“Six Sigma for Managers”
Top-Down Six Sigma Implementation
for
American Society of Quality
Breakfast Meeting
March 18, 2004
Two Key Aspects to Six Sigma
• Methods and Tools
–
–
–
–
Process Thinking
Process Variation
Facts, Figures and Data
Define, Measure, Analyze,
Improve and Control
– 8 Key Tools
• Sequenced and Linked
– Statistical Tools
– Statistical Software
– Critical FEW Variables
• Initiative
–
–
–
–
Improvement
Breakthrough
Systematic, Focused Approach
Right projects
• Linked to business goals
– Right people
• Selected and Trained
– Project Management
• Management Reviews
– Sustain the gains
• New projects
– Results
• Process and Financials
Hoerl, Roger W., and Ronald D. Snee. (2003). Leading Six Sigma; p. 5
Six Sigma Project Outlook
Practical Problem
Statistical Problem
Statistical Solution
Practical Solution
Key Inputs for Deployment
• Strategy and Goals for Six Sigma
• Process Performance Measures
• Project Selection Criteria
• Project Identification/Prioritization System
• Deployment Processes for Champions, MBBs, BBs, etc
• Roles of Management, Champions, MBBs, BBs and Functional
Groups
• Curricula and Training System
• Project and Six Sigma Initiative Review Schedule
• Project Reporting and Tracking System
• Audit System for Previously Closed Projects
• Reward and Recognition Plan
• Communication Plan
Hoerl, Roger W., and Ronald D. Snee. (2003). Leading Six Sigma; p. 65
Keys to Successful Deployment
• Committed Leadership
• Top Talent
• Supporting Infrastructure
The Right People
Six Sigma
Champions
Six Sigma
Leaders
Black Belts
Green
Belts
Yellow
Belts
Black Belts
Green
Belts
Yellow
Belts
Yellow
Belts
Master Black
Belts
Black Belts
Green
Belts
Yellow
Belts
Green
Belts
Yellow
Belts
Yellow
Belts
Six Sigma Project Team Members
Each Level Drives the Team to Breakthrough Project Performance
Six Sigma Resource Definitions
•Black Belts
•Full Time Six Sigma Resource
•4 Weeks Initial training, plus follow-up advanced statistical training
•Work 3-4 projects Simultaneously
•Mentor 5-10 Green Belt project
•Train all Yellow Belts and some Green Belts
•Green Belts
•Initially trained Manufacturing or Operations GBs
•2 Week training -- equivalent Define and Measure skills
•Expectation is to complete at least 1 project per year, and then work
on 2nd project
•Currently 25% of savings is from Green Belts
•Evolved to DFSS, Technical Service, Transactional, Analytical and
Reliability GBs
•Yellow Belts
•One day of training focusing on Define and Measure tools
•Target team members, then future project resources
Types of Projects
•
Cost Reduction
–
–
–
–
–
–
–
•
Cost Avoidance
–
–
•
Reducing effects of future cost increases (disposal/environmental)
Inventory Control
Capital Avoidance
–
–
•
Yield and Rate Improvement
Downtime Reduction/Equipment Utilization
Raw Material Selection
Utility Optimization (Gas, Steam, Air and Electricity)
Trailer/Railcar Utilization
Accounts Payable Process
Corporate Credit Card Usage
Plant Utilization
Rate Improvement
Revenue Enhancement
–
–
Plant Capacity Improvement
Tech Service Offerings
About Six Sigma at Grace
• What is Six Sigma (at Grace, at Davison)
– Improving business performance by
improving process performance
– All kinds of processes -- from mfg to corporate
– Leadership, alignment, support
– Objectives, financial and otherwise
– Organization, infrastructure
– Staffing, training (6σ staff and everyone else)
– Projects, scoping, tools, review & follow-up
– Results at departmental, product line... Grace levels
– Individual mind-set, organizational culture
Savings $,000,000
Davison Six Sigma Savings
• Hard or
EBIT savings
45
40
35
30
25
20
15
10
5
0
– Revenues up
– Costs down
Hard
Soft
Total
• Soft savings are
– Cash Flow
– Cost and Capital
Avoidance
EBIT: Earnings Before
Interest & Taxes
2000A 2001A 2002A 2003F
(A = actual; F = forecast)
A project’s savings are tracked
over a 12 months period.
Implementing Six Sigma in a
Manufacturing Environment
•
•
•
•
•
•
•
Evolution
Training
Resources
Projects
Project selection & management
Expansion
Measurement Systems
Six Sigma – Evolution at Grace
Sept - Oct. 1999
Champion training in U.S. and Europe
January 2000
First Black Belt Wave Training Complete
February 2000
First Green Belt Training (Admin)
June 2000
Second Black Belt Wave Training Complete
December 2000
Second Ops Green Belt Wave Training Complete
May 2001
First Yellow Belt Training Complete
June 2001
Six Sigma Project Hopper - 100% Utilized
December 2001
First Catalyst DFSS Green Belt Class Complete
January 2002
First German “Regional” Ops GB Class Complete
April 2002
Sales/Tech Service Green Belt Training Complete
September 2002
Analytical Green Belt Training Complete
September 2003
Reliability Green Belt Training Scheduled
Trained Belts - Davison
1600
Leaders
1400
1500
100%
Champions
Goal is for each salaried
employee to hold an active,
engaged Six Sigma role
Yellow Belts
1200
Green Belts
1000
Black Belts
915
61.0%
800
Black Belts
Green Belts
Yellow Belts
Champions
Leaders
Total
Entitlement
600
616
41.4%
400
200
0
80
5.3%
2000 A
2001 A
2003 YTD
2008 T
2000 A
21
33
0
20
6
80
5.3%
2001 A 2003 YTD
23
19
100
232
442
572
45
82
6
10
616
915
41.1%
61.0%
2008 T
20
560
800
100
20
1500
100%
Project Selection & Management Process
RTY
studies
Champion
Inputs
BB/GB
Follow-Up
Projects
CpK
studies
Bus. Leader
Inputs
BB Project Loading
Evaluation (3-4)
and Assignment
Project Work
Project Reviews
Monthly General Manager
Reviews for Black Belts
Monthly Plant Manager
Reviews for Green Belts
Hold, Reject,
or More Info
Business Leader
Acceptance
•Drive Project Speed
•Instant Business Feedback
•Opportunity to devote more resources
•Understand Barriers
•Opportunity to Kill a Project
•Unearth additional projects
Some of the tools we use
•
•
•
•
•
Project Charter
Process Map, Flowchart
Cause & Effect Analysis (C&E)
Failure Modes and Effects Analysis (FMEA)
Statistics and Data Analysis
–
–
–
–
–
–
–
Graphs, plots, etc... Multi-Vari Studies
Control Charts
Measurement Systems Analysis (MSA)
Regression, ANOVA
DOE (improve, optimize)
Surface Response (improve, optimize)
Process Capability
• Control Plan
– procedures, specifications, etc.
Define
Measure
Analyze
Improve
Control
2003 Six Sigma Savings
~
Catalysts
Six Sigma Plan by Quarter
2003 Type Contribution ($K)
•Each Quarter Consistent in Savings
•Missed Forecast by $1.3M
•2003 Off EBIT Goal by $6M, but Greater than 2002 by $2M
1
More capable savings accountability was used in 2003. Goal was to
drive projects more directly and accurately to the bottom line with the
use of EBIT Metrics.
Silicas/Adsorbents
Tracking Cost Reduction
I and MR Chart for Performance
S/A Cost Red
by C6
using
a Control Chart
Wave 1 & 2
Individual Value
600000
2002 Focus
New Review
UCL=543004
500000
1
400000
Mean=373679
300000
200000
LCL=204354
Forecast
100000
6
0
Subgroup
0
C4
Moving Range
Wave 1 & 2
10
20
30
6/1/2001
4/1/2002
2/1/2003
2002 Focus
200000
40
New Review
UCL=208016
100000
R=63666
0
• May, 2003 Started New Six Sigma Review Format
• Better Six Sigma Alignment to Drive Higher Performance
LCL=0
Individual Project Savings
CBHP-125 Savings Chart
Goal
Goal Sum
Actual
Actual Sum
$400,000
$350,000
Savings
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$Mar-03 Apr-03 May-03 Jun-03
Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04
Month
•Every project must report savings monthly.
•Savings accounting is reviewed by the Black Belt and Champion to insure accuracy. Expenses
or Capital Investment are subtracted from the savings.
•Savings are tracked for 12 months and subject to audit after one year. This drives the
continuous use of the Control Plan.
Six Sigma Program Investment
WR Grace (Total Commitment)
•
44 GBs (2 classes) + 25 GBs (1 class) = $ 1,000,000 (~ $15,000/person)
– Davison Catalyst Portion is approximately 25% - $250,000
•
•
•
$ 75,000 per GB Class (External Training)
– $50K fee; $25K travel and expense
$ 25,000 per GB Class (Internal Training)
Grace has done 10 externally and 10 internally
ROI: Grace Davison Catalysts (~25% of Grace)
•
•
•
Total Savings:
$ 15,000,000/year (60 times initial investment annually)
– BB Savings (70%): $ 10,500,000/year
– GB Savings (30%): $ 4,500,000/year
Resources
– Black Belts: ~ 20
– Green Belts: ~ 230
Annual Savings per Resource
– Black Belts:
$ 525,000 per year
– Green Belts:
$ 20,000 per year
Where We’re going with Six Sigma
• Beyond manufacturing...
• Administrative,
Transactional,
Corporate,
Business processes
• Sales and Technical Service
• Maintenance, Reliability
• Lean Manufacturing
– Value Chain
• Factory Physics
• Customized Six Sigma Training
What the Six Sigma Project Has
Accomplished
Y =
f (x1, x2, x3, x4, . . . xn)
We begin with the “Y”:
}
Performance of
the Y over Time
Variation
of the Y
Process Map
Initial
Capability
Assessment
C&E Matrix
FMEA
Measurement Actual
variation variation
Multi-vari
FMEA reduces variation and
effects for “inputs gone wrong”
x1, x7, x18, x22, x31, x44,
Multi-Vari identifies Noise
x57
variables and reduces the x’s for
Multi-vari studies
help develop association
between the Y and key Xs
Repeatability Reproducibility
(equipment) (people / methods)
DOE
Y = f (x7, x22, x57)
I Chart for Chart 1
Individual Value
1
Reduced measurement error ,
“true” capability assessment !
The Roadmap “funnels”
down the Xs from the trivial
many to a “vital few”
DOEs identify the Critical x’s and
their relationship to the Y
55
3.0SL=54.21
X=50.35
50
-3.0SL=46.50
45
0
10
20
Observation Number
30
Controls in place for Critical x’s
Summary
• Six Sigma
• Grace, and Davison
• Six Sigma at Grace
–
–
–
–
Evolution
Strategic, infrastructure
Tactical, execution
Results
• Questions...
• Drawing...
30+ Inputs
10 - 15
8 - 10
4-8
3-6