Anda di halaman 1dari 452

Six Sigma Black Belt Program

Define & Measure phase

1
General Introduction

 Objectives of Black Belt Training

 Why 6 Sigma in our organization?

 Benefits of 6 Sigma

2
Objectives of Black Belt training

• To develop professionals in quantitative analytical skills, project


management, group dynamics, team building and change
management to address the organizational challenges.

• To build quality in to the systems to meet and exceed customer


requirements.

3
Why 6 Sigma in our organization?

• Overall strategy is to:


Accelerate improvements in all processes and services by:
- Identifying customer needs
- Crafting a value proposition
- Designing business models

• Reduce cost of poor quality by eliminating waste, reducing defects and


variations

• To delight the Customers / Clients

• To Grow revenues, Sustain Margins, Improve revenue productivity, Grow


human capital

4
Benefits of 6 Sigma

When the principles and methodologies of Six Sigma are properly applied in
a business process, they return positive top line & bottom-line results.

Some of the 6 Sigma Benefits are


* Improved overall customer satisfaction
* Increased productivity and added value
* Improved capacity and output
* Reduced total defects and cycle time
* Increased product and service reliability
* Improved process flow
* Improved ROI

5
Introduction to Quality

 Fundamental Principles

 Quality Concepts

6
Aim So High…
You’ll Never Be Bored…
The greatest waste of our natural resources
is the number of people who never achieve
their potential.
Get out of that slow lane. Shift into that fast
lane
Knowledge Skills
If you think you can’t, you won’t. If you
think you can there’s a good chance you
will.
Even making the effort will make you feel Attitude
Habit
like a new person.
Reputations are made by searching for
things that can’t be done and doing them.

7
Moving up the competency ladder
Unconsciously
Competent

1. Unconsciously Incompetent
2. Consciously Incompetent Consciously
Competent

3. Consciously Competent
4. Unconsciously Competent Consciously
Incompetent

4
Unconsciously
Incompetent

8
Quality Concepts

Quality
Simply stated, quality comes from meeting customer expectations. This
occurs as a result of four activities:

• Understanding customer requirements

• Designing products and services that satisfy those requirements

• Developing processes that are capable of producing those goods


and services

• Controlling and managing those processes so they consistently


deliver to their capabilities.

9
Importance of Quality

Classical Business Model Six Sigma Approach


PROFIT = PRICE - COST Better Quality Means:
Less Defects
Classical Quality Belief
Less Reworks
Better Quality Means:
Less Buffer
Modern Technology
Low Cycle Time
Modern Machinery
High Skilled Resources

In short In short
BETTER QUALITY = HIGH COST BETTER QUALITY = LOW COST

10
Quality’s contribution to Profitability

Quality Customer Market


•Better products and
services
•Improved processes
Satisfaction Share
Compete with value

Price
External
Product Quality
•Reduced Scrap Productivity
•Improved customer
Response time
•Decreased
•Cycle time Internal Profit
•Elimination of setup time

Process Quality
•Reduced Rework
•Elimination of in Cost
process Opportunity for
•inspection profit

Organization
11
Typical Waste….
Wastes of Manufacturing Process Wastes of Service Industry

• Defects
• Defects
--- rework
• Waiting
• Unsatisfied Customer
• Processing
---Customer not satisfied, wrong input
• Over production • Under-utilization of Resources
• Motion --- Poor usage of infrastructure , manpower
• Inventory • Over- Processing
• Transportation --- Over-support to customer ,unwanted information
• Redundant Process steps
• Under-utilization
--- Wrong processes / methods
• Safety hazards

Wastes Kill ….. Business and Profits

12
Cost of Poor Quality
Inspection
Traditional Quality Costs
Warranty
(Easily Identified)
Rejects 4~ 6% of Sales
Rework
(tangible)
(tangible)
Scrap

Lost sales

Additional Costs of Poor Quality Long cycle time


(Difficult or impossible to measure)
25~35% of Sales Late delivery
(intangible)
(intangible) Lost Customer Loyalty
Lost Opportunity
Lost Opportunity Excess inventory

Expediting costs

13
Cost of Poor Quality (COPQ)?

Costs incurred due to product or


process quality not meeting the
customer requirement all the time.

Costs that would not exist if there were


no defects.

14
Cost of Quality Categories
Internal Failure Costs
- costs that would disappear if no defects existed in the product
prior to shipment to the customer.

External Failure Costs


- costs that would disappear if no defects were shipped to the customer.

Appraisal Costs
- costs incurred to discover the condition of the product (during “first
pass through”).

Prevention Costs
- costs incurred to keep failure and appraisal costs to a minimum.

15
Internal Failure Costs
Before shipment to customer

Examples
• Scrap (labor and material)
• Rework
• Retest / Recheck/ Re-inspection / Re-testing
• Productivity loss due to defects
• Excess inventories
• Failure analysis
• 100% sorting inspection

16
External Failure Costs
After shipment to customer

Examples
• Lost business
• Warranty
• Dealing with complaints
• Returned product
• Price concessions due to lower
grade product

17
Appraisal Costs

Examples

• Maintaining test equipment


• Quality audits / Transaction Monitoring
• Materials consumed through destructive testing

• Incoming, In process & Final inspection & testing

• Quality system audits

• Inspection & testing of materials & services

18
Prevention Costs

Examples
• Maintaining production/operations equipment
• Process Control & Capability evaluation
• Process improvement:
-Error proofing
-FMEA
-DOE
• Training

19
Evolution of Quality

1980s: Six Sigma

1960s: Japanese Quality Movements

1940s: Statistical Process Control

1920s: Invention of Control Charts by Walter A. Shewhart, Bell Labs

Each Phase Built on the Structure and Gains From the Previous Phases
20
DEMING’S Philosophy

21
Deming’s 14 points for Quality Management
(Principles of transformation)
1. Create constancy of purpose for continual improvement of product and
service. : Replace short-term reaction with long-term planning.

2. Adopt the new philosophy for economic stability.

3. Cease dependency on inspection to achieve quality. : If variation is


reduced, there is no need to inspect manufactured items for defects,
because there won't be any.

4. End the practice of awarding business on price tag alone.

5. Improve constantly and forever the system of production and service. :


Constantly strive to reduce variation.

6. Institute training on the job. : If people are inadequately trained, they will
not all work the same way, and this will introduce variation.

22
Deming’s 14 points for Quality Management
7. Adopt and institute modern methods of supervision and leadership.

8. Drive out fear.


Deming saw management by fear as counter- productive in the long term,
because it prevents workers from acting in the organization's best interests.

9. Break down barriers between departments and individuals. : The concept


of the 'internal customer', that each department serves not the
management, but the other departments that use its outputs.

10. Eliminate the use of slogans & posters : Another central


TQM idea “it's not people who make most mistakes - it's the process
they are working within. Harassing the workforce without improving the
processes they use is counter-productive”

23
Deming’s 14 points for Quality Management

11. Eliminate numerical quotas. : Deming saw production targets as


encouraging the delivery of poor-quality goods.

12. Remove barriers that rob the hourly worker of the right to pride in
workmanship. : Many of the other problems outlined reduce worker
satisfaction.

13. Institute a vigorous program of education and retraining.

14. Define top management’s permanent commitment to ever-improving


quality and productivity.

24
Introduction to Six Sigma

25
Introduction to 6 Sigma

 Six Sigma History

 Success Stories

 Definitions and Drivers

 6 Sigma : What Makes It Different?

 6 Sigma : Meaning

 6 Sigma : Benefits

 6 Sigma : The Organization

26
Six Sigma History

In 1979 during a executive meeting, Motorola engineers stated “The real


problem at Motorola is that our Quality stinks”

They had data confirming 10 - 20% of annual revenues was spent on


correcting poor Quality, costing the company 800 - 900 million US $ PA

To get rid of this problem Motorola came up with Six Sigma


Breakthrough strategy.

27
Motorola And the Results?

1997
5.6σ ~ 16Billion
Products Manufactured

1986
4.2σ In 1988 Bob Galvin (CEO Motorola) while accepting
first “Malcom Baldrige National Quality Award ” for
Motorola, described about something called as Six
Sigma.

28
Six Sigma History

Since then, hundreds of companies around the world have adopted Six Sigma
as a way of doing business.

Six Sigma is a Structured, Project based approach to achieve


BREAKTHROUGH results, leading to sustainable and significant
FINANCIAL impact on our organization through intensive application of
statistical tools and techniques by our people.

29
Success stories - General Electric
General Electric’s, Jack Welch describes Six
Sigma as the most important initiative GE has ever
undertaken. GE had an operative income of 10%
for decades and they were not able to improve this
despite various efforts. After implementation of Six
Sigma GE was able to improve its operative
income from 10% in 1995 to 16.7% in 1998.

As Jack Welch explains it:


The best Six Sigma projects begin not inside the business but outside
it, focused on answering the question—how can we make the
customer more competitive? What is critical to the customer’s
success? . . . One thing we have discovered with certainty is that
anything we do that makes the customer more successful inevitably
results in a financial return for us.

30
Asea Brown Boveri

ABB, after application of Six Sigma has reduced


measurement equipment error by 83%. The company
also made drastic improvements in material handling
resulting in an annual estimated cost savings of US
$775000.

31
Allied Signal

Allied Signal, which was on the verge of


bankruptcy was made profitable by CEO Larry
Bossidy through Six Sigma. The company
implemented Six Sigma program in 1994. The
cumulative impact on the savings in the direct
costs during this period was more than US$ 2
billion.

Allied’s leaders view Six Sigma as “more than just numbers—it’s a


statement of our determination to pursue a standard of excellence
using every tool at our disposal and never hesitating to reinvent the
way we do things.”

32
A Six Sigma Journey • • 1987 to 2006

Over the past few decades six sigma has evolved from a
focus on defects to cost reduction to value creation.

33
Companies Implemented 6 Sigma
-Worldwide
Black and Decker
Dupont Kodak

Sony Microsoft

GE Allied Signal

Motorola
Corporation Toshiba
Johnson Controls
Ford Caterpillar

Federal Express Asea Brown Boveri


IBM
Johnson and
Johnson Texas Instruments
American Express
Citibank

34
Definition & Drivers
6 Sigma
• A comprehensive and flexible system for achieving, sustaining
and maximizing business success

6 Sigma Drivers
• Close understanding of customer needs
• Disciplined use of facts, data, and statistical analysis
• Diligent attention to managing, improving, and reinventing
business processes

Six Sigma - A concept for Quality improvement

The Goal of Six Sigma is not to achieve six sigma levels of quality. It is about
improving profitability, though improved quality and efficiency are the immediate
by-products of Six Sigma.

35
Definition of Quality as per Six Sigma

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


consumer and the provider in every aspect of business relationship.

• Entitlement for companies means that they have rightful expectation


to produce quality products at the highest possible profits.

• Entitlement for customer means they have a rightful level of


expectations to high-quality goods at the lowest possible cost.

36
6 Sigma : What Makes It Different?
• Six Sigma metric provides a standard for communicating process status and
improvement goals.

• Project selection tied to organizational strategy / balanced scorecard


 Customer focused / proactive vs. customer driven / reactive.

• Project outcomes / benefits tied to financial reporting system.

• Recognition and reward system established to provide motivation.

• Executives and upper management drive the effort through:


– Understanding Six Sigma.
– Significant financial commitments.
– Actively selecting projects tied to strategy.
– Setting up formal review process.
– Selecting Champions.
– Determining strategic measures.

37
Six Sigma v/s TQM and ISO
ISO TQM Six Sigma
Focus on Money

Leadership & Top-Down Support

Continuous Improvement

Deployment Strategy & Guidelines

Measurement Criteria of Quality Goals

Performance Targets

Application of Statistical Tools

Quality Career Path

Extension to Cost, Cycle Time &


Other Business Issues

Integration of Business Goals with Quality

Functional Focus

Project Approach
38
6 Sigma: Meaning
• Reduce Variation to the half of Tolerance Band
• Minimize defects to the level of 3.4 defects per million opportunities

6σ Definition

σ It is a Greek term which LSL USL LSL USL


designates the spread
or distribution about the
Defect ! Defect !
mean of any process.
Precise But not Accurate: Not Accurate Not Precise
Process is off target : High variation in the process

6 It is a metric that
indicates how well the
monitored business Six sigma tool tries to LSL USL
reduce variation in the
process performs.
process and shifts
Higher the no., better process mean
the process. towards the target

39
Example 1

Time taken to process order - Advisor A


USL
45
44
43 Process mean is 40
Time in Minutes

42
41 40
40
39
38
37
36 LSL
35
1 2 3 4 5 6 7 8 9 10
Order no.

40
Time taken to procees order - Advisor B
USL
45
44
43 Process mean is 40
Time in Minutes

42
41 40
40
39
38
37
36 LSL
35
1 2 3 4 5 6 7 8 9 10
Order no

41
Time taken to process order - Advisor A & B

USL
45
44
43
Time in Minutes

42
41
40
40 B
39
38
37
36 A
LSL
35
1 2 3 4 5 6 7 8 9 10
Order no

Which Advisor will you prefer ?


42
The Goal
6 Sigma Goal
To
Optimized processes
that produce defect
From Quantum Leap free products and services
Fixing products
and services
to become acceptable
Before After
30

20
Influence of 6 Sigma
10

0
0 10 20 30 40 50
Process before and after Six Sigma
43
A Six Sigma Landing .

Target USL

LSL

Six Sigma is about on target performance


with reduced variability around the target

44
Consider 10,00,000 (1
Million) planes take off
Understanding per year. The plane
Sigma Level crash results…at each
Sigma Level will be as
follows

2 sigma – 3,08,537 Planes per


year

3 sigma – 66,807 Planes per

year

4 sigma – 6,210 planes per

year
45
Sigma Level and Quality

Sigma Level Defects Per Million % Defects


Opportunities
1 691,462 69 %

2 308,507 31 %

3 66,807 7%

4 6,210 0.6 %

5 233 0.02%

6 3.4 0.00034%

46
Six Sigma Process
Predictably twice as good as what the customer wants

−6σ + 6σ USL
LSL

1σ 1σ 1σ 1σ 1σ 1σ

1 2 3 4 5 6 7 8 9 10 11 12
47
Sigma –

A measure of variation from “target”.

LSL USL

1 Std. Dev. / 1 Sigma

One standard deviation around the mean is about 31% of the total
“opportunities” included with in specification limit.

48
If we can fit six standard deviations on both side of the mean
in between our target and the specification limits . . .

LSL USL

6 5 4 3 2 1 1 2 3 4 5 6
6 Std. Dev. / 6 Sigma
….. then
99.99966% of our “opportunities” are included!
49
6 Sigma : Benefits
• Cost reduction

• Generates sustained success • Productivity improvement

• Sets a performance goal for • Market-share growth


everyone
• Customer retention
• Enhances value to customers
• Cycle-time reduction
• Accelerates the rate of
improvement • Defect reduction

• Promotes learning • Culture change

• Executes strategic change • Product/service development

• And many more.


50
6σ Methodology

Y = f(X)
Focus of the 6σ
Approach of
Which one should we focus on the Y or X? Problem solving

Y X1,.…,Xn
■ Dependent Function ■ Independent Variable
■ Output ■ Input
■ Effect ■ Cause
■ Symptom ■ Problem
■ Monitor ■ Control object

6σ Application assures that problem is solved by focusing on the factors


that cause the problem.
51
Lets Avoid This Situation !

If we don’t know the relationship between the


Output (Y) and the Inputs (X’s) all we can do is to
monitor and sort the good from the bad Y’s.
And Pray Hard that Y will turn out good !

Or

Implement Six Sigma ...


It discovers relationships between Y & Xs

52
Y = f (X)

Everything has a cause. Cause influences the effect

Focus on the cause (x) to change the response

53
Pr = f (V)

Problem is any deviation from the defined standards


of a distinguishing feature.

Focus on source of variation to eliminate the problem

54
V=E-O

Variation is the gap; A deviation from the expectation

Measure the variation.


We can’t improve what is not measured.

55
Continual Improvement

Continual
Performa Improvement
nce 6σ / ISO /
act plan COPC
act do / e-SCM
check do Performance
check do Management
System

Assura
nce

Time

56
Six Sigma
Organization, Roles and
Responsibilities

57
Six Sigma Organization
Six Sigma focuses on reducing the variation in every
process , makes intensive use of the statistical tools,
enables decisions based on facts & data rather than gut
feelings and puts customer in first place .
Every improvement we are doing in house must be
ultimately linked with the customer satisfaction whether it
is internal or external . There must be strong and clear
linkages between the internal processes, which ensures
the end customer satisfaction .
To transform our organization into Six Sigma
organization , we must ensure that six sigma is used as a
philosophy / strategy and not a tool .
In an essence , It's a new way of managing the
6 Sigma : The Organization

Leadership
Commitment at
Executive
Level
Governance
Review,Enable,Monitor,Institutionalise
e.g. Quality leaders, Master Black Belts etc.

Implementation
Scope, Apply Six Sigma Tools And Enhance Business
Processes
e.g. Project sponsors, BU Managers, BB, GB, YB – who
apply Six Sigma on-the-job

59
Ispat Industries Ltd. Six Sigma Deployment Process
Six Sigma Deployment Model
Creat a
Champion / Top

core six
Management
Deployment

Link Six Develop Establish


Creat Determine sigma Extend the
Sigma to Allocate incentive accountibilit
Customer strategic leadership initiative in
overall appropriate plan & y in annual
Feed back goals and team with other group
business resources reward performanc
process objectives defined companies
strategy system e reviews
responsibilit
ies
MBB / Six Sigma

Evaluate Design a
Define a
Design Define a Establish cultural common Compile the
core team

Design and project


Creat an training project project obstacles & database of lessons
implement validation &
overall Material & selection review & raise red closed learned &
six sigma project
training plan Periodic process & project trac alerts to projects & share best
deployment closeout
updates criteria mechanism manageme key practices .
process .
nt learnings
Project Champion /

Identify Appreciate
Review the Ensure
BU Managers

appropriate and
Identify Ensure team controls are
project recognize
opportunities resource progress, in place and
leaders & good
for availability remove project
arrive at efforrts.
breakthrough for project barriers and gains are
cross Motivate
improvement execution resolve sustained
functional project
issues forever .
team team
Belt / Project Team
Black Belt / Green

DEFINE CONTROL
MEASURE ANALYZE IMPROVE
the project. the KPIV's
the the negative peroformance
Pboblem to sustain
response effect. ( Y's) by
statement, improved Y.
variable Y. Identify root implementing
Objective, Control
Baseline, causes(X's) the counter
Scope, plan,
Target, & verify solutions for
Team, Control
MSA statisticaly X's
Timeline chart etc..
60
Organization / Infrastructure
Sponsor Senior executive who sponsors the overall Six Sigma Initiative and who is
responsible for implementing Six Sigma within the business. Select meaningful
business impact projects. Responsible for achieving Six Sigma project results.
Identify, prioritize, select & scope projects. Review, track, and report Six Sigma
project progress and results. Eliminate project barriers, assure proper project
resources. Reward, recognize Six Sigma project team
Achievements.

Master Black Mentor black belts on their projects. Ensures effective application of DMAIC.
Belt Coach on appropriate, effective use of Six Sigma Tools & effective project
management to achieve on-time results. Helps sponsor in improvement
opportunity identification. Apply Six Sigma skills and expertise to their own
Projects. Train BBs, Sponsors and Managers in Six Sigma.

Black Belt Highly experienced person with four weeks of classroom training, has
managed several projects and is an expert in Six Sigma methods / tools.
Organize, plan and lead Six Sigma projects. Escalates project barriers to
sponsors. Project tracking, reporting. Apply Six Sigma skills and expertise to
project execution. Responsible for coaching / mentoring / training Green and
Yellow Belts, team members and for helping the Sponsor keep the initiative
on track

61
Organization / Infrastructure
Project leader Understand DMAIC Process and Sustain Improvements. Provide domain /
Process expertise. Accountable for timely completion of projects. Support
improvements. Identifies project team and ensures their availability.

Green Belt Professional who leads small scope Six Sigma projects. Typically has
one week of classroom training in methods, statistical tools, and (sometimes)
team skills, participates in Black Belt project team or leads smaller projects.

Yellow Belt Typically has two days of classroom training in methods and basic statistical
tools, participates on a Green Belt project team or leads smaller improvement
projects.

Team Member Professional who has general awareness of Six Sigma. (through no formal
training) and who brings relevant experience or expertise to a particular project.
Apply Six Sigma tools with help of Black / Green / Yellow Belts Contribute ideas
during meetings and carry out action items. Collect and analyze data
Lead small activities such as process capability studies, measurement system
studies, verifying causes and solutions. Implement and sustain solutions.

62
Six sigma Roles
Black Belt Green Belt Team Members
• Organize, plan & lead Six Sigma • Participates in Black Belt • Bring expertise to projects
projects project team. • Contribute ideas during meetings
• Project barrier escalation to • Leads smaller projects and carry out action items
sponsors • Collect and analyze data
• Project tracking & reporting • Lead small activities
coaching / mentoring / training
Yellow Belt • Implement & sustain
• Leads smaller improvement
Green & Yellow Belts, team solutions
projects
members

Master Black Belt Sponsor Project Leader


- Mentor black belts on their - Sponsors the overall Six - Understand DMAIC Process
projects Sigma initiative
and Sustain improvements
- Ensures effective application - Select meaningful business
impact projects - Accountable for timely
of DMAIC
- Helps sponsor in improvement completion of projects
- Eliminate project barriers, assure
opportunity identification proper project resources. - Provide domain / Process
expertise
- Apply Six Sigma skills & - Reward, recognize Sigma
expertise to their own projects project team achievements - Support improvements.
Identifies project team and
- Train BBs, Sponsors & ensures their availability 63
Champion or Sponsor
Requirements Responsibilities
• Representative of Top At Start:
Management * Identify the Goals of the Project
* Select the Project Leader or Black Belt
• Has Authority over the
* Ensure the Project Scope is under his control
scope of project
* Identify Milestones
• Statistical Knowledge * Prepare Project Schedule
is preferable
On Going:
• Experience in carrying • Provide Resources
out Quality • Conduct Periodic Review & add value
improvement Projects • Ensure the Project is on Right Track
is preferable • Control Budget
At End:
• Handle Implementation Issues
• Quantify the Project Results
• Verify whether the Goals are achieved
• Prepare Future Action Plan, if required
• Conclude Project
64
Master Black Belt
Requirements Responsibilities
• Sound knowledge At Start:
of Statistical Tools • Create Six Sigma awareness among top
are required management
• Provide guidance & training for gathering Voice of
• Good
Customer’s & Stakeholders
Communication &
• Help to identify projects
Teaching Skills are
• Provide guidance to prepare Project Charter
essential
• Should be a Good • On Going:
Consultant • Provide training on various Statistical Tools useful at
different phases of the project life cycle
• Give Statistical Consultancy at different phases of
the project life cycle

65
Black Belt
Requirements Responsibilities
• Statistical Knowledge At Start:
essential • Select Team Members
• Prepare Project Charter
• Experience in Data Collection, • Identify Ys
Analysis & Interpretation
required On Going:
• Should posses Leadership • Analyze Ys & compute Baseline Sigma Value
Qualities • Identify Xs
• Establish relationships between Ys & Xs
• Should posses Good • Optimize Xs
Communication Skills • Devise Control Mechanism to ensure that Xs
are at optimum always.

At End:
• Be equivalent to Master Black Belt.
• Conducts programs on Statistical tools
• Facilitates Business Unit Head for project
selection
66
Green Belts \ Team Members
Responsibilities
On Going:
Collect data on Ys
Help BB to analyze Ys data.
Be part of identifying Xs
Collect data on Xs
Help BB to establish relationship between Xs &Ys
Help BB to optimize & control Xs
Help design the new process
Drive the project to completion

At End:
* Green Belt will be equivalent to Black Belt

67
Team Members

• Guidelines for team members


– Manageable team size up to 5 people
– People who are part of the process
– People who are benefited by removal of pain area
– People who have domain knowledge
– People from same location
– Guest members as required

68
Project Teams

G
Champion

Black Belt

B
Green Belt

G G
Team Members

69
Team Dynamics
Accountability
Skills

Performance
Problem Solving Mutual Accountability

Results
Technical/ Small group of people
Functional
Individual Accountability
Interpersonal
C
dge t Wo ollec
wle en rk t
Pro ive
no cem du
K an ct
h
En
Specific Goals

Common Approach

Meaningful Purpose

Commitment

70
Deployment Strategy

 Elements of 6 Sigma Deployment

 Role Matrix

 Training

 Certification Criteria

 Project Classification

 Project Benefits Evaluation

71
Elements of 6 Sigma Deployment
1.Project Identification - Six Sigma is being
To contribute to the bottom-line implemented in the
of the organization, client
satisfaction, etc organization as a catalyst
2. Project for change in culture and
6. Fostering Quality Classification
Culture
achieve competitive
•Branding •Black Belt Project advantage.
• Yearly Awards •Green Belt Project
•dedicated facilities •Yellow Belt Projects
and staff Top DMAIC methodology is
Management being used to develop and
5. Project Benefits
Evaluation
Commitment 3.Enhanced Training
fine tune both core and
and certification
Project Benefits (QNI) = enabling processes.
Project Savings – •Awareness Program
Project Expenditure •Yellow Belt Training
4. Review •Green Belt Training
Six Sigma Deployment plan
•Black Belt Training
Mechanisms
is properly documented as
•Program Reviews
•Project Reviews
PACE guidelines.

“commitment for Six Sigma” and “Champions/ Sponsors”


are the most powerful success factors
72
Team Structure - Role Matrix
Role Description Quality Team Operations / HR Team SS Executive
Support Team Committee (EC)

Training Curriculum preparation and implementing √


improvements as per recommendations

Preparing the Training Calendar √


Identifying the Trainers √
Certifying the Trainers √
Defining the Selection Criteria and improving the √
same on an ongoing basis
Identifying the Trainees √ √
Selection of Projects based on ongoing experience √ √
and Business Goals
Sponsor for the Project √ √

Project Management / Coordination √ √

Project Execution Respective BB / GB / YB

Project Certification √

Review of training material


√ √

73
Types of Training
 Awareness Program – The program will be of a 4 Hrs duration.
This is engagement specific and will be conducted internally by the
dedicated certified trainer.

 Yellow Belt Training – Two continuous days as stipulated in the


program calendar

 Green Belt Training – Five Days program spread over 3 months


(2days + 2days + 1day) as stipulated in the program calendar

 Black Belt Training – 20 Days program spread over 4 months, 5


continuous days every month as stipulated in the program
calendar.

For YB/GB/BB trainings all trainees are expected to be fully available


during the training period
74
Certification Criteria
 All trainees would need to attend a 2 day YB session/ 5 day GB session
/ 20 days BB session & pass the respective certification examination.

 Qualifying mark would be 70% for YB, 75% for GB & 80% for BB

 Project Certification will be granted to the BB, GB and YB identified


and dedicated for the particular project

 Certification will be done internally by the Certification Board. The


criteria for certification will be
 Complete training
 Pass the examination
 Meet any of the options as mentioned in the next page.

75
Certification Criteria OPTIONS
1 2 3 4 5

Black Belt
Certification

Green Belt
Certification

Black Belt Project Leader

Green Belt Project Leader


Yellow Belt Yellow Belt Project Leader
Certification
Yellow Belt/ Green Belt/
Black Belt Project Member

76
Project Classification Green Belt Black Belt

IMPACT
Yellow Belt X

Complexity

Black Belt Projects


• Projects that have cross functional scope and are of high impact and
complexity with respect to NET revenue earnings / NET savings. (Expected
savings $ 50,000/ annum min).
• Should complete within 4 to 6 months
• Base line, target and savings should be validated by Financial
Green Belt Projects
representative
• GB projects are less complex than BB projects. (Expected savings $10,000-$
50,000/ annum)
• Should complete within 2 to 4 months
• Base line, target and savings should be validated by Financial
representative
Yellow Belt Projects
• YB projects are Cell wise projects, where cross functional team is not
required and very limited statistical knowledge required to carry out the
project
• This projects are taken as value addition to GB projects. YB projects by
themselves do not generate / save revenue. 77
Project Benefits Evaluation

Hard (Tangible)
Benefits Definition: Any measurable
Improvement which can be Quantified
and converted into Dollar Savings.
Soft
Examples:
(Intangible) • Reduction of 3 FTE’s
Benefits • 1% market share Increase
• Eliminate 2 Temporary Positions
Definition: Any measurable • Rework down 20%
Improvement • Lower vendor cost per transaction
which cannot be quantified and • Save 1 temp. worker 2 hrs of work
converted per week
into Dollar Savings. • Eliminate 30% call volume
• Decrease AHT of the process by 60
Examples: secs
• Increase Customer Satisfaction • Reduction in past due receivables
Scores by $10MM
• Improve VOC Scores
Project Benefits (QNI) = Project Savings – Project Expenditure
• Improving Federal
1. Project Charter will include/ State regulatory
Sign-off from Finance Analyst
Compliance Scores
2. Project validation / authentication is done by Sponsor, Head Quality and Finance Dept. The
return on the project is verified.
3. Only upon successful completion of the project, the respective BB will be eligible for
certification. 78
Six Sigma
Project Identification and
Selection

79
Project Identification & Selection

 Project Selection approach

 Project Sources and Selection Criteria

 Kano Model

 CTQ Tree

 Quality Function Deployment

80
Project Selection Approach
Steps

What is the process ?


Who are the potential customers ( Internal, External, Business
owners)
What are the process deliverables ?
What is the Unit of Measurement ?
Is Measurement System in place ?
What is the Current Performance (Baseline) ?
What is a expected / targeted performance ?
Does gap exists ?
Does gap carries significant impact to customer / business ?
Identify the improvement approach Continuous Improvement OR Re
designed ?

81
SS Project Selection Approach – Identifying Critical processes
Approach Steps Tools Approach Description
Business Process
Framework One of the Business / Functional unit (e.g. Operations /
Business
Business Unit Purchase

Process Flow Process flow steps


Business
Business Process
Process Chart

Customer Step I Step II Step III Step IV Step V Step VI Step VII
Surveys
Identify
Identify Critical
Critical Process
Process
Brain storming
Prioritization
Study the critical process and the pain areas identified
Study Process
Process during customer survey
High level
process mapping

Identify External & Internal (Business Owner & other


Identify
Identify Customers
Customers functions) for the critical process
SIPOC

List
List out
out Customer
Customer
Expectations/Deliverables
Expectations/Deliverables SIPOC Categorize the customer expectations (VOC / Pain areas)
from critical process obtained form from surveys in to
Deliverables of Quoting process

Does
Process B
Exists? No Sub Process Flow For each deliverable of critical process identify
Chart If the sub process or product / service feature exists
Yes A
82
Six Sigma Project Selection Approach (Contd.)
Approach Steps Tools Approach Description

A
Are SIPOC
For each deliverable of critical process identify
Metrics Define
Define Metrics
Metrics &
& Data collection unit of measure & measurement system
in place? implement
implement checklists
data
data collection
collection plan
plan
Dashboard
Ensure that the critical process metrics are
Enterprise linked with Business objectives, Strategy & VOC
Performance
Validate
Validate the
the Metrics
Metrics Management Matrix
Collect data for all critical process metrics
Process to define baseline process performance
Capability
Process
Process Base
Base lining
lining
Control Charts
Conduct a gap analysis between the critical
process baseline performance and targeted /
Explore
Explore need
need of
of customer expected performance level
Does No performance
performance Process
Gap Exists?
excellence
excellence
Performance
Yes If the sub process does not exist for a metric
B Enhancement
/ feature apply DMADV or
Apply
Apply DMADV
DMADV // implementation Process Re Engineering Approach.
Does No Process
Process
Process exists? Re Engineering
Engineering 1. DMAIC
2. DMADV
If the sub process exists for a metric / feature apply
Long
Long Term
Term Approach
Approach –– 3. Re Design / DMAIC for long term approach OR Problem
Yes
Apply
Apply DMAIC
DMAIC Re Engineer solving approach for Quick wins for early
realization of improvements
4. Problem
Quick
Quick wins
wins –– where solutions are known
Solving
Apply
Apply REIS
REIS Approach
83
SS Project Selection Approach
– Identifying Undesirable Conditions
1. Identify the 2. Quantify the 3. Identify the 4. Arrive at the vital
undesirable undesirable potential causes for few potential
business process conditions in to the undesirable causes and
conditions. Defect (%, PPM, conditions. prioritize .
(Customer DPMO, Sigma level) (High level process (NVA's, Multivoting,
complaints, VOC, or Cost . map, C & E 80:20 principle )
Quality reports, analysis, Pareto
Monthly analysis)
performance
indicators)

Six Sigma Six Sigma Six Sigma


5. Identify the 6. Select the core Project 1 Project 2 Project N
business process or enabling process Define Define Define
to which each for improvement,
prioritized quantifying the gap
suspected cause between current Appl Measure Measure Measure
belongs to . performance and Appl
y...
what customer y...
wants (Process Analyze Analyze Analyze
Deliverable).

Improve Improve Improve

Target : Reliable (Stable & controlled) processes,


Satisfied Customers, Happy Employees Control Control Control

84
Improvement Methodology Selection

Process Improvement

Product / Process Metric


Product / Process Performance
Product / Process Development : monitoring :
Enhancement :
Where a sub process Where the tentative
Where the sub
does not exist to take care of solutions are known and systematic
process exists but unable to meet
the customer requirement execution is required to ensure the
the customer requirement with
Improved process performance &
current process performance level
sustenance

DMADV DMAIC REIS


(Define, measure, analyze, (Define, measure, analyze, (Recognize, evaluate, implement
design and validate) improve and control) and sustain)

Design processes that do not Enhance process metrics e.g. Monitor and reduce errors in the
exist for e.g. knowledge turnaround time, customer problem process e.g. ineffective call close
management resolution effectiveness etc etc

85
Six Sigma DMAIC Project Flow
Define Measure Analyze Improve Control
Tollgate Tollgate Tollgate Tollgate Tollgate

D M A I C

Define
Define Measure
Measure Analyze
Analyze Improve Control
Step 1: Identify customer & Step 3: Take the Step 5: Identify the key Step 7: Determine the Step9 : Put the control in
their care abouts. snapshot of the process, process input variables solutions to optimize the place to sustain the gains
Covert their needs in to how the process that affects the outputs output & eliminate / made by the process
Critical to Satisfaction performing currently & fix most. reduce defects & improvement.
the baseline.
(CTS) i.e. CTQ – Critical to variations.
quality, CTC – Critical to Step 6 : Verify the Step 10 : Integrate in daily
Cost & CTD Critical to Step 4 : Validate the
identified causes to see Step 8 : Implement the work by Process Owner &
Delivery. measurement system
whether those are real or solutions partly & team
from which we collect the
not. statistically verify their
data.
Step 2: Develop Project impacts on output.
Charter

Phase Deliverables

Required Required Required Required


• Required • Post Improvement
• List of Project CTQs • Process Baseline • Optimization of Xs
• Data Normality Test Capability
• QFD/CTQ Tree capability • Improvement
• List of Statistically • Improvement tracking
• Project Charter • Operational definition, verification
Significant Xs . • Process Control Plan
• SIPOC Specification limits, • Tolerances on Vital Few
target, defect definition • List of vital few Xs & Xs • Process Owner Signoff
Tools Box for Project Y(s) their verification
• Project Risk Assessment • Measurement System
• Tools Box Tools Box
• Stakeholder Analysis Analysis Tools Box
• RCA / Fishbone • Control Charts
• High Level Project Plan • Design of Experiments
Diagram • Control Plan
• In Scope/Out of Scope Tools Box • Improved Process Maps
• Hypothesis Testing • Hypothesis Testing
• Customer Survey • Benchmarking • FMEA on new process
Methods (focus groups, • Correlation & • Error Proofing
• Data Collection Plan
interviews, etc.) Regression Analysis
• Gage R&R
• Process Map
• FMEA
• Pareto Analysis

86
Six Sigma DMADV Project Flow
Define Measure Analyze Design Validate
Tollgate Tollgate Tollgate Tollgate Tollgate

D M A D V

Define Measure
Measure Analyze
Analyze Design
Design Validate
Validate
Step1: Identify new Step 3: Identify Step 5: Develop design Step 7: Optimize the Step9 : Validate results on
product, Process, Service caustomer & their care alternatives micro level design full scale & Put the
abouts (CTQ) parameters controls in place to
sustain the gain.

Step 4 : Identify , deploy Step 6 : Develop & Step 8 : Evaluate and Step 10 : Integrate in daily
Step 2: Develop Project data collection plan & evaluate high level verify the micro level work by Process Owner &
Charter process base lining design capability design. team

Phase Deliverables
Required
Required
Required Required Required Required •• Post
Required PostDesign
DesignCapability
Capability
• Customer surveys, • Operational definition, •• Design • Optimization
Designalternatives
alternatives •• Scale
Scaleup
updecisions
decisions
Interviews • Specification limits, •• Selection • Of design parameters
Selectionofofbest
best •• Full
Fullscale
scaleprocess
process
• Project Charter • Current Performance alternative • Prediction model implementation
alternative implementation
• Performance target, •• Detail • Design Verification
Detaildesign
design •• Improvement
Improvementtracking
tracking
• defect definition requirements • Updated design •• Process
requirements ProcessOwner
OwnerSignoff
Signoff
Tools Box •• High scorecard
Highlevel
leveldesign
design
Tools Box capability
capabilitypredicated
predicated
• High Level Project Plan • Benchmarking Tools Box Tools
ToolsBox
Box
• In Scope/Out of Scope • Data Collection Plan Tools
ToolsBox
Box • Design of Experiments •• Control
ControlCharts
Charts
• Customer Survey • CTQ Tree •• Benchmarking • Improved Process Maps •• Control
ControlPlan
Plan
Benchmarking
Methods (focus groups, • Affinity Diagram •• Design • Updated FMEA •• Process
Processcapability
Designscorecard
scorecard capability
interviews, etc.) • Process capability •• FMEA • Software simulation •• Design
Designscorecard
scorecard
FMEA
• MSA •• Layout • Pilot / Test plan •• Process
Processmanagement
Layoutdiagrams
diagrams management
•• Process • Design score card chart
Processmap
map//model
model chart
•• Prototyping • Tolerance analysis •• Standards
Standards& &
Prototyping
• Process management Procedures
Procedures
chart

87
Problem Solving (Quick Win) Project Flow
R Phase Exit E Phase Exit I Phase Exit S Phase Exit
Review Review Review Review

Recognize Evaluate Implement Sustain

Step 7: Validate results on


Step1: Identify full scale & Put the
Improvement area/ Step 3: Evaluate the Step 5: Identify the
causes for problem controls in place to
Problem countermeasures /
sustain the gain.
solutions

Step 2: Define Problem Step 8 : Integrate in daily


Step 4 : List the vital Step 6: Implement
statement & Goal work by Process Owner &
causes the
statement team
countermeasures /
solutions

Phase Deliverables

Required Required
Required Required
• List of Improvement tracking
• Customer surveys, • Vital causes
countermeasures/ Process Control Plan
Interviews
solutions Process Owner Signoff
• Problem & Goal
statement • Countermeasure /
• Business dashboard solution implementation
plan

Tools Box Tools Box


Tools Box Tools Box
• Control Charts
• In Scope/Out of Scope • Countermeasure Matrix • Control Plan
• Customer Survey • Cause & Effect • Implementation plan • Visual Management
Methods (focus groups, Analysis
interviews, etc.)
• Problem solving charter

88
Project Sources and Selection Criteria

Sources of Six Sigma Project


Project Generation Selection criteria
• Business Filters
C-Sat / V-Sat • contribute to bottom-line
Short Term / Long Term of the organization
Organizational Goals (Business • Drastic, long term, risk free
Improvement
• Solution Not known
and operations)
• No other teams working on
Service Level project
Transaction Quality • Project Filters
Resource Utilization • Availability of Data
• Measurable
Engagement Targets • Time bound
client complaints • Realistic and Attainable

etc 89
Customers Perception

• Project identification begin not inside the business but outside it


• Focus on answering the following questions:
* How can we make the customer more competitive?
* What is critical to the customer’s success?

Anything we do that makes the customer more successful inevitably


results in a financial return for us.

• Kano Model is one of best technique to collect and understand Voice


of Customer (VOC)

• Business and operational goals can be analyzed by CTQ Drill down or


Quality Function Deployment

90
Customers

Who is a customer?
One who is paying for your service or product a person who buys
goods or services

Types of customers
•External or internal
•Lost customers
•Prospective customers

91
What do customer & shareholders want?

I ne at rig d pric
ed ht ti
What do customer wants?

at g

righ me .
oo

t pr ,
odu
e
v oic
r

ct,
Utility:They buy product or service for to me
cus
a need
Time : They want it when they need it
Value : They pay for it only if they What do shareholder wants?
perceive a value

The business must successfully serve


I ne and

the customers “ Wants “ and


ed

Still provide good profits.


hap ood p
g
py
cus ofit

r
lde
tom
r

ho
ar e
ers

Sh
ce
voi
92
Kano Model

CUSTOMER’S WANTS
•Must Be
•Satisfiers Delighters
No penalty for not doing Satisfiers
•Delighters them However, if you do The better we do, the
them, you get bonus happier the customer is
points (Plane gets to the
destination on time)

Performance
Must Be
The better I do, the less
dissatisfied the customer is.
(e.g., airlines get no credit for
getting bags to you on-time)

Customer Satisfaction

93
Kano Model : Exercise

Exercise 1:
Classify the following as Must Be, Satisfiers & Delighters

1. Air Conditioner free with every purchase of four wheeler


2. Availability of hot water in 5 star hotel bath room
3. More mileage per liter of fuel

Exercise 2:
1. Identify a Must Be, Satisfier & Delighter from your own process

94
Gather voice of the customer
* Review existing voc data
* Decide what to collect
* Select tool to collect
*Collect data

Voice of Customer : Ways to Capture

• SURVEYS
• FOCUS GROUPS
• INTERVIEWS
• WORD OF MOUTH
• COMPLAINTS

95
Voice of Customer : Ways to Capture
Surveys :
A method of gathering information From a sample representing the
population these are comprehensive data driven information vehicles
that are useful in capturing customer requirements as well as
measuring performance against those requirements.

Focus groups:
in this group you group together similar customers and ask for their
opinion on the requirements as well as performance against those
requirements

Customer interviews:
could be informal or Structured. Informal interviews give good insight
into the customer perspective of the product and services and
depends on probing open ended questions

96
Voice of Customer : Ways to Capture

Word of mouth:
the customer feedback comes through direct and different channels.
Internal: employee feedback
External: reports from known sources

Be a customer yourself :
feel the quality of Service yourself

97
Voice Of The Customer

Sample Comments/Data

“I’m Tired Of Having To Call up for this Lousy Product Every Ten Days”

“I simply don’t understand what the Customer Support Professional Talks about ”

“Why Don’t You Guys Get Your Act Together?!”

“The Phone Must Have Rung Ten Times Before I Got An Answer”

“I’m Not Very Happy With Your Service”

What do we do with VOC input?


98
Translating Customer Needs To Requirements

Voice Of The Customer Key Issue(s) Requirement

I Am Always On Hold Want To Talk To  Add Additional Menu Items To


Or Transferred To The Right Person Voice System (BAD)
The Wrong Person. Quickly  Customer Gets To The Correct
Person The First Time (GOOD)

I’m Getting My Bill Consistent Monthly Bill  Customer Wants Timely Bill (BAD)
At Different Times  Customer Bill Received Same Day
Of The Month. Of Month (GOOD)

Take Too Long Speed Up Loan  Customer Wants Fast Loan (BAD)
To Process The  Customer Receives Approval On
Application. Customer Request Date (GOOD)

99
Exercise 1.1
Translating Customer Needs (VOCs) To Requirements.

1. Refer to your workbook.

2. You have given a “Voice Of Customer (VOC)”

3. Using these VOC

- Identify key issues customer is facing


- Identify the specific requirements which will tackle these issues

100
Collection of Voice of Customer (VOC)
Step 1: Get the Voice of Customer (VOC) and the importance rating
through survey, feedback, market research, etc.

Example: VOC of a BPO company


VOC Rating

Utilization of billable resources should be Very Important


maximum
Abandoned calls should be minimum Important
Right & Complete Resolution Very Important

Talk Time should be reasonable Important


Good Customer Service Skills Important

101
Step 2: Quantify the Customer rating numerically.
VOC Rating
Utilization of billable resources should be maximum 5 Very Important: 5
Abandoned calls should be minimum 3 Important: 3
Right & Complete Resolution 5
Reasonable: 1
Talk Time should be reasonable 3
Good Customer Service Skills 3

Step 3: Get Voice of Stakeholder.


Voice of Stakeholder Rating

Buffer should be minimum Very Important


Reduce loss of login hours Important
Reduce Rework Important
Increase CSat Score Very Important
Reduce Customer Complaints Very Important
102
Step 4: Quantify Stake holder's voice.
Voice of Stakeholder4 Rating

Buffer should be minimum 5


Very Important: 5
Reduce loss of login hours 3
Important: 3
Reduce Rework 3
Reasonable: 1
Increase CSat Score 5
Reduce Customer Complaints 5

103
Step 5: Map the Customer Requirements & Stake Holder
Requirements
to Business and Operational Goals.
Requirements Rating Quality Cycle Training Multi Tasking
Time
Utilization of billable resources should be 5 High High Medium
maximum
Abandoned calls should be minimum 3 Medium High Medium
Right & Complete Resolution 5 High Medium
Talk Time should be reasonable 3 High Medium
Good Customer Service Skills 3 High
Buffer should be minimum 5 Medium High
Reduce loss of login hours 3 Medium high
Reduce Rework 3 High Medium
Increase CSat Score 5 High Medium
Reduce Customer Complaints 5 High Medium

104
Step 6: Calculate importance ranking to Business and Operational
Goals.
Requirements Rating Quality Cycle Training Multi Tasking
Time
Utilization of billable resources should be 5 High High Medium
maximum
Abandoned calls should be minimum 3 Medium High Medium
Right & Complete Resolution 5 High Medium
Talk Time should be reasonable 3 High Medium
Good Customer Service Skills 3 High
Buffer should be minimum 5 Medium High
Reduce loss of login hours 3 Medium High
Reduce Rework 3 High Medium
Increase CSat Score 5 High Medium
Reduce Customer Complaints 5 High Medium
Rank 124 118 42 55

105
Step 7: Identify Key Process Output Variables or CTQ’s (Ys).

KPOV’s (Ys) Ranking


Quality 124
Cycle Time 118

Identify Six sigma projects to improve these KPOV’s

106
Exercise 1.2 (10 minutes)

Six Sigma project identification through VOC

1. Refer to your workbook.

2. Identify Six Sigma projects for the areas identified through VOC

3. Allowable time : ----- Minutes

107
CTQ (Critical to Quality) & CTQ Tree

The basic reason any process


exists for is to satisfy the
requirements of the customer / Business CTQ Customer CTQ
Stakeholders. Business
Y
The critical customer satisfaction
parameters can be broadly
categorized under Cost, Quality, Delivery,
Service, productivity etc Internal CTQ
which are called as CTQs
Process
Y
CTQ is a
Product , Process or Service
characteristic Project CTQ
that satisfies a
Customer Requirement Project
(External & Internal – Business Y
Owners, all functions )
108
Business Objective

Voice of customer /
Organizational Goals/ Pain Areas
Business Y

Identification of Improvement Areas

Customer
Service Level Transactional Resource
Process Y Satisfaction
Agreement Quality
Development
Utilization
Score Cost

Six Sigma Black Belt & Green Belt Projects


Project Y Leading to significant Top line improvement with Customer Satisfaction &
Bottom line impact through Revenue generation and cost saving

109
CTQ TREE
A methodology to break the CTQ’s in the over all level to the CTQ’s at
sub process level

Example 1: Example 2 :
CTQ Tree for the KPOV: Quality CTQ Tree for the KPOV: Cycle Time
Voice
& Accent Waiting
Time

Voice Quality Empathy Cycle


Time
Handling
Time
Quality Culture

Data Quality

110
Examples of Customer CTQs
A Car Purchaser A Prospective Employee
• Mileage • Good Salary
• Spacious • Location Preference
• Low price/affordable • Flexible Working Hours
• High technology • ESOPs
• Loan Facility • Good working place

Order Management Client


Service Quality

• Yield
• Customer Sat (Ext)
• Productivity
• Customer Sat (Int)
• 1st Touch Cycle Time
• Service CSat (Ext)
• Case Res Cycle Time
• Service CSat (Int)

111
CTQ Drill Down responsibility Matrix

•Define what is critical (CTQ) to Business Champion, BB


•Define your Customer Champion, BB
•Explore Customer CTQ Champion, BB
•Define Internal CTQ / Critical Business Process Champion, BB

112
Exercise 1.3 (15 minutes)
Drawing a CTQ Tree

1. Refer to your workbook.

2. Draw a CTQ tree for your any one of the project you have selected

3. Allowable time : ----- Minutes

113
Quality Function Deployment (QFD)

What is QFD?
• QFD begins with Customer. It is also called House of Quality

• QFD links the needs of the customer with design, development,


engineering, manufacturing and service functions. It helps
organizations seek out both spoken and unspoken needs, translate
these into actions and designs, and focus various business
functions toward achieving this common goal. QFD empowers
organizations to exceed normal expectations and provide a level of
unanticipated excitement that generates value.

• The basic idea of QFD is to translate the voice of customer,


throughout the marketing, R&D, engineering and manufacturing
stages of product development.

114
Quality Function Deployment (QFD)
• It is a structured approach that facilitates the translation of the
customers voice into specific requirements.

• These specific requirements are mapped to the design process


production process and delivery processes to determine the process
and design requirements.

• Quality function deployment allows customers to prioritize their


requirements

• Benchmark with competition, help optimize and to attain competitive


advantage

115
Quality Function Deployment (QFD)

QFD: When to use ?

• To develop new product or service capability, specially for complex


ones.

• For products and services where clarification and prioritization of


efforts on key customer wants is needed.

• For developing or refining existing internal systems in order to build


or product delivery capability.

• For development of products or services that do not have a clear


mapping of the customer requirements and the design attributes.

116
Quality Function Deployment (QFD)

Benefits of QFD

• QFD brings in involvement of all the departments thus


improving the communication among them.

• Provides excellent frame work for cross functional


deployment of quality cost & delivery.

• Since QFD is a documentation process it helps in reducing


mistakes.

• Brings robustness in the product.

117
Quality Function Deployment (QFD)
How to build one?
1. The first portion of QFD matrix is the Customer Requirements. All the VOC that have been
translated into tangible requirements form the Customer Requirements part.
2. The second part, on the right hand side of QFD, is the Planning Matrix. It is used to quantify
Customers’ requirement priorities and their perception of the performances of existing
products. This is done through Importance Weighting of the Customer Requirements.
3. The third part of QFD is the Technical Requirement section. This describes the product or
service in the terms of the company and it includes all the measurable characteristics of the
product / service that might be related to meet the customers’ requirements. Often an
additional row is included to illustrate the direction in change of variables which is supposed
to result in improvement in product / Service performance.
4. The fourth part of QFD is Interrelationships section. This is used to translate the customer
requirements into the technical characteristics of the product / service. Inter-relationships
between each of the Customer requirements and technical characteristics are analyzed.
Generally, the level of inter-relationship is shown with the help of symbols denoting a 3 point
scale (High, medium, low ). Each level of inter-relationship is assigned a score. Generally a
score of 5-3-1 is used to denote High-medium-low-none.

118
Quality Function Deployment (QFD)
5. The fifth part of QFD is the Roof. This is used to denote the areas where the technical
requirements characterizing the product or service support or inhibit each other. Where
there is a deterioration because of interaction, “-” sign is used. Where there is an
improvement in one characteristic because of the other, “+” sign is used.

6. The final component of QFD is the Targets. It summarizes the conclusions drawn form
the matrix and team’s discussion. It consists of three parts: a) Technical Priority b)
competitive Benchmarks and c) Targets.

a) Technical Priority signifies the relative importance of each of the technical


requirement in meeting the Customers’ specified needs. It is calculated by
summing up the products of interrelationships weightings with the overall weighting
in the planning matrix.
b) Competitive Benchmarking: Each of the technical requirements identified as
important characteristic of the product or service are compared vis-à-vis the
existing product and the competitors’ product.
c) Targets: The final outcomes of QFD are the targets. These are a set of target
engineering values to be met by the new product or service.

119
D M A I C

Quality Function Deployment (QFD)


Structure
3
Roof

Technical Requirements
2

1 Customer Planning 5
INTER- RELATIONSHIPS
Requirements Matrix

Techincal Priorities
6
Targets
7
120
STEP - 1 Customer Requirement : Basically focus
on desired deliverable/outcomes from the
process

Customer Importance : Rating of


Customer requirement on a scale of 1-5

3
Roof

Technical Requirements
2

1 Customer Planning 5
INTER- RELATIONSHIPS
Requirements Matrix

ce
121
Technical Requirement : This describes the
STEP - 2 product or service in the terms of the company
and it includes all the measurable characteristics
of the product / service that might be related to
meet the customers’ requirements ; Basically
focus on input parameters which will have
direct/indirect impact on deliverable/outcomes of
3 the process;
Roof

Technical Requirements
2

1 Customer Planning 5
INTER- RELATIONSHIPS
Requirements Matrix

nce
Technical 122
STEP - 3
Roof : It shows the inter-relationship between
two or more inputs Parameters
` + ’ means positive relationship
` - ’ means negative relationship

+
+ 3
Roof

Technical Requirements
2

1 Customer Planning 5
INTER- RELATIONSHIPS
Requirements Matrix

ce
123
STEP - 4 Inter-Relationship Block : It shows the inter-
relationship between inputs parameters and
output deliverable
` 5 ’ means Strong relationship
` 3 ’ means Medium relationship
` 1 ’ means Weak relationship
` 0 ’ means No relationship
3
Roof

Technical Requirements
2

1 Customer Planning 5
INTER- RELATIONSHIPS
Requirements Matrix

ce
124
Planning Matrix :
STEP - 5
Our Product : Rating of existing
product/service on scale of 1-5 against
customer requirements
Competitor A/B : Rating of Competitor
product/services against our customer
requirements
3
Roof

Technical Requirements
2

1 Customer Planning 5
INTER- RELATIONSHIPS
Requirements Matrix
Competitor Rating shall
be benchmark rating

ce
125
Planned Rating : Target rating for customer
STEP - 5 requirement based on competitor rating
Improvement Factor : Ratio of Planned rating
and Our product Rating
Sales Point : Rating of Sales team (sales
perception)on ability to sell the
product/services based on how well each
3 customer need is met, on scale of 1.1, 1.3 and
1.5
Roof

Technical Requirements
2

1 Customer Planning 5
INTER- RELATIONSHIPS
Requirements Matrix
1.1 : Low inter-relationship
1.3 : Medium inter-relationship

ce
1.5 : Strong inter-relationship
126
Overall Weighting : Product of Sales Point,
STEP - 6 Improvement factor and Customer Importance
Technical Priorities : signifies the relative
importance of each of the technical
requirement in meeting the Customers’
specified needs. It is calculated by summing
up the products of interrelationships
weightings with the overall weighting in the
3 planning matrix.
Roof

5 8.7 43.5
5 13 65
Technical3 Requirements
5.9 17.7
2 3 10.8 32.4
1 4.4 4.4
3 7.3 21.9
5 4 7.8 39
224

1 Customer Planning 5
INTER- RELATIONSHIPS
Requirements Matrix

e
127
STEP - 7
Targets : The final outcomes of QFD are the
targets. These are a set of target
engineering values to be met by the new
product or service.

3
Roof

Technical Requirements
2

1 Customer Planning 5
INTER- RELATIONSHIPS
Requirements Matrix

e
128
4 House QFD

Customer
Measurements
(HOW’s)
Internal
House Actions
(HOW’s)
of Process
Quality House Requirements
s’ QT C
r e mot s u C

) s’ T A H W

#1 (HOW’s)
(

of Process
Customer
Customer Quality House Variables
House (HOW’s)
r e mot s u C

House #2
) s’ T A H W
(

of
st ne mer us ae M

Function
Quality House
Function

s noi t c A
l anr et nI
#3

) s’ T A H W
of

(
House
House

Process
Quality
Process

ss ec or P
#4

) s’ T A H W (
House
House

st ne meri uqe R
Control
Control
House
House

Define Improve Control


129
Points to Remember in QFD
Do’s
Don’ts
 Focus on the end-user

Charts as the ends & not the

means Don’t apply QFD on everything

Avoid too much chart focus


 Find reasons to succeed, not
Don’t hurry up & get done
excuses for failure

 If there are no “tough spots” the

first time, it probably is not being

done right !

130
A Restaurant Example – Manila Pizza
CTQs from VOC (WHAT’s)
Importance Rating
– Type of Menu 3
– Economic aspect 4
– Presentation of staff 3
– Type of service 3
– Quality of service 4
– Quality of Food 5

Measurements on CTQs (HOW’s)


– Varieties available in terms of Chinese, Indian, Continental food
– Price
– Availability of parking space
– Food served at right temperature
– Waiting time for food/order
– Options to pay ( Cash/Debit card/Credit card)
– Cleanliness of cutlery / attendant’s attire
– Staff courtesy
– Taste of food
– Ambience

131
Define

Capturing
Customer
Requirement
along with
importance
rating

132
Improve

133
Control

134
Exercise 1.4 (30 minutes)

Preparing the first two houses of the QFD

1. Refer to your workbook.

2. Prepare the first two houses of the QFD for a given example

135
Brainstorming & Multi-voting Example
• Below table illustrates the number of group members & total ideas generated

• Now each member gives votes to ideas (maximum one vote to each idea) & below
is the vote distribution for ideas

• Top ideas whose vote count adds upto 32 are as below (30 is not possible), there
are 7 such ideas

136
Brainstorming & Multi-voting Example
• Take these 7 ideas for further round of multi-voting

• Give each member 4 votes (round off 50% of 7 to next higher integer) & ask them to distribute
these 4 votes among these 7 ideas. Below could be the distribution in this fresh round of voting

• Take top ideas whose vote count adds upto 9

• This list is manageable

137
Points to Remember in Brainstorming

• All ideas are important, don’t out rightly reject any idea

• Participation should be ensured from all team members

• To ensure this, project teams could use the round-robin method of


idea generation

• It’s advised to use the Black Belt as the facilitator here

138
Exercise 1.5 (15 minutes)

Multi-voting

1. Refer to your workbook.

2. Do a multi-voting exercise for a given example

139
A Right Project Selection is key to success

Right Project Selection Wrong Project Selection


• Selecting the right project • If project selection is
can have a tremendous done improperly, a
effect on your business. If project may be selected
done properly, that doesn't have the full
• Processes will function business buy-in, project
more efficiently in 3 to 6 roadblocks may not be
months, employees will removed due to other
feel satisfied and business priorities, the
• Appreciated for making team may feel Ineffective
business improvements and the end result may
be less than ideal. No
and ultimately one wins in this situation
stakeholders will see the
benefit

140
Six Sigma Project Selection Filters

1. Company Filters and


2. Six Sigma Filters

Once the potential projects are identified next step is to verify, whether
these are six sigma project or not ?

There are two type of filters to qualify the potential projects as six sigma
projects. They are 1) Company filters and 2) Six Sigma Filters

141
1. Company Filters
Aligned
Alignedwith
with No Why
company Whydo
doit?
it?
company Drop
Strategy? Drop
Strategy?
No
Yes
1)
1)IsIsititaasevere
severe
No pain
pain inthe
in theprocess
process
2)
2) Is documentalproof
Is documental proof
Does
Doesproject
projectlead
lead available
available to provepain
to prove pain
USD--- min. per annum?
USD--- min. per annum? 3)
3) Is the pain sensedby
Is the pain sensed by
process experts
process experts

Yes
Yes (all 3)

No Scope
Can
Canititbe
becompleted
completedinin Scopeisistoo
toolarge.
large.
44toto66months? Consider making
Consider making
months? Multiple
Multipleprojects.
projects.
Yes

Move to Six Sigma Filters


142
2. Six Sigma Filters
Is
Isthe
thesolution yes Implement
solution Implementthe
the
already
alreadyknown?
known? solution
solution

No

Is
Isneeded
neededdata
data No Implement
Implementaadatadata
available
available to quantifythe
to quantify the collection plan
collection plan
problem?
problem?

Yes
Yes
Is
Isthe root
theyes
root Derive
Deriveand
andimplement
implement
cause known?
cause known? the solution
the solution

No

Is
Issomeone
someoneelse
else Yes Implement
Implementthe
theother
other
working on the problem?
working on the problem? team’s solution
team’s solution
no

No

Six Sigma Potential Project 143


Types of Projects

1. Projects cutting across processes focusing on


CTQ.

2. Projects cutting across CTQ focused on


process.

3. Projects focusing on a specific CTQ for a


process.

144
SS Project Execution Process Map
Client & Top
Management
Voice Of Customer & Pain Areas

Recognition of Problem Definition


Champion
Improvement
opportunity Project Review at
Project Agreement Pre-defined
& Target setting Frequency
Project Evaluation & (MBB & Champion)
Methodology
MBB selection (DMAIC /
DMADV)
Project
Validation,
Closure
and sign-
Initial Financial Final Financial off by
Finance Validation Validation champion,
Controller MBB and
Financial
controller

BB Project Charter

(Champion /
sponsor) Project Kick Off Project Execution
( DMAIC / DMADV )
(MBB & Champion (MBB & Champion
are secondary resp.) are sponsor )
GB &
Team Integration & Deliver
Improvement Project Execution
1- MBB 1- BB, 1- GB Project
4 - PA 1
Project
DMAIC Project 2
Project
3
1- BB, 1- GB Project
Business 4 - PA 1
Process Project
Improvement DMADV Project 2
Project
3
Project
1- GB
4 - PA
1
Project
REIS Project
2
Project
3 146
Six Sigma
DMAIC Methodology

147
Overview of DMAIC Methodology

 DMAIC Vs DMADV

 DMAIC Methodology
– Define
– Measure
– Analyze
– Improve and
– Control

148
DMAIC Vs DMADV
CREATION PROCESS
IMPROVEMENT PROCESS
(DMADV)
(DMAIC)
Define, Measure,
Define, Measure, Analyse, Analyse, Design and
Improve and Control Validate
Improve processes, Create new processes,

DM
products, services, and products, services, and
C

AD
organisation to 6 Sigma
AI

plants to 6 Sigma

V
DM

quality quality.
It is also Called DFSS
Process Management
PROCESS MANAGEMENT
Leverage and sustain the gains achieved by
improvement and creation with BPMS, QMS, COPC etc
149
DMAIC Methodology

Step 5:
Step 1: DMAIC
CONTROL
DEFINE
Define Define project goals & customer
(internal & external) deliverables
Measure Measure the process to determine
current performance
DMAIC Analyze Analyze and determine the root
Step 4: Step 2: cause of the defects
IMPROVE MEASURE Improve Improve the process by eliminating
defects
Control Control future performance
Step 3:
ANALYZE

150
Define
Objective:
is to define the problem in a clear manner and in a way that is related to an
internal or external customer.

Deliverables:
• Fully trained team, committed to work on improvement project.
• Customers identified and defined (CTQ’s)
• Project charter and Process map

Check points:
• Trained team
Customers (and CTQ’s)
• Project Charter
• Business process mapping (SIPOC)
• Process Map

151
Measure
Objective
to measure what you care about most, making certain that your measurement
approach is sound and not based on questionable formulas or data.

Deliverables:
• Key measures identification, data collection plan, data on process variation
performance baseline, sigma level calculation.

Check points:
• Identification of Key measures - Defining high impact defects
• Data Collection Plan - Data collection
• Measurement system analysis
• Process Variation
• Long term and short term variability accounted for.
• Performance Baseline/Sigma Calculation
• Measure baseline process performance (capability, yield, sigma level).
152
Analyze
Objective
is to look for the critical root causes of the variability by applying statistical
tools to determine what factors are contributing to the problem.

Deliverables:
• Data and process analysis, root cause analysis, quantifying the
gap/opportunity.

Check points:
• Data and Process Analysis – Identification of gaps between current
• performance and the goal performance
• Root Cause Analysis- Verify and quantify the root causes of variation
• Quantifying the Gap/Opportunity - Determine the performance gap.

153
Improve
Objective
is to determine and confirm the optimal solution.

Deliverables:
• Generate (and test) possible solutions, select the best
solutions, design implementation plan

Check points:
• Generating (and Testing) Possible Solutions
• Selecting the best Solution (s)
• Designing Implementation Plan

154
Control
Objective
is to be sure the quality improvements remain in effect and the problem
does not recur.

Deliverables:
• Documentation and implementation of monitoring plan, standardized
process, documented procedures, response plan established and
deployed, transfer of ownership (project closure).

Check points:
• Monitoring Plan
• Process Standardization
• Documented Procedures
• Transfer of Ownership (Project Closure)

155
Define Phase

156
Define
Main Activities
1.0 Step 1:
Define • Identify customer & their care about.

Defi
Opportunit • Convert their needs in to Critical to Satisfaction (CTS) i.e.
ies CTQ – Critical to quality, CTC – Critical to Cost & CTD
Critical to Delivery.
ne Step 2:
• Develop Project Charter reporting improvement
opportunity and effective project team

Main Tools used Define Phase


Project Charter Outcomes
VOC Problem Business
Statement Case
• List of Project CTQs
Goal Project
Statement Scope Baseline Gap • QFD/CTQ Tree
Project Project
Analysis • Signed off Project
team Timeline

Target charter
SIPOC • Team Charter
• CCRs
SI OC •
Process Process SIPOC
Map • Macro Level Process
Map
157
Define Phase Topics

 Project Charter

 Team Charter

 SIPOC

 Process Mapping
– Top Down Model
– Cross Functional Process Mapping &
– ICOM model

158
Project Charter

159
Project Charter
What Is A Project Charter?
• A project charter is a document that provides purpose and goals
for an improvement team

Six Major Elements of a Project Charter


1. Business Case 4. Milestones
Explanation Of Why To Do This Project Key Steps And Dates To Achieve
Goal
2. Problem And Goal Statements
Description Of The Problem/Opportunity 5. Roles
And objective In Clear, Concise And People, Expectations,
Measurable Terms Responsibilities

3. Project Scope 6. Financial Impact


Defined project beginning and end points Savings, impact on bottom-line

160
Business Case
Business Case Development
• The business case describes the benefit for undertaking a
project. The business case addresses the following
questions:
– Does this project align with other business initiatives?
– What is the focus for the project team?

• What impacts will this project have on other business units


and employees?

• What benefits will be derived from this project?

• Has the value of the benefits been quantified?

161
Problem Statement
Description Of The “Pain”

What Is Wrong Or Not Meeting Our Customer’s Needs?


• Who is the customer of the process ?
• What is the process ?

When And Where Do The Problems Occur?

How Big Is The Problem?

What’s The Impact Of The Problem?


• If I let it be what will happen ?
• If I reduce it what will happen ?
• If I increase it what will happen ?

162
Problem Statement Example

Poor Example:
Weak Problem statement
Our Fatal accuracy score is at 80% against the client target of 95% and
we Need to improve it

Improved Example:
Fatal accuracy score (what) this quarter (when) has been observed to be
at 80% for the last 4 months (extent) against the client target 95% which
has significant impact on customer satisfaction. (impact)

163
The Problem Statement
Key Considerations/Potential Pitfalls

• Is The Problem Based On Observation (Fact) or Assumption (Guess)?

• Does The Problem Statement Prejudge A Root Cause?

• Can Data Be Collected By The Team To Verify and Analyze The


Problem?

• Is The Problem Statement Too Narrowly or Broadly Defined?

• Is A Solution Included In The Statement?

• Would Customers Be Happy If They Knew We Were Working On This?

164
The Goal Statement
Project Objective

• Definition of The Improvement The Team Is Seeking To Accomplish

• Starts With …. Reduce, Eliminate, Control, Increase.

• Tends To Start Broadly – Eventually Should Include Measurable


Target And Completion Date

• Must Not Assign Blame, Presume Cause, Or Prescribe Solution!

165
SMART Problem And Goal Statements

Specific
Measurable
Attainable
Relevant
Time Bound
166
Goal Statement Example

Poor Example:
Put in place a Transaction monitoring evaluation system to increase
the fatal accuracy.

Improved Example:
Increase the fatal accuracy from the existing 80% to 95% by the end of
first quarter 2005.

167
Project Scope
• What Process Will The Team Focus On?

• What Are The Boundaries Of The Process We Are To Improve?


Start Point? Stop Point?

• What Resources Are Available To The Team?

• What (If Anything) Is Out Of Bounds For The Team?

• What (If Any) Constraints Must The Team Work Under?

• What Is The Time Commitment Expected Of Team Members?


What Will Happen To Our “Regular Jobs” While We Are Doing
The Project?

168
8 Steps to Scope a Project
1. Identify the customer
• Who receives the process output?
• May be an internal or external customer
1. Define customer’s expectations and needs
• Ask the customer
• Think like the customer
• Rank or prioritize the expectations
1. Clearly specify your deliverables tied to those expectations
• What are the process outputs?
• Tangible and intangible deliverables
• Rank or prioritize the deliverables
• Rank your confidence in meeting each deliverable
1. Identify CTQ’s for those deliverables
• What are the specific, measurable attributes that are most critical in
the deliverables
• Select those that have the greatest impact on customer satisfaction

169
8 Steps to Scope a Project
5. Map your process
• The process of producing the deliverables
• The process as it is working prior to the project
• If you are delivering something, there is a process, even if it has not
been formalized
6. Determine where in the process the CTQ’s can be most seriously
affected
• Use a detailed flowchart
• Estimate which steps contain the most variability
7. Evaluate which CTQ’s have the greatest opportunity for improvement
• Consider available resources
• Compare variation in the processes with the various CTQ’s
• Emphasize process steps which are under the control of the team
conducting the project
8. Define the project to improve the CTQ’s you have selected
• Define the defect to be attacked

170
Importance of Scoping

• Poor/improper scoping may result in following:

– Team loses interest in the project

– Project becomes difficult to implement

– Even after implementation, the desired/significant benefits are not seen

– Team focuses on trivial pain areas, and missing out the vital ones

– Process selected is too broad to handle or too small to realise


breakthrough improvements.

171
Milestones
• A preliminary High Level Project Plan with dates

• Tied to phases of DMAIC process

• Should be aggressive (don’t miss “ window of opportunity “)

• Should be realistic ( don’t force yourself into corrective rather than


preventative solutions)

1-May 7-May 16-Jun 23-Jun 7-Jul


Week : 1 2 3 4
Define Review Charter with Champion X
Measure Collect VOC X X

Analyze Complete Map X X


Validate Map X
Improve
Collect Data X
Control

172
Take Aways –Project Charter
• Key elements of a charter include: Business Case, Problem and Goal
• Statements, Project Scope, Milestones, and Roles.

• The team charter is a vital part of the project’s overall success. It


communicates the project direction to all members of the team.

• A Problem Statement describes what is wrong while a Goal Statement


defines the improvement objective.

• A charter clarifies what is expected of the project team, keeps the team
focused, keeps the team aligned with organizational priorities, and
transfers the project from the champion to the improvement team

173
Period
Start End Responses
Project Charter Example 1 Mar 05 30 May 05
Project Sponsor xxxxxx
MBB
Xxxx (YB)
Goal statement: Reduction of rework from 38% to 5% Project Leader
xxxxxxxxx
Problem Statement : Black Belt
Name Sign
The rework percentage in this quarter (Apr’05 to June’05) has been observed jkafkj

MEMBERS
to be at 38% based on the system reports which is leading to over stretching jkjklaj
of PE to meet the production targets. dxcv

Out-scope : Measurable Goals : Current Target σCurrent σTarget


In-scope :
All exiting sub – Any new sub-process to Rework reduction
processes in the be adding with in the
process project period Unit: Percentage 38 5 2.5 4.2
Business case Estimated Saving Expected, ( 1 Fin. Year)
Revenue Enhancement
Expense Reduction
Rework is one of the main concern area in our xxx process. Due Loss Avoidance 50,000 USD
to rework, most of our PE are over stretching their working Costs
hours. Our quality percentage is being maintained below the
Basic Schedule
SLA.
Define 16.03.05
The client also concern about the issue and suggested to take Measure 25.03.05
action with in 3 months to improve the same.
Analyze 07.04.05
Failure of the same may lead to employee attrition and loss of Improve 21.04.05
business.
Control 06.05.05
IMPCHG/QLTY/TMPL/6111 Version 1.0, Copy if printed 174
Project Scoping responsibility Matrix

Scope the Project GB, BB, Champion


Develop Team Charter GB, BB

175
Exercise 1.6 (15 minutes)
Project Scoping

1. Refer to your workbook.

2. Define in-scope & out-scope given project example

176
Team Charter

177
Team Charter
Team Roles Refresh Team Charter explains following
•How do you want the champion to work
Sponsor with the team?
• Review the project progress once a month
• Provide/modify direction/alignment with • Is the team’s role to implement or
business realities recommend?
• Provide resources required from time to time
• Remove Roadblocks • When must the team go to the champion
for approval? What authority does the
Black Belt/MBB team have to act independently?
• Provide content knowledge on Six Sigma
tools to the team • What and how do you want to inform the
champion about the team’s progress?
Project Leader
• Keep the team focused. Arrange logistics • What is the role of the team leader and
and team meetings and raise issues with the team coach?
Sponsor
• Are the right members on the team?
Team Member (s) Functionally? Hierarchically?
• Participate in meetings, collect data, do
analysis using Quality tools, provide subject
matter expertise related to process
178
Exercise 1.7 (45 minutes)

Team Charter – Breakout Activity

1. Refer to your workbook.

2. Practice writing problem and goal statements

179
A Good Project
• A good project:
• Problem & goal statement clearly stated
• Defect and opportunity definition is clearly understood
• Does not presuppose a solution
• Clearly relates to the customer and customer requirements
• Aligns to the business strategy
• Uses the tools effectively
• Data driven

• A bad project:
• Project is not focused – scope is too broad
• Not clear on what you are trying to fix
• Solution is already known/mandated without proper
investigation
• Difficult to see linkage to customer needs
• Working on a project that will not move the needles
• Little or no use of tools
180
SIPOC

181
SIPOC
SIPOC:
• A tool to identify all relevant elements of a process
• Helps to understand a complex process better
• Graphic display of steps, events and operations that constitute a
process

S - Suppliers
I - Inputs
P - Process
O - Outputs
C - Customers

182
SIPOC
Suppliers
– People who provide input to the process

Inputs
– Information, material etc., goes into the process from some other group of
people (supplier)

Process
– Process is a series of activities that takes an input, adds value to it and
produces an output for a customer

Outputs
– Output of a process creating a product or service that meets a customer need

Customers
– Users of the output 183
Information Flow & Measures
Thinking
Flow
Requirements Requirements

S I P O C

Suppliers Inputs Process Outputs Customers

Input Measures Process Measures Output Measures

Measures That Are


Internal To Your Output Measures
The Key Quality
Process. They Include Are Measures Used
and Delivery
Quality and Delivery To Determine How
Requirements
Measures Important To Well Customer Needs
Placed On Your
Your Internal Customers And Requirements
Suppliers.
As Well as Waste and Are Met.
Cycle Time Measures.

184
SIPOC: Uses

• To know who supplies input to the process

• To know what are the inputs to the process

• To know step by step flow of process

• To know the outputs of process

• To know the customer of a process

185
Steps to create SIPOC
1. Attaining a full understanding of all the steps of a process. This is done by
looking at processes from customer’s point of view.

2. Clearly define the process start and end boundaries

3. Brainstorm list of all process steps. Go on the floor, walk through the
process and interview people working on the process as needed.

4. Recorded process steps using a sticky-note method. In this method each


step in the process is recorded on a sticky-note and built in front of the
individual completing the work.

5. Discuss, review & modify process step sequence to agree on “As Is”
process map.

6. Add suppliers, inputs, outputs, customers

7. Add Input, Process, & Output measures 186


SIPOC: Format
Supplier Inputs Process Output Customer
A X1 Y1 Alpha

B X2 Y2 Beta

C X3 Y3 Gamma

187
SIPOC: Example 1:
Contract Management : Contract Publishing
SIPOC LEVEL I Contract Management : Contract Publishing

Supplier Input Process Output Customer


Electronic 1.Receive scanned images
Scanning Team Documents

Job Aid: Four-Eye 2.Sanity Check


ABC Bank
principle, Contract
Commodity Record
Classification, 3.Assign Contract Number
Global Sourcing- Template from
ABC Retained Emptoris, A-
signatory list 4. Upload Data

Vendor folder P2P Arthur


in shared drive
5.Create Vendor Folder in the shared drive
Vendor Number
from SAP, Contract
template from
Emptoris 6. Review Contract record

7.Publish Contract
Contract
Number.xls,
Contract
Information Sheet 8.Update Contract Tracking Sheet

188
Contract Management : Contract Enquiry
SIPOC LEVEL I Contract Management : Contract Enquiry

Supplier Input Process Output Customer


Query 1. Receive Query and review
Global Sourcing- Received
ABC Retained
Resolution
2. Update Query tracker sheet Document ABC Bank

Job Aid
3. Verify Authorization
P2P Contract Communication
Management to the Enquirer P2P Arthur
Onshore Team
Contract
Number.xls, 4. Check Availability
Authorization
Sheet

5. Get information/document

6. Communicate to the user

7. Close query in the tracker

189
Contract Management : Contract Review
SIPOC LEVEL I Contract Management : Contract Review

Supplier Input Process Output Customer


Electronic 1. View & analyze electronic document
Documents
Global Sourcing-
ABC Retained Review
ABC Bank
2. Check Contract Compliance Record
Job Aid

P2P Contract
Management 3. Validate Contract Data
Onshore Team Emptoris P2P Arthur

4. Check terms & conditions Vs ABC standard terms & conditions

Contract
Number.xls

5. Create Contract Summary records

190
SIPOC: Example 2:
Call Handling
S I P O C
Agents Team Incoming Call Opening Completed Caller
Call Call
Y
Spanish? Interpreter
Managers Client
ACD
Performance
Confirmation
Reports
Auditors IVR Internal
Verification Customers

Number of App Assistance


agents, Speed of
Managers, answer
Response Satisfactio
Auditors, Number
Calls n score
of ACD
Certified / Y abandoned
calls, Escalate? ASA
On training & Time
Pattern,
N Agent
Experience Q Quality
productivit
/Vintage Closing
Spanish? Talk Time y
Process
Nature of Wrap Time Talk Time
Knowledge
Query After Call Work Hold time Wrap Time
Listening /
App
Accent, Resolved ? %
speaking & Response No of lines per step, Time per Abandoned
keyboardin step, Time holding for
Uptime of response, Call Accuracy, Aband
g Skills
ACD, Quality, Cycle Time Time
Input Measures
Alltel Process Measures Output Measures
AHT,ACW
Noise? 191
Exercise 1.8 (20 minutes)

SIPOC
1. Refer to your workbook.

2. Draw the SIPOC for your process

192
Process Mapping

193
Process
“Process is a series of activities that takes an
input, adds value to it and produces an output for
a customer ’’
RESOURCE
S

INPUT OUTPU
PROCES T
S

MEASURE
S
SLAs

194
Process Mapping Definition

Process mapping is a graphical display of


steps, events and operations that constitute a
process.

195
Why Process Mapping?
• Validates our understanding of the process with the client (The way
work gets done)

• Identifies hidden process steps

• Helps to understand weak links in the process

• Eliminate the ambiguity & brings standardization

• Helps to identify data collection point during measure phase

• Imparts training to others

• To design the “ to be” process

196
Flowchart Vs. Process Map

Flowchart Process Map

May only shows the Goes further showing who


connected steps in a is doing what, with whom,
process when, for how long and with
what documents.

It shows how operational


decisions are made

197
Process Map Symbols
Symbol Meaning
Start or End of Process
Activity or Process Step
Decision or Inspection Point
Delay
Connector
Document
Data
Direction of Flow

198
Basic Types of Process Maps
• Linear Process Maps Call Opening

Confirmation

It can be used when Verification

– The process is not very complicated


Assistance
– Micro level (detailed) map is “dropped down”
from the macro (high level) process steps. Response

Closing

• Cross Functional Process Maps Dept 1 Step 1


(also known as “Swim Lane process map”)
It can be used when Dept 2 Step 1 Step 4

– The process complicated consists of several Dept 3


activities between different departments or
groups. Dept 4
Step 3

199
“As Is” Process Map in define phase

• Objective of “As Is” process map in define phase is to


identify hidden process steps in process.

• It helps to understand weak links in the process

• It also helps to identify non value adding process steps in


the process

200
Steps to create “As Is” Linear Process map
1. Attaining a full understanding of all the steps of a process. This is done by
looking at processes from customer’s point of view.

2. Clearly define the process start and end boundaries

3. Brainstorm list of all process steps. Go on the floor, walk through the
process and interview people working on the process as needed.

4. Record individual process steps on the sticky-note / post it .

5. Discuss, review & modify process step sequence to agree on “As Is”
process map.
201
Analyze “As Is” Linear Process map

Next Step : Analysis of As Is process map

1. Analyze process map to identify NVA’s.


(identify unnecessary approvals, isolating rework, removing duplicate
forms and investigating decisions leading to no results)

2. Identify data collection & decision making points.

3. Compare with “To Be” process map to identify the gaps.

202
“As Is” Linear Process map : Example 1

Call
Opening A
Collect data on
% Spanish calls

Yes
Spanish? Interpreter Response

No
Assistance
Confirmation
Collect data on
% escalated calls

Yes
Escalate?
Verification

No
NVA
On hold
Call closing Collect data on
% accuracy

Assistance
After call
work

A
NVA = Non value added activity
203
“As Is” Linear Process map : Example 2
Business Unit A
Are
Metrics Define Metrics &
in place? implement
Business Process data collection plan

Identify Critical Process Validate the Metrics

Study Process Process Base lining

Explore need of
Identify Customers Does No performance
Gap Exists?
excellence

List out Customer Yes


Expectations/Deliverables Apply DMADV /
Does No Process
B
Process Re Engineering
exists?
Does
Process B Long Term Approach –
Exists? No Yes Apply DMAIC

Yes Quick wins –


Fix it
A
204
Steps to create “As Is” cross functional map
1. Attaining a full understanding of all the steps of a process. This is done by
looking at processes from customer’s point of view.

2. List all departments or groups involved in the process. (Record in left


column of swim lanes)

3. Clearly define the process start and end boundaries

4. Brainstorm list of all process steps. Go on the floor, walk through the
process and interview people working on the process as needed.

5. Record individual process steps on the sticky-note / post it.

6. Discuss, review & modify process step sequence to agree on “As Is”
process map.
205
Analyze “As Is” Cross functional Process map

Next Step : Analysis of As Is cross functional process map

1. Analyze process map to identify NVA’s.


(identify unnecessary approvals, isolating rework, removing duplicate
forms and investigating decisions leading to no results)

2. Identify data collection & decision making points.

3. Compare with “To Be” process map to identify the gaps.

4. Identify the cross functional complexities involved in the process.

206
Cross Functional Process Mapping

Step
Function 1 Step 5
4

Step 3

Function 2
Step 2

Step 1 Step 8 Step 9


Function 3

Step 6 Step 7
Function 4

207
Client & Top
Voice Of Customer & Pain Areas
Example 1
Management

Recognition of Problem Definition


Project
Improvement
Sponsor opportunity Project Review at
Project Agreement Pre-defined
& Target setting Frequency
(MBB & Champion)
Project Evaluation &
Methodology
MBB selection (DMAIC /
DMADV)
Project
Validation,
Closure
and sign-
Initial Financial
off by
Validation
Finance champion,
Controller MBB and
Financial
controller

BB Project Charter

(Champion
sponsoror.) Project Kick Off Project Execution
( DMAIC / DMADV )
(MBB & Champion (MBB & Champion
are secondary resp.) are sponsoror.)

GB &
Team Integration in Deliver
208
Example 2 : Photo Process
Photographer Postal System Processor
Take Photograph

Return home

Place film in
Pre paid envelope Send to Processor
1 Day Delay
3 days Process Negative

Produce Prints

1 hr

Inspect
N
OK ?
Await Photograph Send to Photographer
Y
Package for posting
3 days
Inspect Photograph
Photograph Y Frame
to be framed N
Store in album

The flowchart below depicts the activities involved from taking


a photo to developing, framing and storing the result.

209
Example3: Import process
Imports Supplier Finance Forwarder / Customs
Clearing Agent
Planning

Get Options details


from Logistics if reqd.

Plan & Schedule

Obtain price &


Prepare P.O

Approve P.O

Fax / Mail copy to Prepare Order Ack &


supplier Send to Company

Direct
Payment or Check payment
Site Draft terms

LC
Request for LC
Open LC & send
Copy to Imports
Not OK
Verify LC

OK
Inform & send Verify correctness
Copy to supplier Of LC & Inform

Follow-up material

A 210
Example3: Import process
Imports Supplier Finance Forwarder / Customs
Clearing Agent
A

Arrange material Collect material

Arrange shipment &


Details to company/Supplier

Send documents to company


And Supplier
Prepare checklist for
Send documents
Internal circulation
To bank

Advise finance for


Arrange Insurance
Insurance

Send to clearing agent


For preparation of BE
Receive info from Bank

Send to Imports for


Check & certify docs
certification

Arrange for payment &


Retire documents

Send documents to Send documents


Clearing agent to Imports
Prepare Bill of Entry &
Files with Customs

B
211
Example3: Import process
Imports Supplier Finance Forwarder / Customs
Clearing Agent

Inspect & ascertain


Customs Duty

Inform Company - Imports

Prepare RFC to finance


customs duty
Prepare payment and
Send to clearing agent

Deposit amount in
Customs & clear the goods

Inform Company-Imports for


Collection of material

Inform W.H to collect


The material

W.H – Collect the material


& prepare GR

Move to
Stores.

212
Other Types of Process Maps

• Top Down Model


• ICOM

213
Macro to Micro (M2M) Process Map
It can be used when
- Team wants to pay attention to the important process steps in detail.

The Process

Step 1 Step 2 Step 3 Step 4

The Sub-Process

The Micro-Process

214
Example 1 : Quotation Sub-Processes
Research Create Proposal Refine Proposal Accept Quote

Previous Guided selling tool Refine


Agreement maps requirements proposal Quote
Look up to offerings (iterative) Acceptance

Optional
Previous Create initial Create final
Purchase proposal with all proposal
History relevant options
Look up

Previous
Profile defined Escalate
Quote
concession
History
request
Look up
Optional indirect
Cross geo Validate customer
customer and proposal pre- Concession
quoting credit check credit process
Look up rating lookup
215
Other process mapping models (additional information)
ICOM
Control
Input:
The material / information which enters in to the
system with specified process capability Input Output
Process

Control :
The systems, policies which control or governs
the process. Mechanism

Output :
The value added material / information through Single Process
the process and entitled for next process

Mechanism : fsdafdf High Level Process


The entity which may consume or act as Or Multiple processes
resource for processing. Eg. Machine, computer,
Agent
216
ICOM Model (additional information)
It can be used when
- Team want to map processes hierarchically

Level 0 Business/Enterprise

1
Basic process Increasing
Level 1 structure of the
business
level
of detail

1.1

Level 2 1.2
Sub-process
1.3

1.3.1

1.3.2
Activities within
Level 3 Sub-process
1.3.3

217
ICOM Model – Example (Process : Call Handling )
SOP Rules of verification Rules of verification Database
SLA Data base Data baseIdentified
Identified
Customer Type
Connected Genuine
Call Agent press Agent Identification of call Obtaining the
Call caller
Button to Verifies Of Type Requirement
attend call Caller & authorization of call Of caller

Soft skills
Peripheral Server, Software Server, Software
Caller’s
Agent training Agent training
requirement
Database
No SOP
Hold call and Processed
Database Obtain information Need to information Searching and
from supervisor verify from processing
Information supervisor? of information
as requested
Agent provides by caller Yes Server, Software
information Agent’s training &
to caller Process Knowledge

Soft skills SOP SOP SOP Agent


Answered
SLA SLA SLA ready
call
to take
Satisfied Completed Completed Agent press to next call
Agent check caller call ACW
Termination Agent does after button to give
for the Caller
of call Call work (ACW) access to
satisfaction
attend next call
Soft skills Peripheral Server, Software
Agent’s training Agent’s training & Peripheral
Process Knowledge
218
Exercise 1.9 (20 minutes)
Process Mapping
1. Refer to your workbook.

2. Draw the process map for your process

219
Measure
Phase

220
Main Activities
Step 3:

Measu • Take the snapshot of the process, how the process


performing currently & fix the baseline.
Step 4 :
re • Validate the measurement system from which we
collect the data.

Measure Phase
Tools used Outcomes
• Operational
Definitions
Process • Measurement System
Map Analysis
Data Collection Plan
Gage R&R • Data Collection
Formats and Plans
• Process Baseline
• capability
• Specification limits,
FMEA Baseline and target
Benchmarking setting
• target, defect
definition for Project
Preparation
Preparation FMEA Process
FMEA Process
Y(s) Improve
Improve
221
Measure Phase Topics

 Data Collection Plan


– Operational Definition
– Develop Measurement Plan
– Data Collection
– Data Display and evaluation of Data

 Fundamentals of Minitab

 Basic Statistics
– Measures of Central Tendency
– Measures of Dispersion
– Probability Distribution

222
Measure Phase Topics

 Gage R&R
– Gage R&R for Continuous Data
– Gage R&R for Attribute Data

 Process Capability

 Process Sigma Level Calculations

223
Why to Measure ?

If we can’t accurately
measure something

We don’t know enough about it

We can’t control it

We are at the mercy of chance!!!

224
Science of Six Sigma

When you measure what you are speaking about and


express in numbers, you know something about it.

Scientific Explanation : Very little progress is possible in


any field of investigation without the ability to measure. The
progress of measurement is in fact the progress of science !

Non Scientific Explanation : If you can not measure, just


forget it ! It will be a sheer waste of time.

Without data you are just a loud mouth with an opinion ..


225
Data Collection Plan

Foundation of six sigma is Data based decision making,


Data drives decisions and actions !!!
226
What is data

Data are measurements or observations we


record and use to understand, characterize,
optimize or control something such as process.

227
Knowledge is Power

Knowledge is not based on opinion,


rather it is derived from facts & data.

In order to efficiently collect the data & effectively analyze it,


to extract the maximum knowledge available, one must rely
On statistical techniques.

228
Use of Statistics

Data

Statistics
convert
to

Usable
Information

229
Data Collection Plan

Decide objective

Step 1 • Define a Metric


Operational definition

Step 2 • What, How, by Whom the measurement will


Develop Measurement Plan
be done

Step 3
Data Collection
• Stick to procedure/plan

Step 4 • By Plotting (Graphing) the Data, the result can


Data display
be easily understood.

Evaluation of Data

230
Operational Definition

An operational definition is a precise description of the specific criteria used


for the measures (the what), the methodology to collect the data (the how),
the amount of data to collect (how much) and who has the responsibility to
measure the data

When developing an operational definition, it is important for the team to


fully understand and agree that the DEFINITION reflects exactly what
information the team is attempting to gather on the process.

Clarity is more important when developing and selecting the measures that
will be used to determine the SIGMA PERFORMANCE of the process.

231
Operational Definition
Example :

Operational definitions may determine whether, a team is required to


count all the defects on an invoice (required to calculate defects per
million opportunities)
or

the total number of defective invoices (any invoice with any defect)
or

the type of defects encountered on an invoice (to eliminate the most


common defects first).

Each of these cases may require a very different approach for gathering
the data.

232
Operational Definition

Operational definition provides the foundation for the team to

1. Reach an agreement on what data to be collected.

2. Build consistency and reliability into data collection.

3. Fully agree on how a particular characteristic of a process is to be


measured.

233
Example of Operational Definition.

Poor Operational Definition:


Cycle time of a transaction

Good Operational Definition:


Collect data for all transactions processed from 1-Aug-05 to 31-Aug-05.
The cycle time of each transition will be determined by the date and
time of transaction download from client server by an agent/CSR to the
date and time of the PROCESSED transaction was submitted in client
server as per the client server system time.

234
Exercise: Operational Definition

Write operational definitions for the following cases

1) Maximization the server availability

2) Reduction of the attrition rate in ABZ

3) Improving the quality percentage a process

4) Reduction of call handling time

5) Minimization of abandoned calls in a call center

235
Develop Measurement Plan
Measurement Plan
Determining current process performance usually requires the collection of
data. When developing a measurement plan ensure that:
– The data collected is meaningful
– The data collected is valid
– All relevant data is collected concurrently

What is the Purpose of Collecting the All related Data collected?


Data? -Sample size, frequency, sampling
Will it serve the purpose ? method?
How will you collect the data? Is the Data Collecting method is
-what result will you measure? adequate?
-what kind of cause will you analyze for the
ineffective process?
-who will collect the data?
What kind of tool will be required? -where can we collect the data?
-form, check sheet ? -when will we collect the data?
-what kind of assistance will be
necessary?

236
Data Classification
Before data collections starts, classify the data into different types:
continuous or discrete.

This is important because it will:

– Provide a choice of data display and analysis tools

– Dictate sample size calculation

– Provide performance or cause information

– Determine the appropriate control chart to use

– Determine the appropriate method for calculation of Sigma

237
Types of Data

Continuous Data Discrete Data


Description
Binary : Classified into one of two
categories

Measured on a continuum or scale Count : Counted discretely

Ordered categories : Rankings or


ratings

Example
% of applications with or without
errors.

Time (in hours) to process an Number of errors in an application.


application
Customer satisfaction rating of
call center service.

238
Continuous Data
Data generated by
– Physically measuring the characteristic
– Generally using an instrument
– Assigning an unique value to each item
Continuous Data:
Example (Call Waiting Time in Secs)
Examples:
SL No. Waiting SL No. Waiting Time
Time
1. The time it takes to write a
1 98 11 102
proposal.
2 103 12 98
2. The time it takes to conduct a
3 100 13 101
feasibility study.
4 100 14 101
3. The time it takes to close the
5 99 15 99
books each month.
6 101 16 100
4. Invoice amounts.
7 97 17 101
5. Sales order amounts.
8 102 18 99
6. Handling Time, Time to Certify
9 100 19 100
PEs, etc.
10 99 20 102
239
Discrete Data Good

NOGO GO

Data generated by Bad

• Classifying the items into different groups based on some criteria


• All the items classified into a group will have same value

Examples:
• Gender, Shade Variation, etc.
• Escalations, Repeat Calls, Defective Transactions, Defects in
Transactions etc.

240
Defects versus Defective
Out of these 09 Invoices… there are...
Quantity: AAAAA Quantity: AAAAA Quantity: AAAAA
Price: $BBBBB Price: $BBBBB Price: $BBBBB
Date: YY/YY/YY Date: YY/YY/YY Date: YY/YY/YY
  
  
  









3 Defective
  
Invoices
Quantity: AAAAA Quantity: AAAAA Quantity: AAAAA
Price: $BBBBB Price: $BBBBB Price: $BBBBB
Date: YY/YY/YY Date: YY/YY/YY Date: YY/YY/YY
  





 6 Defects
  
  
  
  

Quantity: AAAAA Quantity: AAAAA Quantity: AAAAA


Price: $BBBBB Price: $BBBBB Price: $BBBBB
Date: YY/YY/YY Date: YY/YY/YY Date: YY/YY/YY
  
  
  
  
  
  
  

241
Example of Opportunities

Only three line items on this


invoice are
Quantity: AAAAA
Price: $BBBBB critical to the customer.
Date: YY/YY/YY ( Quantity, Price, Date)




 Errors in the rest of

 the invoice are not
critical

Hence, there are 3 opportunities per invoice


even though the invoice contains more than 3 line items.
242
Discrete : Binary Data (Binomial)

• Classifying the items into only two groups based on some criteria
• Each item will fall in either of the two groups
• All the items classified into a group will have same value
• Expressed or summarized as proportion p or percentage

Examples:
• Gender, Escalations, Repeat Calls, Defective Transactions, etc
• An invoice is either “complete” or “incomplete”.
• A delivery is either “late” or “not late”.
• A product is either “damaged” or “not damaged”.
• A hotel room is either “dirty” or “clean”.
• A sales pitch is either a “thumbs up” or “thumbs down”.

243
Binary Data : Example
(Month wise Escalation of Transactions)

Month No. of Transactions Processed No. of Transactions Escalated


Jan 2000 20
Feb 2500 30
Mar 1500 14
Apr 3000 27
May 4000 40
Jun 3500 33

Proportion of Escalated Transactions


p = No. of Transactions Escalated / Total No. of Transactions Processed
= (20 + 30 + 14 + 27 + 40 + 33) / (2000 + 2500 + 1500 + 3000 + 4000 + 3500)
= 164 / 16500 = 0.0099 ≅ 0.01 = 1 %
On an average, 1 % of Transactions are escalated

244
Discrete : Count Data (Poisson)

Data generated by
• Counting the exact number of occurrences of the characteristic in a
group of items.
• It takes integer values as 0,1,2,-,-,-,
• Expressed or summarized as average number of occurrences

Examples:
• Number of fatal defects in transactions processed
• Number of accidents in the city during June 2005
• Number of suicides in the city during 2004.
• The number of errors on twenty invoices.
• The number of computer system failures in a month.

245
Count Data: Example
(Data on Defects found during Transaction Audit)

No. of Items 100 50 76 82 172 150 89


Audited
No. of Defects 3 4 0 1 5 10 1

Average Number of Defects = Total No. of Defects / Total No. Audited


= (3 + 4 + 0 + 1 + 5 + 10 + 1) / (100 + 50 + 76 + 82 + 172 + 150 + 89 )
= 0.033
On an average 0.033 defects found per Transactions
On an average 3.3 defects found per 100 Transactions

246
Exercise 1.10 (20 minutes)
Type of Data

1. Refer to your workbook.

2. Identify the type of data given in example

247
Cause
Data Measurement Plan Format Data
Performance Operational Definition Data Source Sample Who will Data collection How will Other data that should
measure & location size collect period date be be collected at the
the data collected same time

Time to Date and time of transaction Client 256 Raju 1-Aug-05 to 31-Random Type of transaction,
process a was download from client server server Smita Aug-05 selection Day of week,
transaction by an agent to the date and time system Agent name
of the PROCESSED transaction time.
was submitted in client server

The data is being collected to measure the performance is called PERFORMANCE DATA.

On the other hand, CAUSE DATA, focus on why the process performs as it does. Cause
data supports the problem solving by helping to isolate root causes of the problems.

Most of the times, however, we won’t know enough about potential causes until we have
determined our processes current performance level. Be prepared to document current
performance first, then brainstorm potential causes and collect additional data related to
those causes at a later date.

248
Data Collection
While collecting data ensure that the data measurement plan is followed.
Note any deviations from the plan.

Avoid bias and ensure consistency.

Use various tools like check sheets to record and grouping of the data.

Ensure that the sample selected is representative of the population. If


there is any concern on this issue, record the things that may cause the data
collected to not be representative of the population.
Data Rich
Poor
Information
Ensure Effective and Efficient
Data Collection

249
Sampling

250
Sampling Objectives

• Understand the purpose and advantages of sampling

• Understand the application of different sampling techniques to


ensure accurate process representation

• Gain experience in asking appropriate questions to ensure a


robust sampling plan is implemented effectively and efficiently

• Understand guidelines and formulas used to determine sample


size

251
Basic Definitions and Symbols
Population (N): The entire set of objects or activities for a process

μ: the mean (arithmetic average) calculated for a population

σ: the standard deviation calculated for a population

Sample (n): a group that is a part or subset of a population

x: the mean (arithmetic average) of a sample

s: the standard deviation of a sample

252
Sampling Definition
Sampling is the process of:
Collecting only a portion of the data that is available or could be available,
and drawing conclusions about the total population (statistical inference)
Population Sample

x x x
x
x x x x
x
x x x x x
x x
x x x x
x x
x x x
x x
x x

N = 5000 n = 100

Example:
Estimating the average height of students in a college by measuring the
heights of only 250 students (250 is a subset of entire students
population).
253
Sample ….. When ?
When to …..
• Collecting all the data is impractical or too costly

• Data collection can be a destructive process

• When measuring a high-volume process

When not to ……
• A subset of data may not accurately depict the process, leading to a
wrong conclusion (every unit is unique-e.g., structured deals)

254
Kinds of Sampling

Random Sampling
• This sampling ensures that the
characteristics of the population are
collected with equal possibility.

Stratified Sampling
• Make stratifying plan for Group A Group B

population characteristics.
• Select the sample among each
stratified group

255
Frequency of Sampling

• Recommended more often for unstable processes


(Systematic, Subgroup sampling)

• Recommended less than usual for stable processes.

• To make a useful business decision we have to decide the


precision of data and frequency of data.

256
Sampling: Methodology

• Select a sample of items from the population

• Measure the characteristics on each item in the sample

• Calculate the sample statistics

• Provide the sample statistics as an estimate of population


statistics

257
Methodology: Example
To estimate the average height of students in a college

Select a sample of items from the population, say 250 students

Measure the characteristics on each item in the sample


i.e. measure the height of all the 250 students in the sample

Calculate the sample statistic


i.e Calculate the average height of 250 students ( = 5.5 feet)

Provide the sample statistic as an estimate of population statistics


Estimate of average height of students in the college = 5.5 feet
258
Methodology: Issues

The following are the Waiting Times (Seconds) values of 36 Calls:

10
Mean Waiting Time = 28.55 30
The following data is a sample of 10 from the above data:

50
30
Sample Mean = 25.3

60
34
Sample Statistics may not be exactly equal to Population Statistics

259
Methodology: Issues
The following data is another sample of 10 from the parent data:

Sample Mean = 27.8

26
The estimate may vary from sample to sample
40
To overcome these issues Confidence Intervals are developed

260
Confidence Interval: Methodology

• Select a sample of items from the population

• Measure the characteristics on each item in the sample

• Calculate the sample statistics

• Provide two limits: an upper bound & a lower bound to the population
statistics such that the true value of population statistics will lie within
these limits with a specified level of confidence

261
Continuous Data: CI for Population Mean

• Select a sample of n items from the population

• Measure the characteristics on each item in the sample

• Calculate the sample Mean & Standard Deviation (SD). Then

(1-α ) % Confidence interval :


Sample Mean ± Constant (confidence level) x Standard Error (SD of Sample Mean)

262
Continuous Data: CI for Population Mean

(1-α ) % Confidence interval on Mean:


Sample Mean ± Z α /2 x SD / √n

Z α /2 is the Standard Normal variate for an area of α /2 as shown in


figure
4

α /2
1

0
-3 -2 -1 0 1 2 Z α /2 3

263
Continuous Data: CI for Population Mean

α CI Zα /2
0.05 95 % 1.96
0.01 99 % 2.57
0.10 90 % 1.64

Obtained from Z table

264
CI for Population Mean: Example

The following are the Waiting Times (Seconds) values of 36 Calls:

10
Mean Waiting Time = 28.55
30
The following data is a sample of 10 from the above data:

50
30
Sample Mean = 25.3
Sample SD = 15.34
60
34 265
CI for Population Mean: Example

95 % Confidence interval on Mean:


Sample Mean ± 1.96 x SD / √n
= 25.3 ± 1.96 x 15.34 / √10
= 15.79 to 34.80

Similarly, 2nd Sample:

Sample Mean = 27.8


Sample SD = 11.94

26
95 % Confidence Interval on Mean:
27.8 ± 1.96 x 11.94 / √10 = 20.39 to 35.20
40
266
Exercise 1.11 (20 minutes)
CI for Population Mean

1. Refer to your workbook.

2. Calculate CI for a given example

267
Discrete Data: CI for Proportion

Collect a sample of size n from the population


Calculate sample proportion p
Calculate Standard error (SE): √(p(1-p)/n)
Then

(1 - α ) % CI interval for Population Proportion:


p ± Z α /2 x √(p(1-p)/n)

95 % CI interval for Population Proportion:


p ± 1.96 x √(p(1-p)/n)

268
Exercise 1.12 (20 minutes)
CI for Discrete data

1. Refer to your workbook.

2. Calculate CI for a given example

269
Sample Size Calculation: Continuous Data
Using 95 % CI
True value of population Mean will lie between
Sample Mean ± 1.96 SD / √n
Then
Population Mean - Sample Mean < 1.96 SD / √n ( with 95 %
Confidence)

Hence
To estimate the population mean with an accuracy of say 5
I.e Population Mean - Sample Mean < 5
I.e 5 = 1.96 SD / √n
n = (1.96 SD / 5)2

Sample Size required to estimate population mean with an accuracy of 5:


(1.96 SD / 5)2

270
Sample Size Calculation:
Methodology Continuous Data

Collect a small sample

Calculate Sample Mean & Standard Deviation

Equate accuracy required to 1.96 SD / √n

Solve for n

271
Exercise 1.13 (20 minutes)
Sample Size Calculation for continuous data

1. Refer to your workbook.

2. Calculate sample size for a given example

272
Sample Size Calculation: Discrete Data
Using 95 % CI
True value of population proportion will lie between
p ± 1.96 x √ p(1-p) / n where p is sample proportion
Then
Population Proportion - Sample Proportion < 1.96 x √ p(1-p) / n

Hence
To estimate the population proportion with an accuracy of say 0.01
I.e Population proportion - Sample proportion < 0.01
I.e 0.01 = 1.96 x √ p(1-p) / n
n =1.962 p (1-p) / 0.012
Sample Size required to estimate population proportion with an accuracy of 0.1:
1.962 p (1-p) / 0.012

273
Sample Size Calculation: Methodology Discrete
Data
Collect a small sample

Calculate Sample proportion p

Calculate Standard Deviation √(p(1-p) / n)

Equate accuracy required to 1.96 √(p(1-p) / n)

Solve for n

274
Exercise 1.14 (40 minutes)
Sample Size Calculation for discrete data

1. Refer to your workbook.

2. Calculate sample size for a given example

275
Data Display and Evaluation
Once we collect the data, it is always preferable to evaluate the data for its
accuracy and usage prior to calculation of the capability of the process

As a initial step, display the data using Patero charts, Scatter plot, control
charts, Histogram or Normality etc to look for data errors, trends and outliers.

Be prepare to collect more data or different data based on the above


observations.

Evaluate the data to confirm that the data is dependable, consistent, reliable
and representative.

Also ensure that, we get similar results if we repeat the data collection.

Finally confirm that the data collected provide the information we need.

276
Fundamentals of Minitab
(Statistical Package)

277
Once you start Minitab, Minitab opens with two main windows.

Session Window
It displays the results
of your analysis in text
format.
Column

Data Window
It contains an open
worksheet, which is
similar in appearance
to a spread sheet.
We can open multiple
work sheets.
Row
Cell

278
Column with Column with
Column with
Numeric data date/time data
Text data

Column Name
To be written by us

Row Number

All the columns are formatted by default to Numeric data. As per the requirement we can
reformat the columns.
Right click mouse>Format Column>numeric/text/date.

279
File
Most of the functions of the
File Menu are similar to Excel
sheet.

Open existing or new files


Save file
Print files, etc.

Edit
Most of the functions of the File
Menu are similar to Excel sheet.

Cuts, Paste cells,


Undo, redo
Clear cells etc.

280
Data
It is very useful function menu in
Minitab. to immunize the
duplicate data entry in the work
sheets.

Using this menu, we can subset


the worksheets, split and merge
work sheets.
Minitab automatically opens
multiple data windows.

We can transpose and sort the


columns.

Group of the points from the


graphs can be selected and
corresponding data subset can
be stored in separate work sheet.
281
Calc
Calculator: Data in various
columns can be computed
and stored in separate column

Column and Row statistics:


Various statistics like mean,
SD etc can be calculated for
the data listed in the column /
row

Random data: Can be


generated for all the
distributions

Probability Distribution: All


the distribution statistics can
be calculated.

282
Stat
All sorts of statistical analysis
can be done for the data
stored in various columns in
the work sheet.

Graphs
Various graphs can be plotted
using this menu

Editor
Used for Formatting of the
columns

283
Basic Statistics

284
Describe Sets of Continuous Data
The following three characteristics can describe the continuous data set

1. Measures of Central Tendency


1. Mean 2. Median 3. Mode

2. Measures of Dispersion
1. Range 2. Variance 3. Standard Deviation

3. Shape
1. Histogram

285
Continuous Data:
Measures of Central Tendency

1. Mean
2. Median
3. Mode

286
Mean: • Numerical value indicating the central value of data
• Sum of all observations / Total number of observations

Suppose x1, x2, - - - xn be the data, then


Mean = (x1+ x2 + - - -+ xn ) / n = Σ xi /n

Mean: Sum of all observations / Total number of observations

Continuous Data : Example Call Waiting Time

= (98 + 103 + 100 + 100 + 99 + 101 + 97 + 102 + 100 + 99 + 102 +


98 + 101 + 1.01 + 99 + 100 + 101 + 99 + 100 + 102) / 20
= 200.2 / 20
= 100.1 Minutes

287
Median: • Middle Value
• Value which divides observations arranged in ascending or
descending order into two equal halves
Case 1: Total number of observations is odd
Median: Middle Value
Case 2: Total number of observations is even
Median: Average of two middle values

Median: Example Call Waiting Time in Minutes


97 98 98 99 99 99 99 100 100 100
100 100 101 101 101 101 102 102 102 103

Total Number of observations: 20 (even)


The middle Values : 100 & 100 (10th value and 11th value)
Median: Average of 2 middle values = (100 + 100) / 2 = 100
288
Mode:
• The observation which occurs maximum number of times in
the data

Example Call Waiting Time in Minutes

97 98 98 99 99 99 99 100 100 100


100 100 101 101 101 101 102 102 102 103

Total Number of observations: 20 (even)


The observation with maximum number of occurrences : 100
Mode: 100

289
Continuous Data :
Measures of Dispersion

1.Range
2.Variance
3.Standard Deviation

290
Range: Definition

Range: Maximum value – Minimum Value

Example:
5 4 7 3 2
15 9 8 5 2

Maximum Value = 15
Minimum Value = 2
Range = 15 – 2 = 13

291
Range: Issues
It depends only on extreme values
Hence affected by outliers

16
14
12
10
8 Range
6
4
2
0
1 2 3 4 5 6 7 8 9 10

Better measure of Dispersion is “Standard Deviation”


292
Standard Deviation: Definition
Square root of the average squared deviation from mean
Indicates On an average how much each value is away from the Mean

Example :
5 4 7 3 2
15 9 8 5 2

Step 1:
Calculate Mean = (5+4+7+3+2+15+9+8+5+2) / 10
Mean = 6

293
Example: Standard Deviation
Step 2: Take deviations from Mean

16
14
12
10
8
6
4
2
0
1 2 3 4 5 6 7 8 9 10

-1 -2 1 -3 -4
9 3 2 -1 -4

294
Example: Standard Deviation

Step 3:
Since some values are positive & rest are negative, while
taking sum they will cancel out.
So square the values & Sum

1 4 1 9 16
81 9 4 1 16

Sum of Squares = 142

295
Example: Standard Deviation
5 4 7 3 2 Step 1: Calculate Mean,
15 9 8 5 2 Mean = 6

-1 -2 1 -3 -4 Step 2 : Take deviations


9 3 2 -1 -4 from Mean

1 4 1 9 16 Step 3: Since some values


are positive & rest are
81 9 4 1 16 negative, while taking sum
they will cancel out. So
Sum of Squares = 142 square the values & Sum
Step 4: Standard Deviation = √(Sum of Squares / (n -1))
= √(142 / (10 -1))
= √ 15.77 = 3.972

Variance = (SD)2 = 15.77


296
Standard Deviation: Example 2 Call Waiting Time in Minutes
Data (xi – Mean) (xi – Mean)2
x1 98 -1.9 3.61
x2 103 3.1 9.61
x3 100 0.1 0.01
x4 100 0.1 0.01 S D = √ (28.9) / (10 – 1)

x5 99 -0.9 0.81 = 1.7919

x6 101 1.1 1.21


x7 97 -2.9 8.41
x8 102 2.1 4.41
x9 100 0.1 0.01
x10 99 -0.9 0.81
Sum 999 28.9
n 10
Mean 99.9 297
Continuous Data:
Graphical Representation of Data: Histogram
Example: Call Waiting Time Data
97 98 98 99 99 99 99 100 100 100
100 100 101 101 101 101 102 102 102 103

Total Number of observations : 20


Minimum Value : 97
Maximum Value : 103
Number of Classes : √ n = √ 20 = 4.47 ≅ 5
Class Interval : (Maximum – Minimum) / Number of Classes
: (103 – 97) / 5 = 1.2

298
Construction of Frequency Table
Lower Limit of a Class
• 1st Class Lower Limit : Minimum Value
• Lower Limit of any class other than 1st class : Upper Limit of
Previous Class
Upper Limit of a Class

• Lower Limit of the Class + Class Interval


Construction of Frequency Table
SL No Lower Limit Upper Limit Tally Marks Frequency
1 97 98.2 lll 3
2 98.2 99.4 llll 4
3 99.4 100.6 llll 5
4 100.6 101.8 llll 4
5 101.8 103 llll 4
299
Graphical Representation of Data: Histogram

0
98.2 99.4 100.6 101.8 103

300
Exercise 1.15 (40 minutes)
Mean, Median, Standard Deviation and histogram

1. Refer to your workbook.

2. Calculate Mean, Median, Standard Deviation and construct


histogram for a given example

301
Probability & Normal
Distribution

302
Probability Definition

Ratio of number of favorable outcomes to total number of outcomes

Example
Number of tosses of a coin = 100
Number of times Head occurred = 49
Number of times Tail occurred = 51

Probability of getting Head in a toss of coin


=Number of Times Head occurred / Total number of tosses
= 49/100
= 0.49
= 0.5 (Approximately)

303
Example 1 :
The day wise average waiting time in seconds (AWT) of calls for 10
days is given below:

50
a. Calculate the probability that average waiting time > 60 Seconds?
b. Calculate the probability that average waiting time < 50 seconds
a. Probability of AWT > 60

61
= Number of cases with AWT > 60 / Total number of cases = 2 / 10 = 0.2
20 % of the days AWT will be more than 1 Minute

b. Probability of AWT < 50 seconds


= Number of cases with AWT < 50 / Total number of cases = 1 / 10 = 0.1
10 % of the days AWT will be less than 50 seconds
304
Example 2 :
The number of transactions processed per day by 40 member team
for 12 days during transition is given below:

750
Suppose the SLA on productivity is minimum 720 transactions per
day, calculate the risk of not meeting the SLA?

Risk of not meeting SLA = Probability that productivity < 720


transactions

= 1 / 14 = 0.071
810
= Number of days with Productivity < 720 / Total number of days

Risk of not meeting SLA is 7 %

305
Issues
To estimate probability using this method,
huge amount of data is required

Solution

When data is less, identify the underline distribution & estimate


probability from the distribution

306
Statistical Distributions

Continuous distribution
•Normal distribution

Discrete distribution
•Binomial distribution
•Poisson Distribution

307
Normal Distribution
Definition: Consider the following data on Average Handling Time
(AHT) in minutes of 16 Days:

2.3 2.7 2.4 2.6 2.3 2.7 2.5 2.5


2.5 2.4 2.5 2.6 2.2 2.8 2.4 2.6
Plot of the Data:

0
2.1 2.3 2.5 2.7 2.9
308
Plot of the Data:

0
2.2 2.3 2.4 2.5 2.6 2.7 2.8

• Bell Shaped
• Symmetric
• Total Area under the curve is 1

Then : Normal Curve & Data follows Normal Distribution


309
Normality Test : Probability Plot using Minitab
Step1: Copy the data to Minitab worksheet column
Step 2: Choose Stat > Basic Statistics > Normality Test

310
Step3: Enter the Column Title to the Variable Text Box and Click OK button

311
Step 4: Minitab Output

Interpretation:
If P-Value ≥ 0.05, then Data is Normal
312
Standard Normal Distribution

If
Data follows Normal Distribution
then
(Data - Mean) / SD will follow Standard Normal Distribution

For Standard Normal Distribution:


Mean = 0
SD = 1

313
Standard Normal Distribution: Example

Data:
2.3 2.7 2.4 2.6 2.5
2.5 2.4 2.5 2.6

Mean = 2.5
SD = 0.1225

Z : (Data - Mean ) / SD
-1.633 1.633 -0.8165 0.8165 0.00
0.00 -0.8165 0.00 0.8165

Mean = 0.00
SD = 1.0

314
Standard Normal Distribution: Properties

4
Between
3
Mean ± 1 SD :
68.26 % of Values will lie
2

Mean ± 2 SD :
1 95.46 % of Values will lie

0 Mean ± 3 SD :
-3 -2 -1 0 1 2 3 99.73 % of Values will lie

68.26%

95.46%

99.73%
315
3

0
2.3 2.4 2.5 2.6 2.7

If data follows normal distribution, then the probabilities can be


estimated from Normal Curve

Example:
The probability that AHT will be more than 2.6 Minutes is the
area above 2.6 Minutes in Normal Curve
316
3

0
2.3 2.4 2.5 2.6 2.7

Example:
The probability that AHT will be less than 2.35 Minutes is the
area below 2.35 Minutes in Normal Curve

317
Normal Distribution: Examples

The Time to Certify PE’s is normally distributed with mean 40 days and
standard deviation 8 days. If the client wants that all PEs shall be certified
within 34 to 48 days, estimate the chance of meeting client requirement?

Mean = 40
SD = 8
Let x be the Time to Certify PE

Case 1: Probability of certifying PEs within 34 days


P(x < 34)
Transforming to Standard Normal
P[((x - Mean) / SD ) < ((34 - 40)/8)] = P ( z < -0.75)

318
Normal Distribution: Examples

Case 1: P ( z < -0.75)

0
-3 -2 -1 0 1 2 3

From Standard Normal Tables P(z < -0.75) = 1 – 0.7733 = 0.2266


319
Case 2: Probability of certifying PE in > 48 days

P ( x > 48) = P (z > (48 - 40) / 8) = P ( z > 1)

0
-3 -2 -1 0 1 2 3

320
Normal Distribution: Examples
Case 2: From Standard Normal Tables
P (z > 1 ) = 0.1587

Chance of Meeting Client Requirement = 1 – 0.2266 - 0.1587 = 0.6147 = 61.47 %

OR
Chance of Meeting Client Requirement = 0.7733 - 0.1587 = 0.6147 = 61.47 %

0
-3 -2 -1 0 1 2 3
321
Exercise 1.16.1 (20 minutes)
Probability distribution for continuous data

1. Refer to your workbook.

2. Calculate probability distribution for a given example

322
Handing Non normal data

Handling Non
Normal Data

323
Binomial Distribution:
If the data is binary, then probabilities are estimated using Binomial Distribution

324
Binomial Distribution: Example

On an average, 2 % of the transactions processed in a process are defective. On


a particular day, out of 400 transactions audited 21 turned out to be defectives. Is
it an indication that the process performance deteriorated?

Let p = 2 % = 0.02
Number of Transactions Audited (n) = 400
Number of Defectives (d) = 21

The probability of getting 21 defectives out of 400 when p = 2 % = 0.02 is


calculated using Binomial Distribution as shown below
P(getting x = 21 defectives out of 400 transactions) = nCxpx(1-p)n-x
= 400
C21 0.0221 (1-0.02)400-21

325
Binomial Distribution: Example

Let p = 2 % = 0.02
Number of Transactions Audited (n) = 400
Number of Defectives (d) = 21

The probability of getting ≤ 20 defectives out of 400 when p = 2 % = 0.02 is


calculated using Binomial Distribution as shown below
P ( x ≤ 20) = P ( x = 0 ) + P ( x = 1 ) + P ( x = 2 ) + - - - + P ( x = 20)
P ( getting x = 20 defectives out of 400 transactions ) = nCxpx(1-p)n-x
= 400
C20 0.0220 (1-0.02)400-20

326
Calculation of Binomial Probabilities using Minitab
Step 1:
Copy the defective data to Minitab Worksheet as shown below:

327
Calculation of Binomial Probabilities using Minitab
Step 2:
Go to Calc Probability Distributions Binomial

328
Calculation of Binomial Probabilities using Minitab
Step 3:
Select Cumulative probability, Enter Number of trials, Probability of success,
Input Column, Option Storage and click ‘OK’ button

329
Calculation of Binomial Probabilities using Minitab
Step 4:
Minitab will calculate Binomial Probabilities as display in Optional Storage
Column as shown below

Note: % Chance = Probability x 100


330
Binomial Distribution: Example
p = 2 % = 0.02
From Binomial Distribution,
Number Audited (n) Defectives (d) Chance of getting d or less defects (%)
400 0 0.03
400 2 1. 31
400 4 9.73
400 6 31.09
400 8 59.26
400 10 81.79
400 12 93.81
400 14 98.38
400 16 99.66
400 18 99.94
400 20 99.99
331
Binomial Distribution: Example

Let p = 2 % = 0.02
Number of Transactions Audited = 400
From Binomial Distribution,
Probability of getting less than 20 defectives in 400 transactions = 0.9999
Hence Probability of getting 20 or more defectives = 1 – 0.9999= 0.0001 ≅ 0
i.e. if the process is operating at 2 % defectives:
the chance of getting 21 defectives out of 400 is almost 0 ,
Process performance is deteriorated.

332
Exercise 1.16.2 (20 minutes)
Probability distribution for Binomial Distribution

1. Refer to your workbook.

2. Calculate probability distribution for a given example

333
Poisson Distribution:
If the data is Count, then probabilities are estimated using Poisson Distribution

334
Poisson Distribution: Example

The average number of repeat calls per day in a voice process is 20. On a
particular day , there were 25 repeat calls. Is there any problem with the process
that day?

Let λ : Average number of Repeat Calls = 20


The probability of getting x ≤ 24 calls when average number of repeat calls is
20 is calculated using Poisson distribution as follows
P ( x ≤ 24) = P ( x = 0) + P ( x=1)+ P ( x = 2) + - - - + P ( x=24)
P ( x = 24 when λ = 20) = e-λ λ x / x!
= e-20 2024 / 24!

335
Calculation of Poisson Probabilities using Minitab
Step 1:
Copy the different values of repeat calls to Minitab worksheet as shown below:

336
Calculation of Poisson Probabilities using Minitab
Step 2:
Go to Calc Probability Distributions Poisson

337
Calculation of Poisson Probabilities using Minitab
Step 3:
Choose Cumulative probability, Enter Mean, Input column & Optional storage as
shown below and click “OK” button.

338
Calculation of Poisson Probabilities using Minitab
Step 4:
Minitab will display the probabilities in the Optional storage column as shown
below

Note: % Chance = Probability x 100


339
Poisson Distribution: Example
Average number of repeat calls per day = 20

Average Repeat Repeat Chance of getting d defects or less (%)


Calls Calls (d)
20 0 0.00
20 5 0.01
20 10 1.08
20 15 15.65
20 20 55.91
20 24 84.32

340
Poisson Distribution: Example

Average number of repeat calls per day = 20


From Poisson Distribution,
Probability of getting less than 25 repeat calls = 0.84
Hence Probability of getting 25 or more repeat calls = 1 - 0.84= 0.16 = 16 %
i.e. if the process is operating at 20 repeat calls per day:
the chance of getting 25 repeat calls is 16 %
16 % is large enough to conclude that there is nothing wrong in the
Process.

341
Exercise 1.16.3 (20 minutes)
Probability distribution for Poisson Distribution

1. Refer to your workbook.

2. Calculate probability distribution for a given example

342
Gauge R&R
(Measurement System Analysis)

343
Introduction
Measure
When ? Define

Data Baseline
Identify the Identify Gage R&R Collection Process
Project Y(CTQ) for Y Baseline Capability

• Gage R&R is pre-requisite for data collection / analysis

• Gage R&R study is a method to evaluate measurement system to


determine the amount of variation it contributes to the total observed
process variation.

• In Manufacturing industries, gages are evaluated for repeatability (of


readings when a component is measured multiple times) and
Operators / inspectors are evaluated for reproducibility (of same
readings when the component is measured by different operations).

• In service industries, Appraisers will be assessed instead of


344
Importance of Gauge R&R
• It is a method to determine how good the data is
• A Simple method to aid in improving the measurement system
• A simple method to evaluate new gage / agents repeatability
• A simple method to quantify measurement reproducibility

Examples
• A black belt wants to reduce the variability in transaction time

• A black belt wants to improve the quotation process

• A black belt wants to assess the process knowledge of the agents

345
Measurement System

What is Measurement ?
To give the value to express specific function of a certain material.

What is Measurement System ?


A given value is called measurement data.
All equipment and tools to get the measured data are termed gage.
Gage, operator, software, measurement method and process are
termed as measurement system.

346
Why Worry about Measurement Variation?

Consider the reasons why we measure:

Verify Assist in
How might measurement
product/process continuous
conformity to variation affect these decisions? improvement
specifications activities
What if the amount of
Process
Process measurement variation
is unknown
Measurement
Measurement

?
Measurement variation can make our process capabilities appear worse than they are.

347
Accounting For Changes

While we can come up with many explanations, they would fit into
three general categories

• Simple Day-to-day Random Variation Expected Variation

• An Event That Changed the A Change to the


Distribution of Calls Coming in to Process
Agents

• A Difference in How Calls Are A Change to the


Classified Between You and the Measurement
People Classifying Calls Yesterday System

How Can We Determine the Cause?

348
Sources of variation

Product Variability
(Actual variability)

Measurement
Variability

Total Variability
(Observed variability)

349
Observed Process
Variation

Actual Measurement
Part to Part Variation
Variation

Long Term
Within Sample
Process Variation due Variation due
Variation
variation to operators to Gage

Short Term Reproducibility Repeatability


Process Issue Issue
variation

σ2Total = σ2Part-Part + σ2R&R

To study & reduce the process variation the measurement variation has to be identified
and separated from process
350
Accuracy (Bias)
The difference between the observed average of measurements and
the true average of the items measured.

Accuracy

Observed True
Average Average

351
Repeatability

The variation due to the Gauge.


The variation observed when the same Appraiser
monitors/evaluates the same transaction repeatedly using same
facilities / aids.

Master
Master
Value
Value

Poor
Good Repeatability
Repeatability

Mean Mean 352


Reproducibility

Appraiser to Appraiser Variation


The variation observed when different Agents process the same
transaction using the same facilities / aids.

Master
Master Poor
Value
Good Value Reproducibility
Reproducibility

Operator 1 Operator 2 Operator 3 Operator 1 Operator 2 Operator 3

353
Stability
The variation in the average of at least two sets of
measurements obtained with a gage as a result of time on
the same pieces.

Stability

Time 1 Time 2

354
Methods of performing Gage R&R Studies.

Xbar-R General use.


Method It does not evaluate the interaction
Continuous effect.
Data

ANOVA It evaluates the interaction effect of


Method the agents also.
More effective when extreme values
are present

Attribute
Discrete Agreement
Data
Analysis

355
Exercise: Gage R & R– Continuous Data

Given the data below for reading by 3 appraisers on 6 calls with 2 trails,
determine whether the measurement system is acceptable

Call ID Appraiser A Appraiser B Appraiser C


1 2 1 2 1 2
1 65 60 55 55 50 55
2 100 100 100 95 100 100
3 85 80 80 75 80 80
4 85 95 80 75 80 80
5 55 45 40 40 45 50
6 100 100 100 100 100 100

356
Gage R & R– Continuous Data
Step 1:
Copy the data to Minitab worksheet as shown below

357
Gage R & R– Continuous Data
Step 2:
Choose Gage R&R Study (Crossed) from Stat Menu as shown below:

358
Gage R & R– Continuous Data
Step 3:
Enter Part Numbers, Operators & Measurement Data.
Choose Xbar and R as shown below
Click “OK” button

359
Gage R & R– Continuous Data
Step 4:
Minitab will give the following Output
Source Var Comp % Contribution
Total Gage R & R 17.434 4.06
Repeatability 7.338 1.71
Reproducibility 10.096 2.35
If < 20 %.
Part-To-Part 411.568 95.94 Gage acceptable
Total 429.002 100 Else if > 30 %,
Gage not acceptable
Else
Source StdDev (SD) (6 * SD) (%SV)
some problem with
Total Gage R & R 4.1754 25.052 20.16 gage, use with
Repeatability 2.7088 16.253 13.06 caution
Reproducibility 3.1774 19.065 15.34
Part-To-Part 20.2871 121.723 97.95
Total Variation 20.7154 124.274 100

360
Gage R & R– Continuous Data
Step 5: Graphical Output 1

Gage R&R (Xbar/ R) for Data


Reported by:
Gage name: Tolerance:
Date of study: Misc:

Components of Variation
100 % Contribution
% Study Var

80

60
Percent

40

20

0
Gage R&R Repeat Reprod Part-to-Part

Graphical Representation of the first table in the previous slide

361
Gage R & R– Continuous Data
Step 5: Graphical Output 2
Gage R&R (Xbar/ R) for Data
Reported by:
Gage name: Tolerance:
Date of study: Misc:

Xbar Chart by Appraiser


A B C
100
Sample Mean

_UCL=83.11
_
80 X=77.36
LCL=71.61
60

40

R Chart by Appraiser
A B C
10 UCL=9.98
Sample Range

5
_
R=3.06

0 LCL=0

Interpretation:
All points in R chart should be within the control limits for all Appraisers
Xbar chart for all appraisers should have more or less same pattern and most
of the points should fall outside control limits. 362
Gage R & R– Continuous Data
Step 5: Graphical Output 3
Gage R&R (Xbar/ R) for Data
Reported by:
Gage name: Tolerance:
Date of study: Misc:

Data by Call Id
100

90

80

70

60

50

40

1 2 3 4 5 6
Call I d

Interpretation:
All readings for each call is shown with their means connected. Ideally the
variation around mean for different calls should be equal and minimum.
363
Gage R & R– Continuous Data
Step 5: Graphical Output 4
Gage R&R (Xbar/ R) for Data
Reported by:
Gage name: Tolerance:
Date of study: Misc:

Data by Appraiser
100

90

80

70

60

50

40

A B C
Appraiser

Interpretation:
All readings for each appraiser is shown with their means connected. Ideally
the variation around mean for different appraisers should be equal and
minimum. 364
Gage R & R– Continuous Data
Step 5: Graphical Output 5
Gage R&R (Xbar/ R) for Data
Reported by:
Gage name: Tolerance:
Date of study: Misc:

Appraiser * Call Id Interaction


100 Appraiser
A
B
90 C

80
Average

70

60

50

40

1 2 3 4 5 6
Call I d

Interpretation:
Ideally the lines should overlap or at least parallel. Large deviations from
parallelism indicates lack of agreement among appraisers with respect different
calls. 365
Gage R&R for Continuous Data

Example: Gage R & R for Transition Cycle Time


A Team Lead in a finance related data process is responsible to monitor and
control the cycle time a sub-process. This sub-process is well established
and consumes almost equal amount of time to process each transaction.
Over period of time volumes are increased and agents are also increased
proportionately. But he observed that currently, the variation in cycle time is
very high and not meeting the SLA some times.
He wondered how it can happen? He is in doubt about the agents capability
and likes to measure and assess the same.

He chosen 2 agents and 10 transactions. He has conducted Gage R&R study


by processing each transaction twice by each agent. The transactions are
selected on random basis for the processing.
366
Summary of Case Study (Manual Calculations)
10 Transactions,
2 Agents
Each Agent processed each transaction twice

Data Collection

Transaction 367
Gage R & R: Example

Repeatability: Variation due to measurement instrument


Variation occurs when same operator measures the same part
again and again

Operator 1 Operator 2
Part 1 2 Range 1 2 Range
1 21 20 1 20 20 0
2 24 23 1 24 24 0
3 20 21 1 19 21 2
4 27 27 0 28 26 2
5 19 18 1 19 18 1
6 23 21 2 24 21 3
7 22 21 1 22 24 2
8 19 17 2 18 20 2
9 24 23 1 25 23 2
10 25 23 2 26 25 1
Rbar 1.2 Rbar 1.5
368
Gage R & R: Example

Repeatability: Variation due to measurement instrument


Variation occurs when same operator measures the same part
again and again

Variation due instrument : Average of Rbars


= 1/2(1.2 + 1.5) = 1.35
Repeatability (EV) = K1 x Average Rbar = 1.19681

Trails K1
2 0.8862
3 0.5908

369
Gage R & R: Example

Reproducibility: Variation caused by operators


Variation occurs when same part is measured by different
operators

Part 370
Gage R & R: Example

Reproducibility: Variation caused by operators


Variation occurs when same part is measured by different
operators

Overall Variation between operators : Difference between xbars


= (22.35 - 21.9) = 0.45

Reproducibility AV) = √((xbar diff x K2)2 – (EV2 / n r))


= √((0.45 x 0.7071)2 – (1.196812 / 10 x 2))
= 0.1739
Operators K2
n: Number of Parts 2 0.7071
3 0.5231
r: Number of trails

371
Gage R & R: Example

Total Gage R & R : √Repeatability2 + Reproducibility2


= √( 1.196812 + 0.17392) = 1.2094

372
Gage R & R: Example

Part Variation:

Part
Rp: Mean max – Mean min = 27.00 – 16.00 = 11
373
Gage R & R: Example

Part Variation:

Rp: Mean max – Mean min = 27.00 – 16.00


= 11
Part Variation (PV): K3 x Rp = 0.3146 x 11 Parts K3

= 3.4606 2 0.7071
3 0.5231
4 0.4467
5 0.4030
6 0.3742
7 0.3534
8 0.3375
9 0.3249
10 0.314
374
Gage R & R: Example

Total Variation:
Total Variation: √ Gage R &R2 + Part Variation2
Total Variation: √ 1.20942 + 3.46062 = 3.6658

375
Gage R & R: Example

Summary Table:
% Study variation is
Source SD 5.15 x SD % Study Var
32.99% > 30% hence
variation in processing
Repeatability 1.19681 6.1636 32.64 time is not acceptable.
Reproducibility 0.1739 0.8956 04.74
Total Gage R &R 1.2094 6.2284 32.99 Reasons shall be
Part Variation 3.4606 17.8221 94.40 investigated and
improvement plan shall
Total Variation 3.6658 18.8791 100
put in place.

376
Summary of Case Study (Using Minitab)
10 Transactions,
2 Agents
Each Agent processed each transaction twice

Data Collection

Transaction 377
Enter the data in Minitab as shown

Select Stat>Quality Tools> Gage


Study> Gage R&R (Crossed)

Click on columns
as shown

Choose either ANOVA or Xbar&R. It is


preferable to chose ANOVA as it also
analyses the interaction effect

378
% Study variation is
35.28% > 30% hence
variation in processing
time is not acceptable.

Reasons shall be
investigated and
improvement plan shall
put in place.

379
Total Gage R&R. Focus only on Green Bars.
These represents the % of total variation
contributed from the data.
The Gage R&R should be only 10% of total
variation. Rest should be attributed to within
transactions Variation. 35.28% is not acceptable
Part-to-part variation (transaction to
transaction) (estimate of process variation)

Agent to Agent (Reproducibility)

Within Agent (Repeatability)

Represents the repeatability. Presence of of


assignable causes (point out of control point)
indicates stability problem. Excessive common
cause variation to be addressed

Represents the reproducibility. The


detectable shift in the pattern on X-bar chart
and inconsistent pattern are unwarranted.
Remember : Most of the points should fall outside
control limits.
380
This graph shows the data for the 10 transactions
for each Agent. It display the raw data and
highlights the average of those measurements

Similar to top graph but the data is presented by


Agent instead of Transaction. The graph will help
identify Agent issues

This graph shows the data for each


Agent for all the Transactions.
Represents the Bias.
Ideally, all the lines should overlap each other

381
Exercise 1.17 (20 minutes)
Gage R & R– Continuous Data

1. Refer to your workbook.

2. Calculate Gauge R & R for a given example

382
Gage R&R for Discrete Data
Example: Gage R & R for evaluate appraiser process knowledge
An Engagement Team Lead (TL) considered 10 transaction and chosen 2 appraisers
at random for Gage R&R study. The transactions were evaluated on “Correct” or
“Incorrect” basis. For all the 10 transactions actual results (Standard) are also
available with TL. 2 appraisers processed each transaction twice within gap of one
week. The results are as follows. Study the Gage R&R.

TRANSACTION STANDARD RADHA KRISHNA


NUMBER
TRIAL 1 TRIAL 2 TRIAL 1 TRIAL 2

1 CORRECT CORRECT CORRECT CORRECT INCORRECT


2 INCORRECT CORRECT INCORRECT INCORRECT INCORRECT
3 INCORRECT INCORRECT INCORRECT INCORRECT INCORRECT
4 CORRECT INCORRECT INCORRECT CORRECT CORRECT
5 INCORRECT INCORRECT INCORRECT INCORRECT CORRECT
6 CORRECT CORRECT CORRECT CORRECT CORRECT
7 CORRECT CORRECT CORRECT CORRECT CORRECT
8 CORRECT INCORRECT CORRECT CORRECT CORRECT
9 INCORRECT INCORRECT CORRECT INCORRECT INCORRECT
10 CORRECT CORRECT CORRECT CORRECT CORRECT 383
Note: Minitab 13 is used. Commands are similar to Minitab 14

Enter the data in Minitab worksheet.


Test1 and test 2 results of same appraiser should
be at one place, as shown

384
Analyze Results

Select Stat > Quality Tools >


Attribute Agreement Analysis

385
Analyze Results

Click on columns as shown

Enter
2,
2,
Radha, Krishna

Click on columns as shown

386
Percent Repeatable
by appraiser
(it should be >=80%)

387
Repeatability Vs Standard

388
Percentage Reproducibility
For all appraisers
(it should be >=80%)

Percentage Reproducibility
For all appraisers Vs Standard
(it should be >=80%)

389
Date of study:
Assessment Agreement Reported by:
Name of product:
Pictorial Representation Misc:

Within Appraiser Appraiser vs Standard

100 100
[ , ] 95.0% CI
90 90
Percent
80 80

70 70
Percent

Percent
60 60

50 50

40 40

30 30

RADHA KRISHNA RADHA KRISHNA

Since R&R is less than 80%, rootAppraiser


Appraiser
causes to be
identified and corrective actions to be taken. Re-
conduct study to assess the improvement.
390
Rules for Gauge R&R study conclusions
Case 1: Continuous Data
If Total gage R &R %SV < 20 % , Measurement system is acceptable

If Total gage R &R %SV between 20 % to 30 %


Some problem with measurement system, use with caution

If Total gage R &R %SV between > 30 %


Measurement system is unacceptable.

Case 2: Discrete Data


If Gage R &R (Agreement) > 80 %
Measurement system is acceptable

Else, Measurement system is unacceptable.

391
Exercise 1.18 (20 minutes)
Gage R & R– Attribute (Discrete) Data

1. Refer to your workbook.

2. Calculate Gauge R & R for a given example

392
Process Capability

393
Process Capability

Process Capability
Refers to the inherent or natural variation of a process

Common Process Capability Indices


1. Potential capability Cp
2. Achieved capability Cpk
Process Capability Cpk

A methodology to check whether the process have the capability to


meet the customer requirements

Customer requirements are also expressed as


Lower Specification Limit (LSL) = 50 Days
Upper Specification Limit (USL) = 60 Days

394
Potential capability Cp:
A measure of the ability/potential to meet the customer
specifications
Example 1: Specification: 55 ± 5 Days
Allowed variation = 50 Days to 60 Days
Natural Variation = 52 Days to 58 Days

Natural Variation < Allowed variation

Hence Process have the capability to satisfy customer

Example 2 : Specification: 55 ± 5 Days


Allowed variation = 50 Days to 60 Days
Natural Variation = 48 Days to 62 Days

Natural Variation > Allowed Variation

Then Process doesn’t have the capability to satisfy customer


395
Potential capability Cp:

If the data is normally distributed, then


Natural variation : Mean ± 3 SD

Example:
Mean = 55 Days & SD = 1 Day
Natural Variation = 55 – (3 x 1) to 55 + (3 x 1)
= 52 Days to 58 Days

396
Potential capability Cp:

Ratio of allowed variation to Total variation


Cp = Allowed variation / Natural variation
= (USL – LSL) / ((Mean + 3 SD) – (Mean - 3 SD))
= (USL – LSL) / 6 SD

A Process has the capability to meet customer requirements if


Allowed variation > Natural variation
(USL – LSL) > 6 SD Cp > 1
Preferably Cp should be greater than 1.34

397
Potential capability Cp: Example

The Time to Certify Agents in days is given in the table below. If the client
requirement on Time to Certify Agents is 50 to 90 days, check whether
the process has the capability to meet the client requirement ?
85 75 80 65 75 60 80 70 75 60
80 75 70 70 75 75 85 60 50 65

USL = 90 Days Cp = (USL – LSL) / 6 SD


LSL = 50 Days = (90 – 50) / (6 x 9.2)
= 40 / 55.2 = 0.72
Mean = 71.5
SD = 9.2
Conclusion ?

398
Potential capability Cp: Issues

• Cp checks only whether the process has the potential to meet the
requirements
• Cp never checks whether the Process is actually meeting
requirements

399
Potential capability Cp: Issues

Example:
Process: Training Process Characteristic: Time to Certify Agents
Specification : 55 ± 5 Days

Process 1 Process 2 Process 3


Mean 55 52 58
SD 1 1 1
USL – LSL 10 10 10
6 SD 6 6 6
Cp 1.66 1.66 1.66

400
Potential capability Cp: Issues
Example:
Process: Training Process Characteristic: Time to Certify Agents
Specification : 55 ± 5 Days
Process 1 Process 2 Process 3
Cp 1.66 1.66 1.66

Allowed variation 50 to 60 50 to 60 50 to 60

Total process variation 52 to 58 49 to 55 55 to 61

Cp = 1.66 for all 3 processes


all 3 process have the capability to meet customer requirement
But
only Process 1 is meeting customer requirement
Hence
Achieved Capability Index is developed 401
Achieved Capability Index Cpk:

Cpk = Min [Cpl, Cpu]


Cpl = (Mean – LSL) / 3 SD
Cpu = (USL - Mean) / 3 SD

Cpk checks whether the process is centered.

402
Achieved Capability Index Cpk: Graphical Representation
LSL USL

Cpl = a / c
= (Mean – LSL ) / 3 SD
a b
1.2
Cpu = b / d
1
= (USL - Mean ) / 3 SD
0.8

0.6

0.4

0.2

0
1 2 3 4 5 6 7

3 SD Mean + 3 SD
c d
403
Achieved Capability Index Cpk: Example
6 12
Example:
USL : 12 LSL: 6
Mean : 9 SD : 1

3 3
1.2
Cpu = 3 / 3 = 1
1
Cpl = 3 / 3 = 1
0.8

0.6
Cpk = Min [1 , 1] = 1
0.4

0.2

0
Cpk = 1
6 7 8 9 10 11 12

- 3 SD Mean + 3 SD
3 3
404
Achieved Capability Index Cpk: Example
6 12
Example:
USL : 12 LSL: 6
Mean : 8 SD : 1

2 4
1.2
Cpu = 4 / 3 = 1.33
1
Cpl = 2 / 3 = 0.66
0.8

0.6
Cpk = Min [1.33, 0.66] = 0.66
0.4

0.2
Cpk < 1, Process doesn’t meet the
0
customer requirements.
5 6 7 8 9 10 11

- 3 SD Mean + 3 SD
3 3
405
Achieved Capability Index Cpk: Example
6 12
Conclusion:
Cpu = 3 / 3 = 1
Cpl = 3 / 3 = 1
Cpk = Min [1 , 1] = 1
3 3
1.2

1
Cp = (USL – LSL) / 6 SD = 6 /6 = 1
0.8

0.6
When process Mean is at center of
0.4 Specification then
0.2

0
Cpk =Cp
6 7 8 9 10 11 12

- 3 SD Mean + 3 SD
3 3
406
Potential capability Cp: Issues
Example:
Process: Training Process Characteristic: Time to Certify Agents
Specification : 55 ± 5 Days

Process 1 Process 2 Process 3


Mean 55 52 58
SD 1 1 1
USL – LSL 10 10 10
6 SD 6 6 6
Cp 1.66 1.66 1.66
Cpk 1.66 0.67 0.67

407
Relationship of Cp and Cpk

USL
LSL
Cp =2 Cpk = 2

Cp =2 Cpk = 1.5

Cp =2 Cpk = 1

Cp =2 Cpk = 0

Cp =2 Cpk = -0.5

Mean
408
Exercise 1.19 (20 minutes)
Process Capability

1. Refer to your workbook.

2. Calculate process capability for a given example

409
Process Sigma Level Calculations

410
Process Capability for Continuous Data
General Guidelines

1. Ensure that the data collected is free from measurement error

2. Ensure that the data is true representation of the population

3. Ensure that the process is stable

4. Ensure that the data is following Normal distribution.

5. If data is not normal, check for the transformed functions.

6. Still, data is non-normal, recheck the data or check whether the data fit in
any non-normal distribution.

411
Process Capability for Continuous Data

Z Calculation for Normal Distribution Data

If data is normal follow the following sequence.

• Calculate Ppk using Minitab.

• Sigma multiple Long term of the process is = Zlt = (3 * Ppk)

• Sigma multiple Short term of the process is = Zst = (3 * Ppk)+1.5

• Note the DPMO also from Minitab output.

412
Data Transformation

Typically one sided specification processes have skewed data.


In such cases we transform the data points and specifications to convert data
into a normal data.

Transformed data for Y may be in the form of Y2, Y3, Y0.5, Ln(Y) etc.

We can also use the Box-Cox transformation available in Minitab or apply


instead of try out all the combinations.

Transformation used for Y is also applied to LSL and USL

However, test of normality should be done again to check if the transformed


data has now become normal

413
Process Capability for Continuous Data
Example 1
The cycle time (in Minutes) of each transaction in a day on both the shifts
was collected. The SLA for the cycle time of the process is 60min.
Calculate the process capability.

Cycle Time Shift


Enter the data in Minitab

50 1
51 1
50 1 414
Stability Test
Select Stat>Control Charts>
Variable charts for Individuals> I-
MR chart

Click Cycle time

Click OK

415
Stability Test
I-MR Chart of Cycle Time_ 1
UCL=62.65
60
I ndividual Value

55

50
_
X=51.37 All the points in the I-MR control
45 chart are within control limits. No
40
1 4 7 10 13 16 19 22 25 28
LCL=40.09
significant trends also.
Observation

15
UCL=13.86
So, it is a stable process.
Moving Range

10

5 __
MR=4.24

0
1 4 7 10 13 16 19 22 25 28
LCL=0 Note:
Observation
If there are any out of control
point, the related data to be
analyzed and eliminate the
assignable cause. Then, remove
that data point and continue.

416
Select Normality Test
Stat>Basic Statistics> Normality Test

Click ‘cycle time’ in ‘Variable’ field

Probability Plot of Cycle Time


Normal
99
Mean 51.37
StDev 4.206
95 N 30
AD 0.696
90
P-Value 0.062
80
70
Percent

60
50
40
30
20

10
P-Value is great than 0.05.
5 So, it is a normal Distribution.
1
40 45 50 55 60
Cycle Time_ 1 Since the data is satisfying all the
pre-requisites, we can calculate
the process capability for this
process.

417
Capability Test
Select
Stat>Quality Tools>Capability Analysis>Normal

Click Cycle time

Enter 1

Enter 60 in Upper Spec.

Click OK

418
Select Stat>Quality Tools>Capability Analysis
Capability Test
Process Capability of Cycle Time

USL
Process Data Within
LSL * Overall
Target *
USL 60 Potential (Within) Capability
Sample Mean 51.3667 Cp *
Sample N 30 CPL *
StDev(Within) 3.76009 CPU 0.77
StDev(O verall) 4.24218 Cpk 0.77
O verall Capability
Pp *
PPL *
PPU 0.68
Ppk 0.68
Cpm *

40 45 50 55 60
O bserved Performance Exp. Within Performance Exp. O verall Performance
PPM < LSL * PPM < LSL * PPM < LSL *
PPM > USL 0.00 PPM > USL 10836.64 PPM > USL 20919.46
PPM Total 0.00 PPM Total 10836.64 PPM Total 20919.46
Ppk =0.68
Zlt = (3 * Ppk) = 2.04
Zst = (3 * Ppk)+1.5 = 3.45
DPMO = 20919.46

419
Process Capability for Continuous Data
Example 2
HR is working on reduction of recruitment cycle time. 30 data points are
collected to set the baseline capability, as shown below. The SLA is 60 days.
Calculate the baseline capability of the process.

Recruitment Cycle time Enter the data in Minitab

50
51
50 420
Stability Test

Select Stat>Control Charts>


Variable charts for Individuals> I-
MR chart

Click Recruitment
Cycle time

Click OK

421
Stability Test

I-MR Chart of Recruitment Cycle time


UCL=61.45

Some of the points are crossing


60
I ndividual Value

55

50
_
X=51.37 control limits. No significant trends
45 also.
LCL=41.28
40 1
1
1 4 7 10 13 16 19 22 25 28
Observation
So, it is a not a stable process.
12 UCL=12.39
Moving Range

Since there are some out of


9

3
__
MR=3.79 control points, the related data to
0 LCL=0 be analyzed and eliminate the
assignable cause. Then, remove
1 4 7 10 13 16 19 22 25 28
Observation

that data point and continue.

Let us continue with the same data now.

422
Normality Test
Select Stat>Basic Statistics> Normality Test

Click ‘Rec. cycle time’ in ‘Variable’ field

Probability Plot of Recruitment Cycle time


Normal
99
Mean 51.37
StDev 4.115
95 N 30

P-Value is less than 0.05.


AD 0.911
90
P-Value 0.018
80
70 So, it is a non-normal Distribution.
Percent

60
50
40
30
20
So look for the transformation.
10

1
40 45 50 55 60
Recruitment Cycle time

423
Select Data Transformation
Stat>Control Charts>Box-Cox
Transformation
Ensure dot on
top option

Click Recruitment
Cycle time

Enter 1
Enter C2
It store the
Click on transformed data
Options in C2 column

Click Ok

424
Data Transformation
Box-Cox Plot of Recruitment Cycle time
Lower CL
4.2 Lambda
(using 95.0% confidence)
Estimate 3.03
4.0 Lower CL -1.26
Upper CL

Rounded Value 3.03


*
Lambda Value = 3.03
3.8
StDev

3.6
Limit

3.4

3.2
-5.0 -2.5 0.0 2.5 5.0
Lambda

425
Data Transformation
Select
Stat>Basic Statistics> Normality Test

Click ‘Box-Cox’ in ‘Variable’ field

Probability Plot of Box-Cox


Normal
99
Mean 155934
StDev 35099
95 N 30
AD 0.673
90
P-Value 0.071
80
70
P-Value is greater than 0.05.
Percent

60
50
40
30 So, The transformed data is
following normal Distribution.
20

10

Now let us calculate the process


1
50000 100000 150000 200000 250000
Box-Cox

capability
426
Select Stat>Quality Tools>Capability Analysis>Normal Capability Test

Click on Box-Cox
Click Rec. cycle
time Enter 1

Enter 60 in Upper
Spec.

Click Box-Cox button

Enter Lambda value 3.03

Click others
427
Select Capability Test
Stat>Quality Tools>Capability Analysis
Process Capability of Recruitment Cycle time
Using Box-Cox Transformation With Lambda = 3

USL*
Process Data transformed data Within
LSL * O verall
Target *
USL 60 Potential (Within) Capability
Sample Mean 51.3667 Cp *
Sample N 30 CPL *
StDev(Within) 3.36268 CPU 1.00
StDev(O verall) 4.15021 Cpk 1.00

After Transformation O verall Capability

LSL* * Pp *
Target* * PPL *
USL* 244230 PPU 0.84
Sample Mean* 155371 Ppk 0.84
StDev(Within)* 29657.1 Cpm *
StDev(O verall)* 35265.1

75000 100000 125000 150000 175000 200000 225000

O bserved Performance Exp. Within Performance Exp. O verall Performance


PPM < LSL * PPM < LSL* * PPM < LSL* *
PPM > USL 0.00 PPM > USL* 1366.91 PPM > USL* 5872.39
PPM Total 0.00 PPM Total 1366.91 PPM Total 5872.39

Ppk =0.84
Zlt = (3 * Ppk) = 2.52
Zst = (3 * Ppk)+1.5 = 4.02
DPMO = 5872

428
Process Capability for Attribute Data

We can use Capability Analysis (Binomial) if the data meet the following
conditions.

• Each item is the result of identical conditions.

• Each item can result in one of two possible outcomes


(success/failure, Go/No go)

• The probability of success (or failure) is constant for each item.

• The outcomes of the items are independent of each other.

429
Process Capability for Attribute Data - Example
A Black belt is working on project to reduce the defective transaction in a
process. He has collected data for 30 days as shown below.

Calculate the baseline Capability of the process.

Sl No Trasa
1
2 Enter the this data in Minitab

3 430
Capability Test

Select
Stat>Quality Tools
>Capability Analysis>Binomial

Click on ‘Defective Transactions

Click on ‘No. of Transactions

Target, by default 0.
Value can be entered if there
is any target.

Click OK
431
Capability Test Binomial Process Capability Analysis of Defect
P Chart

The P-Chart Verifies that the 0.4 UCL=0.3819

% Defective
Proportion
process is in a state of control. 0.2
_
P=0.2093

LCL=0.0367
In this case there is no out of control 0.0
1 4 7 10 13 16 19 22 25 28
Sample
point. Tests performed with unequal sample sizes

Cumulative % Defective

Summary Stats
The proportion defective is 20.93%. 22.8 (using 95.0% confidence)
% Defective: 20.93
21.6

% Defective
Lower CI : 18.90
Upper CI : 23.07
Cumulative % defective is the 20.4

19.2
Target:
PPM Def:
0.00
209302

running average of the percentage 18.0


Lower CI :
Upper CI :
189000
230745

defective. 5 10 15 20 25 30
Process Z:
Lower CI :
0.8088
0.7364
Sample Upper CI : 0.8816

It verifies that you have collected


data from enough samples to have
a stable defective estimate.

The rate appears to be stabilizing


around 21%
432
e Transations Capability Test
Rate of Defectives

Defective rate plot verifies that the % defective


is not influenced by the number of items
45 50 55 sampled.
Sample Size

Dist of % Defective
Data should appear randomly distributed.
ar

0 5 10 15 20 25 30 35 Histogram of % defective displays


the over all distribution of the %
defectives from the samples
collected

433
1 4 7 10 13 16 19 22 25 28 45 50
Sample Sample
Tests performed with unequal sample sizes

Cumulative % Defective Summary Stats Dist of % D


Binomial Process Capability Analysis of Defective Transations
(using 95.0% confidence) Tar
P Chart Rate of Defectives
6.0
0.4 UCL=0.3819 22.8 %Defective: 20.93

% Defective
30
Proportion

_ Lower CI: 18.90


21.6 4.5

% Defective
0.2 P=0.2093
20 Upper CI: 23.07
0.0
LCL=0.0367 20.4
10
Target: 0.00 3.0
1 4 7 10 13 16 19 22 25 28
Sample 19.2
45 50
Sample Size
55
PPM Def: 209302
Tests performed with unequal sample sizes Lower CI: 189000 1.5
Cumulative % Defective
Summary Stats 18.0 Dist of % Defective Upper CI: 230745
(using 95.0% confidence)
6.0
Tar
Process Z: 0.8088 0.0
22.8 %Defective: 20.93 5 10 15 20 25 30 0 5 10 15 2
Lower CI: 18.90 Lower CI: 0.7364
21.6 4.5 Sample
% Defective

Upper CI: 23.07 Upper CI: 0.8816


20.4 Target: 0.00
3.0
PPM Def: 209302
19.2
Lower CI: 189000 1.5
18.0 Upper CI: 230745
Process Z: 0.8088 0.0
5 10 15 20 25 30 0 5 10 15 20 25 30 35
Lower CI: 0.7364
Sample
Upper CI: 0.8816

Capability Test
Results:
P-chart indicates that process is stable as there are no data points out of
control
The chart of cumulative % defective show that the estimate of the overall
defective rate appears to be settling down around 21%.
The process Z is around 0.8, which is very poor. This process could
use a lot of improvement
434
Process Sigma Multiple for Discrete Data
Terminology
Unit:
A unit is the tangible & measurable characteristic of a process input / output.
Defects are observed / counted in the output characteristic of a unit (Denoted as Y)

Examples:
Every Call received by a call center Agent: Unit= Call
Each employee recruitment cycle time Unit = Employee
Each transaction processed by agent Unit = Transaction
The transaction not meeting the customer requirement Unit: Transaction
Non-availability of system Unit = System

Defect:
• A defect is a failure to conform to requirements
• Any type of undesired result is a defect.
A failure to meet one of the acceptance criteria of a customer.
• A defective unit may have one or more defects.

435
Specification Vs Characteristic
Specification is a customer-defined tolerance for the output unit value.
There may be two sided specifications.
Specification form the basis of any defect measurement exercise on continuous data

A characteristic is a customer-defined expectation on the output unit.


Characteristic from the basis of any defect measurement exercise on discrete data
There may be multiple characteristics defined on a single unit.
It is also possible to have a combination of specifications and characteristic on an
single unit
Specification : Continuous Data Characteristic : Discrete Data
Example: Transaction processing
Unit: Each transaction processed
Some of the defect definitions may be
1) Transaction not completed before 24min = Specification
2) Transactions not submitted in to client server after processing = Characteristic
3) Transactions submitted with out filling up the amount = Characteristic

436
Opportunity for Defect:
Any critical characteristic which is routinely inspected before passing the item is an
opportunity for defect.
(or)
Opportunity for the error in a process is the number of steps / task / actions in the
process, where there is a possibility of committing error, that may result in a
defect.
Concept of OFD is applicable only when defect measurement is discrete.

Recollect the operational definition >>>>>>


“Clarity is more important when developing and selecting the measures that will
be used to determine the SIGMA PERFORMANCE of the process.

e.g. Operational definitions may determine if a team is to count all the defects on
an invoice (required to calculate defects per million opportunities) or the total
number of defective invoices (any invoice with any defect) or the type of defects
encountered on an invoice (to eliminate the most common defects first). Each of
these cases may require a very different approach for gathering the data”

437
Examples:
• For example, if client wants to ensure that each transactions to be completed
with in 20 min, it can be considered as specification and follow the continuous
data path.

• If client is interested in controlling defective transactions, the entire unit is either


good or Bad. A proportion can be calculated (Binominal).

• If operation head or client head is interested in minimizing the abandoned calls


and team is interested in identifying the steps / task / actions in the process,
First team suppose to map the process and identify the steps which results in
abandoned calls and those steps can be considered as Opportunity for Defect.

• In some cases, client may scope the improvement area. In that situation,
team can consider only that portion and identify the Opportunities for Defects.

438
Examples:

• If the measurement and improvement of process characteristics


calls for noting all the defects, each detail of the process to be
considered OFD.

• If there is no limit to the number of defects that can be


counted, It is not possible to count the non-defects, poison
distribution can be used.

• If operation head or client head is interested in minimizing the abandoned


calls and team is interested in identifying the steps / task / actions in the
process, First team suppose to map the process and identify the steps which
results in abandoned calls and those steps can be considered as Opportunity
for Defect.

439
Exercise for DPMO calculation for Discrete data

The Inspection result for a set of 100 Purchase Orders (PO) are given in the Table
below:
Cause of Rejection Number of Defects

Supplier Name Incorrect 1

Supplier Door # Incorrect 1


Quantity Higher than that in Indent 3
Quantity less than that in Indent 1
Price is higher than that in the Indent 2
Price is lower than that in the Indent 2

Number of Defects =
Number of Opportunities for Defects =

440
DPU: Defects Per Unit
The ratio of Number of Defects found to the total Number of Items Inspected

Cause of Rejection Number of Defects

Supplier Name Incorrect 1

Supplier Door # Incorrect 1


Quantity Higher than that in Indent 3
Quantity less than that in Indent 1
Price is higher than that in the Indent 2
Price is lower than that in the Indent 2

Number of Defects = 10
DPU = Number of Defects / Total Number Units Inspected = 10 / 100 = 0.1

441
DPO: Defects Per Opportunity

Ratio of total number of Defects to the total number of opportunities in the


inspected lot.
Cause of Rejection Number of Defects

Supplier Name Incorrect 1

Supplier Door # Incorrect 1


Quantity Higher than that in Indent 3
Quantity less than that in Indent 1
Price is higher than that in the Indent 2
Price is lower than that in the Indent 2

DPO = Defects / (Opportunities x Total number of Units Inspected)


DPO = 10 / (100 x 4) = 0.025

442
DPMO: Defects Per Million Opportunity

DPMO = DPO x 1000000


Cause of Rejection Number of Defects

Supplier Name Incorrect 1

Supplier Door # Incorrect 1


Quantity Higher than that in Indent 3
Quantity less than that in Indent 1
Price is higher than that in the Indent 2
Price is lower than that in the Indent 2

DPO = Defects / (Opportunities x Total number Inspected)


DPO = 10 / (100 x 4) = 0.025
DPMO = DPO x 1000000 = 0.025 x 1000000 = 25000

443
Yield:
Yield = e-DPU
Cause of Rejection Number of Defects

Supplier Name Incorrect 1

Supplier Door # Incorrect 1


Quantity Higher than that in Indent 3
Quantity less than that in Indent 1
Price is higher than that in the Indent 2
Price is lower than that in the Indent 2

DPU = Defects / (Total Number Inspected) = 10 / 100


= 0.01
Yield = e-DPU = e-0.01 =0.99005 = 99 %

444
ZST: Short Term Sigma Value

Z is the Standard Normal Variate equivalent to DPO obtained from Z table.


Cause of Rejection Number of Defects

Supplier Name Incorrect 1

Supplier Door # Incorrect 1


Quantity Higher than that in Indent 3
Quantity less than that in Indent 1
Price is higher than that in the Indent 2
Price is lower than that in the Indent 2

DPO = Defects / (Opportunities x Total number Inspected)


DPO = 10 / (100 x 4) = 0.025
ZST = 1.96 From conversion tables

445
ZLT : Long Term Sigma Value
ZLT = ZST - 1.5

Cause of Rejection Number of Defects

Supplier Name Incorrect 1

Supplier Door # Incorrect 1


Quantity Higher than that in Indent 3
Quantity less than that in Indent 1
Price is higher than that in the Indent 2
Price is lower than that in the Indent 2

DPO = 0.025
ZST = 1.96 From conversion tables
ZLT = ZST - 1.5 = 1.96 - 1.5 = 0.46

446
Exercise 1.20 (20 minutes)
Sigma level calculations

1. Refer to your workbook.

2. Calculate process capability for a given example

447
Some Helpful Hints:
• It is always preferable to deal with continuous data. Continuous data is
measured on a continuum or scale.

• Collect the cause data along with performance data for initial quick wins.
Once you determine the entire processes, collect the additional data
related to those causes.

• Always evaluate the colleted data, before calculating the base line
capability

448
Some Helpful Hints:
• Proportion Defective: The entire unit is either good or bad. A proportion
can be calculated. Assume Binomial
• Count of defects: There is no limit to the number of defects that can be
counted. Assume poison.

• Calculate Zlt value using Ppk (noted in Minitab output) instead of Cpk, as
Ppk is represents the long term process capability

• Not all the percentages are discrete or count data. Eg. % system
availability. If both the numerator and denominator are determined by
measuring the % is considered continuous data.

449
Table 1: Raw data on Transaction time of express Teller
Exercise Woking Transaction Times(sec)
day
D & M Phase Appraiser A Appraiser B Appraiser C

deliverables 1
2
63
69
55
63
56
60
53
65
61
61
64
66
3 57 60 61 65 66 62

Deliverables 4 58 64 60 61 57 65
5 79 68 65 61 74 71

1 Type of data 6 55 66 62 63 56 52

2 Descriptive Statistics (Mean, Median, Mode, SD, Histogram) 7 57 61 58 64 55 63

3 Sample Size & confidence interval (Accuracy required 10 Secs) 8 58 51 61 57 66 59

4 Probability of getting transaction time between 55 to 65 seconds. 9 65 66 62 68 61 67

5 Probability of getting transaction time > 70 seconds 10 73 66 61 70 72 78

6 Normality Test 11 57 63 56 64 62 59

7 Process Capability ( LSL : 58 Secs, USL : 65 Seconds) 12 66 63 65 59 70 61

8 Sigma level calculation 13 63 53 69 60 61 58

9 Gauge R & R 14 68 67 59 58 65 59
15 70 62 66 80 71 76
16 65 59 60 61 62 65
17 63 69 58 56 66 61
18 61 56 62 59 57 55
19 65 57 69 62 58 72
20 70 60 67 79 75 68

450
Week 1 Define & Measure Phase
Sigma level calculations

1. Refer to your workbook.

2. Calculate process capability for a given example

451
Thank You

452