions each year One hour without electricity every 34 years

What is Six Sigma?

The Greek symbol sigma which means standard deviation; a measurement of variation
66,807 DPMO (Defects per million opportunities) = 3 Sigma or 93.319% Accurate. 6,210 DPMO 3.4 DPMO = 4 Sigma or 99.349% Accurate. = 6 Sigma or 99.999% Accurate.

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Six Sigma Quality

Six sigma is a philosophy and set of methods

used to eliminate defects in their products and processes Seeks to reduce variation in the processes that lead to product defects
DPMO # defects 1 000 000 # error opportunities / unit # units

Six Sigma allows managers to readily describe

process performance using a common metric called defects per million opportunities (DPMO):
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What is Sigma and Sigma Level?

Sigma is: The standard deviation for a given distribution of data. Sigma level (Z) is: A statistic used to describe the performance of a process relative to the specification limits The number of standard deviations from the mean to the closest specification limit of the process LSL USL

LSL

USL

LSL
Level

USL

The likelihood of failure decreases as the number of standard deviations that can be fit between the mean and the nearest spec limit increases 55 9/24/2013

Calculating Process Sigma Discrete Data Method First Pass

1. Number of Units processed 2. Number of Defect Opportunities Per Unit 3. Total number of Defects made defects made and later fixed) 4. Solve for Defects Per Opportunity DPO = D NO N = __________ O = __________ D = __________ (include

=
( ( )( ) )

= __________

5. Convert DPO to DPMO

DPMO = DPO 1,000,000 = __________ 1,000,000 = _________

6 Look up Process Sigma in Abridged Process Sigma Conversion Table Sigma(ST) = __________

Worksheet: Alternate Continuous Data Method For Calculating Process Sigma

1. Label the Normal Curve with the following:

X value X+s value USL and shade area to the right LSL and shade area to the left

LSL = 26 1.2

USL = 33

30.2 x 2. Determine Area 1: Find Z1 Z1 = USL x s =

31.4 x+s

33

30.2

1.2

2.3

Look up Z1 in Normal Table

Norm Dist

(Z1) = Normal Table Look Up for Z 1 E+ to left

.989276

Area 1 = 1 Look Up

Area 1 = 1 Norm Dist (Z 1)

=1

( .989276 )

.0107

3. Skip this step if there is no LSL 2. Determine Area 2: Find Z2 Z2 = LSL x s =

26

30.2

1.2

-3.5

Look up Z2 in Normal Table

Norm Dist

(Z2) = Normal Table Look Up for Z 2

.000233

Area 2 = Look Up

Area 2

The Z - table is a 1 sided Z table

.000233

4. Determine Total Area:

Total Area = Area 1 + Area 2 =

.0107

) )

( .000233)

.0109

5. Yield = 1 Total Area

Yield = 1 Total Area = 1 = x 100%

.0109

= =

.9891 98.91

6. Process Sigma comes from table look up of yield

SigmaST = Look Up Value in Sigma Table

3.8

Sigma Business Improvement

An objective of Six SigmaTM is to reduce variation and move product or service outputs permanently inside customer requirements. (Curve A to B)

Critical Customer Requirement B A

Defects: Service unacceptable to customer

Product or Service Output

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Six Sigma Quality

DPMO example:

Suppose we observe 200 letters delivered incorrectly to the wrong addresses in a small city during a single day when a total of 200,000 letters were delivered. What is the DPMO in this situation

DPMO

# defects 1 000 000 # error opportunities / unit # units

So, for every one million letters delivered this citys postal managers, we

can expect to have 1,000 letters incorrectly sent to the wrong address.

200 1 000 000 1 000 1 200 000

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Six Sigma Quality

Six sigmas name

refers to the variation that exists within plus or minus three standard deviations beyond the natural variation in the process outputs

Six Sigma Quality

Define, Measure, Analyze, Improve, and Control (DMAIC) was developed as a means of focusing efforts on quality using a methodological approach o Overall focus is to understand and achieve what the customer wants o A 6-sigma program seeks to reduce the variation in the processes that lead to these defects

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Process Sigma Value

Process Variability Low Sigma Process Customer Specification Customer Specification =Z Process Variability

Process Variability Customer Specification Sigma Value

High Sigma Process

Sigma value: capability of a process to satisfy customer needs

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The Normal Distribution

Sigma is one way of quantifying area under the curve, or probability Sigma is nothing more than a different way to communicate percent probability

68%
95% 99.7% -3s
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-2s

-1s 2 =Probably

1s

2s

3s
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1 = Maybe

3 =Very Likely

Process Capability
This is a 6 Sigma Process
Lower Spec.
Process average is slightly off target (i.e., midpoint between spec limits)

Mean

Point of Inflection equates to one standard deviation (1)

Upper Spec.

Furthest spec limit

or, s

Nearest spec limit

-7 -6 1

-5

-4

-3

-2

or,

1 x

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, but why do we want 6 of them ?

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Motorola Six Sigma Definition

Why 6 Sigmas?

Problem: Motorola tried to sell pagers in Japan, but couldnt meet the consumers quality (99+% good) expectations to be competitive

Pager parts count + No. of manufacturing steps = ~ 3000 Of these 3000 parts and processes, the final market failure rate must be 1% or less. Therefore to yield 99% in the market, the defect rate of a each single part or process must be:

1 0.01 x 3000

x 0.99999665

Defect Rate 1 0.99999665 3.35 ppm 6

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Cost of Quality
WHY is Six Sigma important to any Company? Six Sigma requires us to focus on the customer to achieve world-class levels of business performance. Our customers continually demand higher quality in the products and services that we produce and provide. Six Sigma provides a systematic means to achieve higher quality by reducing defects. This creates many additional benefits, including

Greater customer satisfaction Reduction in the cost of poor quality Improved competitiveness Increased productivity and top-line growth Greater employee pride

Even in a 4 sigma company, the cost of poor quality is estimated to be 10 to 15% of sales revenue - this is unacceptable.

Sigma value has been related to the (COPQ) as a % of sales.

30% COPQ as a Percent of SALES 2 25% 3 20% 15% 4

5 10% 5%
69% 93.3% 99.4% 99.98% % DEFECT-FREE (RTY) 6 99.9997%
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Cost of QualityA Change in Mindset

Internal Failure Scrap Rework Internal and External Failure Old Belief Increased Quality, Higher Cost 4s Appraisal Appraisal Inspection Test Quality Audits Test Equipment

Quality Internal and External Failure New Belief Increased Quality, Reduced Cost 4s Appraisal and Prevention 5s

External Failure Cost to Customer Warranty Cost Complaint Cost Returned Material

Prevention Quality Planning Process Planning Process Control Training

6s

Quality

The Cost of Poor Quality (COPQ) Iceberg

Traditional Quality Costs
Inspection Warranty Scrap Rework Rejects

Administration / Disposition Concessions

(tangible)

Additional Costs of Poor Quality

More Setups Expediting costs Lost sales Late delivery Lost Customer Loyalty Excess inventory Long cycle times Engineering change orders (intangible)

Lost Opportunity Hidden Factory

(Difficult or impossible to measure)

Average COPQ is 15-25% of Budget

The Statistical Objective of Six Sigma

Process Off Target
Target

Excessive Variation
Target

LSL

USL

LSL

USL

Center Process
Target

Reduce Spread

Defects LSL USL

Reduce Variation & Center ProcessCustomers feel the variation more than the mean

Financial Aspects
Benefits of 6s approach

-level Defect rate (ppm) 6 3.4 5 233 4 6210 3 66807 2 308537

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Costs of poor quality Status of the company < 10% of turnover World class 10-15% of turnover 15-20% of turnover Current standard 20-30% of turnover 30-40% of turnover Bankruptcy
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The Law of Complexity

Level Of Complexity
36 36

25

Reducing the number of Steps simplifies the process rapidly

25

16

16 9

9 4 4 1 1

As the number of steps in any process increases, the level of complexity increases dramatically Number Of Steps
2 3 4 5 6 7

The law of complexity says that the level of complexity of any task is equal to the number of different steps in that task.

The Efficiency Curve

The Law of Increasing Return
Time & Effort
100 90 80 70 60

Desired Result

As you improve, you achieve the same level of results in less time.

50
40 30 20 10

Time

As the COPQ is identified, the process improvement also identifies the quantifiable value to the organization
Cost of poor quality is reduced via assignment of Green Belt project teams to improvement projects: Seasoned Green Belts complete one to three projects annually. $35,000 - $200,000 average savings per project. Annual savings delivered per Green Belt $105,000 $600,000. Guidelines for number of Green Belts: all employees.

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Performance Standards

2 3 4 5 6 Process Performance

PPM
308537 66807 6210 233 3.4 Defects Per Million

Yield
69.1% 93.3% 99.38% 99.977% 99.9997% Long Term Yield
Current standard

World Class

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Performance Standards
First Time Yield in multiple stage process Number of Processes 1 10 100 500 1000 2000 2955 3 93.32 50.09 0.1 0 0 0 0 4 99.379 93.96 53.64 4.44 0.2 0 0 5 6

99.9767 99.99966 99.77 99.9966 97.70 99.966 89.02 99.83 79.24 99.66 62.75 99.32 50.27 99.0

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Lean Six Sigma achieves dramatic improvement in business performance through

A precise understanding of customer requirements Aligning core business processes with customer and business requirements Systematically eliminating defects from existing processes, products, services, or factories Designing new processes, products, services, or factories that reliably and consistently meet customer and business requirements Implementing the infrastructure and leadership systems to sustain gains and foster continuous improvement

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Performance and yield increase (as defects and COPQ decrease) exponentially as the sigma value increases.
With performance at 2 sigma: 69.146% of products and/or services meet customer requirements with 308,538 defects per million opportunities. With performance at 4 sigma: 99.379% of products and/or services meet customer requirements but there are still 6,210 defects per million opportunities. With performance at 6 Sigma: 99.99966% As close to flaw-free as a business can get, with just 3.4 failures per million opportunities (e.g., products, services or transactions).

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Managing up the sigma scale what is the impact of improving from 2 to 3?

Example: Order Processing $25/order & 1 million account transfers processed Performance level at 2 = 69.1% good output or 308,537 defects (Cost of the Defects = $7.7 million) Performance level at 3 = 93.7% good output or 66,807 defects (Cost of the Defects = $1.7 million)

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Use of a blend of Lean and Sigma to address its business issues, while aligning with other integration plan initiatives
we need to get cost out fast our defect rate is much too high.

Sigma SPI
business issues Lean Sigma

our cost base is too high

Lean

Our processes are broken & fragmented. 80

We need better customer service at less cost

Lean focuses on removing the waste from existing processes and is a pragmatic way of making the processes fit for purpose. Typically lean solutions can be identified in 2-3 months. It is often the foundation for continuous improvement. Sigma Process Improvement focuses on existing process performance where the root cause of problems isnt known. Typical projects take between 4-6 months

Initial Lean focus to reduce cycle time & remove waste. Later Sigma to reduce variation & improve service quality
Lead times 70 60 50 Days 40 30 20 10 0 Sigma reduces variation lead time (days) mean UCL LCL Lean reduces average lead time better customer service 40% reduction in costs (up to) 60% increase in capacity

Voice of the Customer (Lean) study on Asda claims handling indicated that 43% of inbound customer calls were due process failures.
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Lean Six Sigma focuses on the reduction of variation that generates defects for customers

Market
Suppliers Inputs Business Processes Process Outputs Critical Customer Requirements

Defects

Variation in the Process Output Causes Defects that are seen by the Customer Output Variation is caused by Variation in Process Inputs and by Variation in the Process itself
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Six Sigma What is Variation?

Critical Customer Requirements

New Shifting the Mean Product or Service Output

Defects: Service unacceptable to customer

2 Sigma Quality: 9 5% meets the customer criteria. 3 Sigma Quality: 99.7% meets the customer criteria 6 Sigma Quality: 99.9997% meets the customer criteria

Defect reduction due to variation is achieved by eliminating root causes of variation that
Move the mean performance of the process output and/or

Reduce the amount of variation in the process output

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Lean Six Sigma reduces variation & moves outputs permanently inside customer requirements
One way to achieve the reduction in variation is to move the mean completely within customer requirements as shown by moving Curve A to Curve B.
Critical Customer Requirement

Defects: Service unacceptable to customer

Product or Service Output

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The customers experience is also improved if only the process variation is reduced

B
Variation B Critical Customer Requirement Defect reduction: achieved by reducing variation

A Variation A

Product or Service Output

When process variation is reduced, the organization is meeting customer requirements more consistently.

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As an example, a critical delivery process is measured at 2.5 sigma.

Critical Customer Requirement: 10 days or less

Delivery Process Output Frequency Defects

10

Distribution of delivery times for most recent month in days

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After finishing a DMAIC project, the Six Sigma Team improves deliveries to 6.0 sigma.

Critical Customer Requirement: 10 days or less

Delivery Process Output Frequency Defects

10

Distribution of delivery times for most recent month in days

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Although there was an improvement made to the process, a changing market drives the process back to 1.2 sigma.
New Critical Customer Requirement: 5 days or less

Delivery Process Output Frequency

Defects

10

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Distribution of delivery times for most recent month in days

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How close are you to consistently meeting your customers needs? How consistently should you meet customers needs?
A defect is considered anytime a customer requirement is not met.

Sigma Level

s
2

Defects per Million Opportunities

DPMO
308,537 66,807 6,210 233 3.4

IRS Tax Advice

Airline Baggage Restaurant Bills Doctors Prescription

Requirements are achieved 93.32% of the time.

3 4 5

(Average Company)

Requirements are achieved 99.99966% of the 9/24/2013 time.

Best In Class Companies

Airline Safety
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Two Approaches to CI (Lean and Six Sigma) Share a Common Legacy

SIMPLIFIED AND ILLUSTRATIVE
1990 Lean Manufacturing No Waste Late 1990s Lean Business Systems Reduced Cycle times + No Waste

1950s

Just-in-time production flow

+ Zero Product Defect

Both methodologies choose different paths to achieve similar aims Neither approach is independently sufficient to capture the full opportunity (e.g., waste reduction can not bring a process under statistical control and variability reduction cannot dramatically improve process speed or reduce invested capital) We believe that two sciences can be complementary to each other; the best answers often require both points of view (e.g., Toyota Production System)

Zero Defect

1960s 1980s TQM Deming & Baldridge awards

1987 Six Sigma Production Process Quality Improvement

1996 Six Sigma Corporate Transformation Program

No Variation + Process Perfection

6 Sigma with Lean

Precision + Accuracy

Voice of the Customer Statistical Process Control Design of Experiments Gage R & R FMEA Cause & Effect Analysis

Speed

Value Stream Mapping Bottleneck Removal Pull from Customer Set-up & queue reduction Process Flow Improvement

There are a number of Lean Six Sigma success factors that are necessary to achieve best results

Business Process Framework Customer & Market Network

Establishing these factors provides the seeds for success. The success factors need to be integrated uniquely to fit each business. All of the success factors are necessary for the best results. The most powerful success factor is committed leadership.

Quantifiable Measures & Results

Committed Leadership

Strategy Integration

Incentives & Accountability Full Time Lean Sigma Team Leaders

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DMAIC Overview

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The Lean Six Sigma improvement methodology is referred to by its phases or D M A I C

D M A I C

Define Opportunities

Measure Performance Analyze Opportunity Improve Performance

Focuses on real problems directly related to the bottom-line Realizes results in 4-6 months Utilizes multiple tools and techniques, especially statistics Sustains improvement over the long-term Disseminates improvement throughout the organization Acts as vehicle for change

Control Performance

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DMAIC Improvement Methodology

Define Measure

Control

Analyze

Improve
Although the DMAIC process is sometimes portrayed in a linear fashion, the phases and steps do not actually occur in such lock-step sequence. More frequently, as teams begin to measure they recognize the need to collect additional data, etc. Teams continually double-back in the DMAIC process to insure thoroughness of the previous step.
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DMAIC Roadmap
1.0
Define Opportunitie s

2.0
Measure Performance

3.0
Analyze Opportunity

4.0
Improve Performance

5.0
Control Performance

What is important?

How are we doing?

What is wrong?

What needs to be done?

How do we guarantee & sustain performance?

Deliverables

Team Charter Action Plan Process Maps Quick Win Opportunities Critical Customer Requirements Prepared Team

Input, Process and

Output Indicators

Operational
Definitions

Data Collection
Formats and Plans Baseline Six Sigma Performance Productive Team Atmosphere

Data Analysis Solutions Process Maps Process Maps and Documentation Potential Root Causes Validate Root Causes Implementation Milestones Problem Statement Improvement Impacts and Benefits Storyboard Change Maps

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Process Control Systems Standards and Procedures Training Team Evaluation Change Implementation Plans Potential Problem Analysis Pilot and Solution Results Success Stories Trained Associates Replication Opportunities 97 Standardization Opportunities

1.0 Define Opportunities

1.0
Define Opportunities
2.0 Measure Performance 3.0 Analyze Opportunity 4.0 Improve Performance 5.0 Control Performance

Objective
To identify and/or validate the improvement opportunity, develop the business processes, define critical customer requirements, and prepare themselves to be an effective project team.

Main Activities

Potential Tools and Techniques

Key Deliverables

Validate/Identify
Business Opportunity Validate/Develop Team Charter Identify and Map Processes Identify Quick Win and Refine Process Translate VOC into CCRs Develop Team Guidelines & Ground Rules

Team Charter Action Plan Process Maps Quick Win Opportunities Critical Customer Requirements Prepared Team

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Define Phase
WHAT is the Define phase?

The Define phase is the first phase of DMAIC methodology. It phase identifies the product and/or process to be improved and ensures that resources are in place for the improvement project.
WHY is the Define phase important? The Define phase sets the expectations of the improvement project and maintains the focus of Six Sigma strategy on the customer's requirements. WHAT are the outputs of the Define phase? The outputs of the Define phase are

The top few critical to quality (project CTQs) customer requirements for a product or process balanced against strategic business requirements A team charter that describes the purpose and goals of the Six Sigma project A high-level process map that graphically displays the major events occurring in the process

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DMAIC Step 1 - Define

We are the maker of this cereal. Consumer reports has just

published an article that shows that we frequently have less than 15 ounces of cereal in a box but we print on the box that there are 16 ounces. What should we do?
What is the critical-to-quality (CTQ) characteristic?

The CTQ characteristic in this case is the weight of the cereal in the box.

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2.0 Measure Performance

1.0 Define Opportunities

2.0

Measure Performance

3.0 Analyze Opportunity

4.0 Improve Performance

5.0 Control Performance

Objective
To identify critical measures that are necessary to evaluate the success meeting critical customer requirements and begin developing a methodology to effectively collect data to measure process performance. To understand the elements of the Lean Six Sigma calculation and establish baseline sigma for the processes the team is analyzing.

Main Activities
Identify Input, Process
and Output Indicators Develop Operational Definition & Measurement Plan Plot and Analyze Data Determine if Special Cause Exists Determine Sigma Performance Collect Other Baseline Performance Data

Potential Tools and Techniques

Key Deliverables
Input, Process and
Output Indicators Definitions

Operational Data Collection

Formats and Plans
Sigma Performance Atmosphere

Baseline Lean Six Productive Team

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Measure Phase
WHAT is the Measure phase? The Measure phase is the second phase of DMAIC methodology. The Measure phase defines the defect(s), gathers baseline information about the product or process, and establishes improvement goals. WHY is the Measure phase important? The Measure phase allows you to understand the present condition of the process before you attempt to identify improvements. Because the Measure phase is based upon valid data, it eliminates guesswork about how well your process is working. WHAT are the outputs of the Measure phase?
The outputs of the Measure phase are:

Clearly defined process output measures (the Ys) Valid data on the process outputs (the Ys) and the variables impacting the process (the Xs) An accurate assessment of current process performance Goals for improvement 102

DMAIC Step 2 - Measure

How would we measure to evaluate the extent of the problem? What are acceptable limits on this measure? Lets assume that the government says that we must be within 5 percent of the weight advertised on the box: Upper Tolerance Limit = 16 + .05(16) = 16.8 ounces Lower Tolerance Limit = 16 .05(16) = 15.2 ounces We test 1,000 boxes of our cereal and find that they weight an average of 15.875 ounces with a standard deviation of .529 ounces. What percentage of boxes are outside the tolerance limits?

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DMAIC Step 2 Measure (2)

upper tolerance

lower tolerance

XX

15.2 15.875 1.276 0.529

15.2

15.875 = 0.529

16.8

What percentage of boxes are defective (i.e., less than 15.2 oz)?

From Appendix E: P( Z -1.276) = .100978

Approximately 10 percent of the boxes have less than 15.2 ounces of cereal.

3.0 Analyze Opportunity

1.0 Define Opportunities 2.0 Measure Performance

3.0
Analyze Opportunity

4.0 Improve Performance

5.0 Control Performance

Objective
To stratify and analyze the opportunity to identify a specific problem and define an easily understood problem statement. To identify and validate the root causes that assure the elimination of real root causes and thus the problem the team is focused on.

Main Activities

Potential Tools and Techniques

Key Deliverables

Stratify Process Stratify Data &

Identify Specific Problem Develop Problem Statement Identify Root Causes Design Root Cause Verification Analysis Validate Root Causes Enhance Team Creativity & Prevent Group-Think

Data Analysis Process Maps Potential Root

Causes Validated Root Causes Problem Statement

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Analyze Phase
WHAT is the Analyze phase?

The Analyze phase is the third phase of DMAIC methodology. The Analyze phase examines the data collected in the Measure phase in order to generate a prioritized list of the sources of variation (the Xs).
WHY is the Analyze phase important? The Analyze phase focuses improvement efforts by separating the potential vital few variables (those most likely responsible for the variation) from the trivial many (those least likely responsible for variation). WHAT are the outputs of the Analyze phase? The outputs of the Analyze phase are

A prioritized list of potential sources of variation A refined estimate of the financial benefits that may be realized by improving the process
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DMAIC Step 3 - Analyze

How can we improve the capability of our

cereal box filling process? Decrease Variation Center Process Increase Specifications

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4.0 Improve Performance

1.0 Define Opportunities 2.0 Measure Performance 3.0 Analyze Opportunity

4.0 Improve Performance

5.0 Control Performance

Objective
To identify, evaluate, and select the right improvement solutions. To develop a change management approach to assist the organization in adapting to the changes introduced through solution implementation.

Main Activities

Potential Tools and Techniques

Key Deliverables

Generate Solution

Ideas Determine Solution Impacts: Benefits Evaluate and Select Solutions Develop Process Maps & High Level Plan Develop and Present Storyboard Communicate Solutions to all Stakeholders

Solutions Process Maps and

Documentation Implementation Milestones Improvement Impacts and Benefits Storyboard Change Maps

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Improve Phase
WHAT is the Improve phase?

The Improve phase is the fourth phase of DMAIC methodology. The Improve phase confirms that the proposed solution will meet or exceed the quality improvement goals of the project.
WHY is the Improve phase important? In the Improve phase you test your solution on a small scale in a real business environment. This ensures you have fixed the causes of variation and your solution will work when fully implemented. WHAT are the outputs of the Improve phase?

The outputs of the Improve phase are:

The proposed solution The piloted solution

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DMAIC Step 4 - Improve

Identify ways to removes causes of defects Confirm key variables and quantify their effects on critical-toquality (CTQ) characteristics Identify maximum acceptance ranges for key variables Identify a system for measuring deviations in variables Modify the process to keep key variables within acceptable ranges

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5.0 Control Performance

1.0 Define Opportunities 2.0 Measure Performance 3.0 Analyze Opportunity 4.0 Improve Performance

5.0 Control Performance

Key Deliverables

Objective
To understand the importance of planning and executing against the plan and determine the approach to be taken to assure achievement of the targeted results. To understand how to disseminate lessons learned, identify replication and standardization opportunities/ processes, and develop related plans.

Main Activities

Potential Tools and Techniques

Develop Pilot Plan &

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Pilot Solution Verify Reduction in Root Cause Sigma Improvement Resulted from Solution Identify if Additional Solutions are Necessary to Achieve Goal Identify and Develop Replication & Standardization Opportunities Integrate and Manage Solutions in Daily Work Processes Integrate Lessons Learned Identify Teams Next Steps & Plans for Remaining Opportunities

Process Control

Systems Standards and Procedures Training Team Evaluation Change Implementation Plans Potential Problem Analysis Pilot and Solution Results Success Stories Trained Associates Replication Opportunities Standardization Opportunities
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Control Phase
WHAT is the Control phase?

The Control phase is the fifth phase of DMAIC methodology. The Control phase implements the solution, ensures that the solution is sustained, and shares the lessons learned in any improvement project.
WHY is the Control phase important? The Control phase ensures that the improvements to the process, once implemented, will be sustained, and that the process will not revert to its prior state. In addition, the Control phase allows for information to be shared that will help accelerate similar improvements in other areas. WHAT are the outputs of the Control phase? The outputs of the Control phase are

Sustained process Project documentation Translation opportunities

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DMAIC Step 5 - Control

Statistical process control (SPC)
o o o

Use data from the actual process Estimate distributions Look at capability is good quality possible? Statistically monitor the process over time

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