Six Sigma Workshop
A Primer for the Small Business
September 5, 2007
Peter J. Sherman
ASQ Certified Quality Engineer
Certified Six Sigma Black Belt
Sherman Consulting Inc.
Driving End-to-End Process Improvement
SM
Agenda
σ Objectives
σ Six Sigma Overview
σ The Basics
σ DMAIIC Process (Case Study Approach)
Define
Measure
Analyze
Improve
Implement
Control
σ Six Sigma Action Plan
σ Wrap Up
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Biography
Peter J. Sherman is an ASQ Certified Quality Engineer and a Certified Six Sigma Black Belt. He has 20
years experience, including serving as Sr. Black Belt for AT&T’s Product Development Group. Mr.
Sherman has led Six Sigma initiatives across Product Development, Sales, Fulfillment, Installation,
Customer Support, and Billing. He began his career in quality management working in Japan as a visiting
M.I.T. Scholar in 1986-87 and is currently lead Instructor at Emory University's Six Sigma Certification
Program in Atlanta, Georgia. Mr. Sherman has been published in various journals including iSixSigma
and Solutions (part of Journal of Financial Planning) and is the recipient of the 2007 Quality Excellence for
Suppliers of Telecommunications (QuEST) 8th Annual Best Practices in the Six Sigma category. Mr.
Sherman received his Master's in Engineering from M.I.T. and has an MBA from Georgia State
University. Mr. Sherman is a member of the ASQ and ISSSP.
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Objectives
1. Discover the role and value of Six Sigma
2. Learn how to conduct the Six Sigma process
and interpret the results through a case study
3. Develop and implement a 6σ Action Plan for
your business
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Six Sigma Overview
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Your Comparative Advantage
σ Capital?
σ No
σ Low-Cost Labor?
σ No
σ Market share
σ Maybe
σ Technology?
σ Maybe
It’s your management and how you manage
your business processes!
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Why Should You Care?
σ Poor quality costs money!
σ 30% for service companies
σ 15% for manufacturing companies
σ Customers have lots of options
σ Global competition
σ Your company’s reputation
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Customers
“Profit in business comes
from repeat customers,
customers that boast about
your product or service,
and that brings friends with
them.”
W. Edwards Deming
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Evolution of Quality
Lean
Six Sigma
“Juran Trilogy”
Six Sigma
Customer Value
Joseph Juran
BPR
Philip Crosby
“4 Absolutes of
Quality Circles
Quality Management”
Kaoru Ishikawa
Ishikawa Diagram
Taiichi Ohno
W. Edwards Deming
Toyota Production
System
PDCA
Deming’s 14 points
TQM
Walter Shewhart, Western Electric
Michael Hammer
ISO 9000
Kaizen
Lean
Just-in-Time (JIT)
Statistical Process Control
Control Charts
1920s
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1930s
1940s
1950s
1960s
1970s
1980s
1990s
2000s
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What is Quality?
Webster’s: peculiar and essential character, an
inherent feature; degree of excellence
Your Interpretation?
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What is Quality?
Meeting the needs and
expectations of your
customers!
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What is Six Sigma Level Quality?
The reliability of getting a dial tone every time you pick up a telephone!
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What is Six Sigma Level Quality?
Knowing your package will be delivered by 10am the next day, guaranteed!
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What is Six Sigma Level Quality?
Whether you are in Athens, GA or Athens Greece, a Big Mac tastes the same!
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Six Sigma Defined
Six Sigma (σ) is a customer focused, well defined
problem solving methodology supported by powerful
analytical tools.
σ It’s an approach to managing a business
σ Focus on customers, data and measurement
σ It’s a process improvement methodology
σ Improve existing processes
σ Build new processes
σ It’s ROI oriented
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Six Sigma Defined
As a business owner you want to:
σ
σ
σ
σ
σ
σ
Accelerate new product / service launches
Increase sales effectiveness
Reduce inventory and A/R to free up cash flow
Reduce costs associated with billing mistakes
Prevent customer service calls
Increase customer loyalty / reduce churn
Six Sigma can help you achieve these goals!
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Six Sigma Defined
“Today's competitive environment leaves no room for error. This is
why Six Sigma Quality has become a part of our culture. At its
heart, Six Sigma is about understanding what your customers
want and developing a game plan to deliver it.”
Jack Welch
Retired Chairman, CEO
General Electric
Six Sigma
Quality
Requirements are Six Standard
Deviations on each side of the
mean

6 
Lower
Customer
Requirement
6 
Upper
Customer
Requirement
6 Sigma translates into 3.4 Defects per Million Opportunities…or 99.9997% accuracy!
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Six Sigma Defined
σ Six Sigma is a measure of quality.
σ Sigma is a Greek letter used by statisticians to show the variation in
a process.
σ The higher the Sigma, the better. 3σ is considered “capable” (93.3%
error free) – necessary for a stable and predicable process.
Sigma Level
1
2
3
4
5
6
18
Defects Per
Million
Opportunities
692,462
308,538
66,807
6,210
233
3.4
% Yield
30.7538%
69.1462%
93.3193%
99.3790%
99.9767%
99.9997%
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Sigma Level Comparisons
3σ
93.3% Error Free
6σ
99.9997% Error Free
Unsafe drinking water for 10 minutes each day
One unsafe minute every seven months!
No electricity for 5 hours each month
One hour with no electricity every 34 years!
2.2M incorrect surgeries per year in the U.S.
111 incorrect surgeries per year!
150M wrong drug prescriptions a year in the U.S.
10,200 wrong drug prescriptions a year!
137,000 pieces of mail lost per hour in the U.S.
7 pieces of mail lost per hour!
Expect cold showers 2 days a month
Cold showers are less than 2 min. a year!
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DMAIIC Methodology
A rational decision making process for improving existing processes.
DEFINE THE OPPORTUNITY
CONTROL AND ADJUST
M
EASURE THE
CURRENT PERFORMANCE
NEW PROCESSES
Customer Focused
Data Driven
ROI Oriented
IMPLEMENT IMPROVEMENTS
ANALYZE THE CURRENT PROCESSES
IMPROVE PROCESS EFFICIENCY
Courtesy IIE and Aft Systems © 2007
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DMAIIC Methodology
DEFINE THE OPPORTUNITY
CONTROL AND ADJUST
M
EASURE THE
CURRENT PERFORMANCE
NEW PROCESSES
• Measure
improvements and
breakthroughs
• Report dashboard,
scorecard data and
client feedback
Customer Focused
Data Driven
ROI Oriented
IMPLEMENT IMPROVEMENTS
• Map the process,
gather initial
performance data
and determine
current “Sigma”
level
• Obtain client input,
factors Critical to
Quality (CTQ)
ANALYZE THE CURRENT PROCESSES
• Perform causeeffect analysis to
determine reasons
for gaps in
performance
• Execute plans,
overcome barriers
• Transition to the
new process
IMPROVE PROCESS EFFICIENCY
Courtesy of IIE and Aft Systems © 2007
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• Improve on what
matters most to the
client
• Significantly impact
the bottom line
• Determine
breakthroughs,
design future state:
new process, new
“Sigma” level
• Create dashboards,
scorecards and
plans
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DMAIIC Methodology
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DMADV Methodology
A rational decision making process for building new processes.
Me a
Ve r
ify
Define
D
es
ig
n
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a
n
A
sure
Customers
e
z
ly
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Keys to Successful Six Sigma Implementation
σ Top Management Support and Participation:
Senior management must drive the process through the
organization. Elements of this include careful selection of
projects, allocation of resources, and decisions based on
the measurements.
σ Clearly Defined Projects: Well-defined scope with
specific quantitative and measurable improvements.
σ Strong Project Leadership: By Black Belts and Green
Belts alike.
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Six Sigma Organization Structure
Steering
Committee
Champion
Master Black Belt
Black Belts
Green Belts
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Six Sigma Organization Roles
σ Steering Committee: Identifies projects /
black belts; allocates resources; monitors
progress; manages project portfolio; establishes
implementation strategy and policies
σ Champions: Provide support, resources and
remove road-blocks. Champions have more indepth understanding of the methods –
measurements and interpretation of process
measurements.
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Six Sigma Organization Roles
σ Master Black Belt: Master Black Belts are Six Sigma Quality experts
that are responsible for the strategic implementations within an organization.
Master Black Belt main responsibilities include training and mentoring of
Black Belts and Green Belts; helping to prioritize, select and charter highimpact projects.
σ Black Belt: Are thoroughly trained individuals with expertise in all
the analysis tools. Black Belts are expected to lead Six Sigma
projects, identify opportunities, and coach / train Green Belts.
σ Green Belt: Green Belts play a key role in the support / execution
of Six Sigma projects. Green Belts are also expected to lead smaller
projects. Green belts understand concepts of problem solving, data
collection, data interpretation, variation, process capability, and cost
analysis.
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What Six Sigma Means to Your Organization
σ Leadership:
 You’ll make more quantifiable contributions
 You’ll become more influential
σ Personal:
 You’ll learn new, marketable skills
 You’ll broaden your perspective
σ Career:
 You’ll become a more valuable asset to the corporation
 You’ll increase your job security and potential for advancement
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The Basics
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The Basics
σ QA vs QC
σ Understanding Variation
σ Statistics 101
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Count the F’s Exercise
THE NECESSITY OF TRAINING FARM HANDS FOR FIRST
CLASS FARMS IN THE FATHERLY HANDLING OF FARM
LIVESTOCK IS FOREMOST IN THE MINDS OF FARM OWNERS.
SINCE THE FOREFATHERS OF THE FARM OWNERS TRAINED
THE FARM HANDS FOR FIRST CLASS FARMS IN THE
FATHERLY HANDLING OF FARM LIVESTOCK, THE FARM
OWNERS FEEL THEY SHOULD CARRY ON WITH THE FAMILY
TRADITION OF TRAINING FARM HANDS OF FIRST CLASS
FARMS IN THE FATHERLY HANDLING OF FARM LIVESTOCK
BECAUSE THEY BELIEVE IT FORMS THE BASIS OF GOOD
FUNDAMENTAL FARM MANAGEMENT.
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QA / QC
Quality
Assurance
Input
Process
Process
Quality
Control
Output
Building in quality throughout
the process:
Ensuring output conforms to
specifications:
σ Methods & Procedures
σ Inspection
σ Roles & Responsibilities
σ Sampling
σ Training
σ Customer Complaints
σ Redundancy (i.e., power
backup, auto-save on your PC)
Both forms of quality are needed for success!
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Variation
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Understanding Variation
σ No two things are exactly alike
σ Variation is the way things normally occur
σ The amount of variation in a process tells
us what that process is actually capable of
achieving. Shrinking variation reduces
costs and creates a more predicable
outcome (product or service)
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Variation Exercise
On this page
sign your
name as you
normally
would.
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
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Types of Variation
σ Common Cause variation is always present to some
degree in the process (i.e., random, chance)
σ Take action on the system or process.
σ Special Cause variation means something different
happened at a certain time or place (ie., non-random)
σ Identify Special Causes and address them first.
Deming felt 94% of all problems are due to common
cause variation and 6% attributed to special causes.
Stable processes are predictable and in control.
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Statistics Refresher
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Statistics Refresher
σ Mean: The sum of all the values in the sample divided by the
number of values in the sample.
σ Median: The mid-point of the data when the data is arranged from
the largest to the smallest value.
σ Mode: The value of the observation that appears most frequently.
σ Range: The distance between the largest and smallest value.
Normal Distribution (Symmetrical)
Mean = Median = Mode
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Statistics Refresher
Example:
A bank generally takes a week to open and process a
new account. A random sample of 9 new accounts
indicates the following cycle times in days:
5, 8, 6, 5, 10, 4, 7, 5, 12
Find the mean, median, mode and range.
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Statistics Refresher
Standard Deviation
σ Common Usage: A measure of volatility or dispersion.
“I love the returns of the stock market, but hate the volatility.”
σ Technical Description: Defined as the positive square
root of the variance*.
S = ∑ (Xn – X)2
n-1
S = Standard Deviation (Sample)
Xn = Value in sample
X = Mean
n = Number of observations in the sample
* Variance is a measure of dispersion. Defined as the mean of the squared deviations from the mean. The problem
with using variance is interpreting it. it is in terms of units squared. How do you interpret square percents or square
dollars? The answer is to take the square root….hence standard deviation.
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Statistics Refresher
Example:
Since 1926, the Standard & Poor’s Composite Index of
common stocks has enjoyed average annual returns of
12.31% with a standard deviation of 20.5%.
What exactly does this mean? How would you interpret
this? Show your answer in a graphical form.
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Statistics Refresher
Normal Distribution (Symmetrical)
68%
95.5%
99.73%
-3 
-2 
-49.2.% -28.7%
-1 
0
+ 1
+2 
+3 
-8.2%
12.3%
32.8%
53.3%
73.8.%
- 68% of the time (1 std. dev), average returns fall within -8.2% and 32.8%.
- 95.5% of the time (2 std. dev), average returns fall within -28.7% and 53.3%.
- 99.73% of the time (3 std. dev), average returns fall within -49.2% and 73.8%.
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DMAIIC Process
Case Study
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Six Sigma Case Study
1. Form teams of four or five
2. Review the case study
3. Select roles within your teams
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Define
DEFINE THE OPPORTUNITY
CONTROL AND ADJUST
M
EASURE THE
CURRENT PERFORMANCE
NEW PROCESSES
Customer Focused
Data Driven
ROI Oriented
IMPLEMENT IMPROVEMENTS
ANALYZE THE CURRENT PROCESSES
IMPROVE PROCESS EFFICIENCY
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Courtesy IIE and Aft Systems © 2007
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Define
σ The most critical step in the DMAIIC journey.
σ Define the scope. Identify the problem and how
much you want to improve it.
An Iterative Process
Define
Measure
Analyze
Improve
Implement
Analyze
σ Projects that are not well defined and scoped
generally lead to a waste of resources (time,
management, capital).
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Define
Measure
Analyze
Improve
Implement
Control
σ Charter – the key document used to identify and define the problem
statement, project scope, team members & roles, and deliverables.
The Charter is the contract between your team and senior
management.
σ Voice of the Customer (VOC): A tool used to describe customers’
needs, leading to specific Critical-to-Quality (CTQ) requirements.
σ SIPOC – A high-level process map that includes Suppliers, Inputs,
Process, Outputs, and Customers.
σ Process Flow – A more detailed process map that documents key
resources, activities, cycle times, and decision points in a process. It
is used to identify dependencies, redundancies, gaps, and
bottlenecks.
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Project Charter
Project Name:
Black Belt:
TN / email:
Champion:
Start Date:
TN / email:
Completion Date:
Element
Description
1. Process
The process in which the opportunity exists.
2. Process
Description
3. Objective
Describe the project’s process and scope.
What improvement is targeted and what will be the
impact to the business?
Team Charter
BSL
Goal
Units
1
2
4. Business Results What is the improvement in business performance
5. Team Members
anticipated and when?
Who are the full-time members and any expert
consultants?
Which part of the process will be investigated?
6. Project Scope
7. Customer Benefits Who is the final customer, what benefits will they see
and what are their most critical requirements?
8. Schedule
Key Milestones
Project Start
D – Define
M – Measure
A – Analyze
I – Improve / Implement
C - Control
“D” Completion
“M” Completion
“A” Completion
“I” Completion
“C” Completion
Project Completion
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VOC Example – Rotary Club
Employees
Who are
your
customers?
Business
Professionals
What are
their needs?
Community
Service
Identify the
drivers
20 hours community
• Schools
• Dept. of Welfare service per year for
each member
• Public Parks
Forum to gather
Professional
Networking Means to
communicate
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Define
Critical-toQuality
requirements
Regular weekly
meetings
• Member Handbook
• 24x7 web access
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SIPOC / Process Flow Example – Rotary Club
Suppliers
Inputs
Prospective
Rotarian
Processes
Application
Becoming
a Rotary
Club
Member
References
Output
Customers
Approval
document
New Rotarian
Member
Rejection
Document
Rotarian Club
Sponsor
2
1
Marketing /
Promotion
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3
Apply for
Membership
4
Gather
Biography /
References
6
5
Evaluate
Candidate
Accept /
Reject
Pay Dues
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Detailed Process Flow Example - Rotary Club
Day 1
Day 7
Day 10
Rotary member
personally
discusses with
prospective
member
Invites prospect to
Rotary Lunch to
meet members
Day 17
Day 24
Day 0
Start
Prospect
decides to
apply
Yes
No
End
Prospect completes
Membership
Application and
sends by mail
Rotary Club collects
and reviews
applications for
completeness
Application
complete?
No
Yes
Day 38
Day 40
Day 47
Day 57
Day 67
Day 67
Day 68
Rotary Club
evaluates
candidate / verifies
references
Decision:
Accept / Reject
Reject
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Accept
Candidate is
officially accepted
to Rotary
Review Applicant
in Future
New Member
receives invoice
by mail
Pays dues by
mail
Rotary receives
dues
End
End
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Team Activities
1. Complete a Project Charter. See
handout. Be as specific as you can.
2. Develop a VOC (identify 1 critical-toquality requirement)
3. Complete a SIPOC Analysis and HighLevel Process Flow
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Pizza Express Charter
Project Name
Black Belt
Champion
Element
1. Process:
Pizza Express Delivery Improvement
Telephone Number
Start Date
Target Completion Date
Description
Team Charter
The process in which
opportunity exists.
Pizza Express operates a pizza delivery business out of a
single retail store. The basic operations include:
1.
2.
3.
4.
2. Project Description:
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Describe the Project’s Purpose
and scope.
Take orders from incoming telephone calls.
Prepare and bake the pizza.
Deliver the pizza via automobile.
Collect payment.
During the past 6 months of 2007 orders have been increasing
significantly, however the business is losing money (1% loss
or nearly $10,000). Customers have been complaining about
the pizzas not being hot and fresh and late deliveries.
The scope of this project will be to investigate the root causes
of the delivery delays and to reduce them by 50% or approx.
$97,000 annually. Resulting operating profits are projected to
increase to $87,600 per year (10% margins).
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Pizza Express Charter
3. Objective:
What improvement is targeted
and what will be the impact to
the business?
1. Reduce pizza delivery
delays by 50%
2.
3.
4. Business Results:
5. Team members:
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BSL1
GOAL
units
15,803
7,901
$193,581
$96,790
Pizza
Orders
Dollars
($9,158)
$87,632
Reduce Refunds
Increase Operating Income
What is the improvement in
business performance
anticipated and when?
Who are the full-time members
and any expert consultants?
Dollars
Improve the on-time delivery of pizzas. This will result in
increased operating income. Time horizon to implement
improvements is the next 2-3 weeks.
Larry Jones, Owner
Mario, Pizza Chef
Rachael, Receptionist
Wayne, Driver
Bobby, Driver

The order-to-cash cycle will be investigated (ordering /
production / delivery / receipt of cash)
6. Project Scope:
Which part of the process will
be investigated?
7. Benefit to External
Customers:
Who is the final customer, what
benefits will they see and what
are their most critical
requirements?

8. Schedule:
Give the key milestones/dates
D- Define
M- Measurement
A- Analysis
I- Improve/Implement
C- Control
Project Start
“D” Completion
“M” Completion
“A” Completion
“I” Completion
“C” Completion
Project Completion
The end-customer is the primary beneficiary of this
process improvement and will benefit from greater
consistency of on-time delivery and customer
satisfaction.
Sept 5, 2007
Sept. 5, 2007
Sept. 10, 2007
Sept. 28. 2007
Oct. 30, 2007
Dec 15, 2007
Dec 20,, 2007
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Pizza Express VOC
Customer
Need / Drivers
CTQs
Primarily middleincome families
with children
Good tasting, quality Pizza


100% guarantee for freshness
Only source suppliers with proven track record and
Quality Management System in-place
Fast Service



30 minute delivery from order
Regular 3 month vehicle maintenance
All drivers given maps
Convenience


Open 7 days a week
Flexible Hours of Operation
o Mon – Thurs (11am – 10pm)
o Fri and Sat (11am – 2am)
o Sun (Noon – 11pm)
Good Customer Service




Answer telephone by 2nd ring
Customer greeted by name
Customer not interrupted
Always repeat order / address / phone number back to
customer
Competitively Priced
Prices will not exceed average of competition
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Pizza Express SIPOC / Flow
SUPPLIERS
INPUTS
PROCESSES
OUTPUTS
Food
Wholesalers
Ingredients (dough,
tomato sauce,
cheese, spices, etc.)
Pizza
Food Equipment
Vendors
Ovens, stoves,
refrigerator, etc.
Bill
Landlord
Building space
Automobiles
Cars and fuel
Utility Companies
Electric, gas,
telephone
Misc. Suppliers
Pizza boxes, pots,
pans, kitchen tools,
etc.
1
2
Take
Order
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End-User
Order-to-Cash
Cycle
3
Prepare
Pizza
CUSTOMERS
4
Cook
Pizza
5
Deliver
Pizza
Collect
Payment
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Pizza Express Detailed Process Flow
Pizza Express
Order-to-Cash Process Flow
Customer
Opportunity for Error
1) Non-Payment
2) Incorrect change
Opportunity for Error:
1) Car Problem (Out
of Gas, Flat Tire,
Mechanical)
2) Driver unfamiliar
with location
Receptionist /
Cashier
Prepares
Pizza
Delivery
Takes order,
name &
address
Pizza Chef
Customer
Calls in Order
Opportunity for Error
1) Wrong Order
2) Wrong Address
3) Wrong Bill
Delivers Pizza
to customer
Late or
Incorrect
Order
No
Collects Full
Payment from
customer
Yes
Credits
customer and
collects partial
payment
Opportunity for Error
1) Under / Over Cook
Returns to Pizza
Express to
deposit cash to
Receptionist /
Cashier
Opportunity for Error
1) Bad Ingredients
Cooks Pizza
Places Pizza in
box and places
on Delivery
Shelf
End
Picks up batch
of pizzas
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Measure
DEFINE THE OPPORTUNITY
CONTROL AND ADJUST
M
EASURE THE
CURRENT PERFORMANCE
NEW PROCESSES
Customer Focused
Data Driven
ROI Oriented
IMPLEMENT IMPROVEMENTS
ANALYZE THE CURRENT PROCESSES
IMPROVE PROCESS EFFICIENCY
58
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Define
Measure
Analyze
Improve
Implement
Control
Measure your current performance:
σ
σ
σ
σ
σ
59
% or # defects
Process “in-control” or “out-of-control”
Sigma Level (capability of process)
% Yield
Cost of Poor Quality
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Data
σ Data Collection Plan – Identify the type data
(variable vs. discrete), source, the format.
Collect as much as you can!
σ Variable: Data that is continuous and can be
measured (i.e., length, time). Typical types
include cycle time, Average Handling Time.
σ Attribute: Data that is discrete (i.e., yes or no
response, pass or fail, go or no-go). Typical
types include % Defective, # Defective, #
Defects, Defects per Unit.
60
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Data
Collect as much data as you can!
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Define
Measure
Analyze
Improve
Implement
Control
σ Histogram – a graphical representation of data in a bar chart format. Used
to observe the “shape” of data (i.e., normal, bell-shaped vs. skewed).
σ Control Charts – The fundamental statistical tool used in Six Sigma. It
shows the amount and type of variation present in the process. Stable
processes are predictable and in (statistical) control.
σ Process Capability – the capability of a process to consistently make a
product / service that meets a customer specification range (tolerance).
Used to predict the performance of a process by comparing the width of
process variation to the width of the specified tolerance.
X
Lower
Specification
Limit
62
Process Width
Design Width
A Capable
Process
Upper
Specification
Limit
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Histogram
1.
2.
3.
Collect data
Arrange data attribute in ascending classes across the
horizontal axis
Populate the specific data in the appropriate class
Normal Distribution
Mean = 25.233
Std Dev = 9.358
KS Test p-value = .4673
Histogram
20
# Observations
15
10
5
0
5.75 to <=
11.5
11.5 to <= 17.25 to <= 23.0 to <= 28.75 to <= 34.5 to <= 40.25 to <=
17.25
23.0
28.75
34.5
40.25
46.0
Class
63
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Control Chart
σ Considered the foundation of Six Sigma
statistical analysis
σ Shows the amount and type (special or
common causes) of variation in a process
σ Indicates if a process is
σ “In-Control”  stable, predictable
σ “Out-of Control”  not stable, special causes exist
64
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Control Chart Interpretation
In-Control – All data points are within the
upper and lower control limits.
UCL
CL
LCL
65
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Control Chart Interpretation
Out-of-Control (Special Causes) – any point touching
or beyond the control limits
UCL
CL
LCL
66
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Control Chart Interpretation
Trend – 6 successive points in an upward or downward direction
UCL
CL
LCL
67
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Control Chart Interpretation
Cycle – variation caused by regular changes in the
process inputs or methods (i.e., time of day, seasonal)
UCL
CL
LCL
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Control Chart Interpretation
Jumps – distinct changes from low to high values
attributed to a change (i.e., operator shifts, material)
UCL
CL
LCL
69
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Control Chart Interpretation
Repeats – a pattern where every nth item is different
(i.e., one station out of alignment)
UCL
CL
LCL
70
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Key Process Metrics
σ
σ
σ
σ
DPMO – Defects Per Million Opportunities
Sigma Level – 3 or higher is “capable”
% Yield
Cost of Poor Quality
X
Lower
Specification
Limit
Process Width
A Capable
Process
Upper
Specification
Limit
Design Width
71
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Team Activities
You decided to take a random sampling of pizza delivery times:
Sample No.
1
2
3
4
5
6
7
8
9
10
1.
Interpret results (in control or out-of-control)
Calculate the key Process Metrics
σ
72
Interpret results (normal or skewed)
Develop a Control Chart (xbar and R) – use the data above
σ
3.
28
25
20
30
25
18
25
75
27
20
Construct a Histogram - use the data above
σ
2.
Sub-Group
(Minutes to Delivery Pizza)
20
25
90
20
25
90
20
28
115
20
30
27
60
110
21
18
30
21
22
60
Interpret results (capable or not capable)
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Pizza Express Histogram
Upper Specification
Limit. Customer
Requirements (within
30 minutes)
Pizza Express
Histogram - Delivery Times
Interpretation of Chart:
Shape: Ideally, the histogram
should be bell-shaped, symetrical
and unimodal (single peak) to
indicate the data is normally
distributed.
14
12
Data skewed to the right
beyond the red bar (30 min.
Upper Spec. Limit)…indicating
process is not capable.
Frequency
10
Histograms that are skewed to the
left or right or have multiple peaks
indicate the data is not normally
distributed. This could mean the
presence of Special Causes
(unusual changes) or possibly the
data is coming from 2 or more
sources (i.e., shifts, people,
machines, suppliers).
8
6
4
Process Cabability: A histogram
wiithin LSL and USL indicates the
process is capble of meeting
Customer Requirements.
2
0
18
38
58
78
98
118
138
158
Class Intervals (minutes)
73
178
198
218
238
If bordering / exceeding the LSL or
USL, the process is too variable
and not capable of meeting
customer requirements. The
process must be improved.
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Pizza Express Control Charts
Pizza Express
Control Chart (X bar)
100.00
Interpreting the Chart
If the Averages Line (blue
line) is within the Upper
Control Limit and Lower
Control Limit…..the process is
IN CONTROL. While good,
there is still an opportunity to
improve the process. .
UCL
80.00
While within the Control
Limits, the process
averages show increasing
variation.
Minutes
60.00
Averages Line of
each Sample
If the Averages Line (blue
line) is touching or outside of
the UCL or LCL…….the
process is NOT IN CONTROL.
Special Causes exist (i.e., a
new vendor is added, a new
employee has not been fully
trained) and must be
addressed before attempting
to improve the process.
40.00
X Bar
20.00
0.00
1
-20.00
2
3
4
5
6
7
9
10
LCL
Delivery Time Samples
74
8
Average
UCL
X bar
LCL
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Pizza Express Control Charts
Pizza Express
Control Chart (R Chart)
Interpreting the Chart
140
UCL
If the Range line (blue) is within
the Upper Control Limit and
Lower Control Limit…..the
process is IN CONTROL. While
good, there is still an opportunity
to improve the process. .
120
Indications of
excessive
variation in
the Range
Minutes
100
Range Line
If the Range Line (blue) is
touching or outside of the UCL or
LCL…….the process is NOT IN
CONTROL. Special Causes
exist (i.e., a new vendor is
added, a new employee has not
been fully trained) and must be
addressed before attempting to
improve the process.
80
60
40
R Average
20
LCL
0
1
2
3
4
5
6
7
8
9
10
Delivery Time Samples
Range
R Average
UCL
LCL
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Pizza Express Key Process Metrics
Key Metric
# Samples
# Deliveries > 30 minutes
Average Delivery Time (min)
DPMO
Sigma Level
Yield
# Pizzas Delivered per Year
$ Loss Per Pizza
Cost of Poor Quality per Year
76
Result
30
7
38.2
233,333
2.3
79%
75,250
$12.25
$195,291
Comments
Defects Per Million Operations
Process Not Capable (<3)
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Analyze
DEFINE THE OPPORTUNITY
CONTROL AND ADJUST
M
EASURE THE
CURRENT PERFORMANCE
NEW PROCESSES
Customer Focused
Data Driven
ROI Oriented
IMPLEMENT IMPROVEMENTS
ANALYZE THE CURRENT PROCESSES
IMPROVE PROCESS EFFICIENCY
77
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Define
Measure
Analyze
Improve
Implement
Control
The primary purpose of the Analyze stage
is to:
σ Make sense out of the data
σ Identify root causes of the problem.
78
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Define
Measure
Analyze
Improve
Implement
Control
σ Pareto Chart – focuses efforts on the
problems that offer the greatest potential for
improvement by showing their relative frequency
in a descending bar graph.
σ Cause-and-Effect Diagram – graphically
displays potential causes of a problem.
79
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Pareto Chart Example – Rotary Club
Rotary Member Drop Out
Reasons
Lack of Interest
No Time
Relocated to Another City
Death
Failure to Pay Dues
Misconduct
25
Total
Count
2
7
10
3
1
2
25
Rotary Club Membership Drop-Out
Pareto Chart
100%
90%
# Observations
20
80%
70%
“Relocations” and “No time”
account for 68% of the Rotary
Club Drop-Out Rate
15
60%
50%
10
40%
30%
5
20%
10%
0
0%
Relocated to Another
City
No Time
Death
Lack of Interest
Misconduct
Failure to Pay Dues
Categories
80
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From Victor Hugo as adapted from Virgil
Felix qui potuit rerum
cognoscere causas.
81
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Cause-and-Effect Diagram
Mother Nature
Methods
Machine
Problem
Man
82
Materials
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Root Cause Exercise
σ What do you think caused the Titanic to
sink?
83
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Team Activities
1. Develop a Pareto Chart
σ Interpret the results
2. Develop a Cause-and-Effect diagram
σ Interpret the results
84
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Pizza Express Pareto Chart
Pizza Express
Pareto Chart
65% of the complaints
consist of Food Not
Fresh / Hot and Late
Deliveries
40
35
100%
90%
80%
30
Frequency
70%
Late Delivery appears positively
correlated with Food Not Fresh / Hot
25
60%
20
50%
40%
15
30%
10
20%
5
10%
0
0%
Food Not Fresh / Hot
85
Late Delivery
Wrong Order
Food Returned (Not
Cooked Properly)
Factor
Wrong Address
Incorrect Bill
Miscellaneous
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Pizza Express Cause & Effect Diagram
86
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Improve
DEFINE THE OPPORTUNITY
CONTROL AND ADJUST
M
EASURE THE
CURRENT PERFORMANCE
NEW PROCESSES
Customer Focused
Data Driven
ROI Oriented
IMPLEMENT IMPROVEMENTS
ANALYZE THE CURRENT PROCESSES
IMPROVE PROCESS EFFICIENCY
87
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Define
Measure
Analyze
Improve
Implement
Control
In order to improve, possible
improvements are developed and
evaluated in a logical and planned fashion
σ Brainstorm ideas
σ Rank, evaluate, prioritize ideas based on key
criteria
88
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Improvement Tools
Optimal
Projects
Low
Benefit
High
2x2 Cost / Benefit Grid
Solution Prioritization Matrix
Low
High
Cost
89
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Team Activities
1. Brainstorm ideas for improvement
2. Rank and evaluate
σ Solution Prioritization Matrix (modify criteria /
adjust weights)
3. Select your improvement idea and
present rationale
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Pizza Express Solution Prioritization Matrix
Controllable
Idea
Description
Yes
No
weight ==>
Effectiveness
Time to
Implement
Cost
Customer
Satisfaction
40%
10%
10%
40%
Weighted
Average
Comments
Scores range from 1 (lowest) to
10 (highest)
1
Add more pizza drivers
■
5
6
2
7
5.6
Possibly, although business
appears to be adequately staffed
2
Hire more experienced drivers (who know
the territory) by offering higher salary
■
5
4
3
5
4.7
May not address root cause.
More expense involved.
3
Remove Calzone, Manicotti and soft
drinks from the menu. Return to just pizza
delivery.
■
4
7
8
5
5.1
4
Add electronic order taking technology to
ensure orders are captured accurately and
stored.
■
5
3
3
5
4.6
2
8
9
0
2.5
6
9
9
1
4.6
Does not address root cause
5
6
7
Refuse to take certain orders that are too
far away
Increase delivery time specifications (i.e.,
45 min delivery)
Change Order / Delivery Process:
Request zip code during order and use
MapQuest determine distance.
- Deliveries > 2.5 miles to be limited to 2
orders. Deliveries <2.5 miles continue with
3-4 grouped orders.
8
Add another pizza chef
9
Open new store to handle larger
geography
10
Reduce the refund to only half the cost for
late deliveries
■
■
Most likely to improve financials -not impact delivery time..
Constantly changing the menu
may create poor customer
experience.
Little evidence to suggest the
current paper ordering system is
not working. Only 1% wrong
orders.
Negative impact on customer
satisfaction
■
8
8
7
9
8.3
Good near-term solution. But may
not be financially optimal since
long-distance deliveries cannot be
bundled.
■
2
7
8
3
3.5
Unlikely the bottleneck is occuring
in the kitchen since drivers are not
complaining of waiting on orders.
■
9
2
Good long-term solution to reduce
late deliveries and capture market
2
10
8.0
share. Although it will reqiure
Sherman Consultingsignificant
Inc. capital.
■
1
8
8
91
2
Driving 2.8
End-to-End
Process
Improvement
Does
not address
root cause
SM
Implement
DEFINE THE OPPORTUNITY
CONTROL AND ADJUST
M
EASURE THE
CURRENT PERFORMANCE
NEW PROCESSES
Customer Focused
Data Driven
ROI Oriented
IMPLEMENT IMPROVEMENTS
ANALYZE THE CURRENT PROCESSES
IMPROVE PROCESS EFFICIENCY
92
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Define
Measure
Analyze
Improve
Implement
Control
Implementation can be accomplished by a Design
of Experiment (DOE)…..aka pilot.
Business
Definition:
DOE helps identify and validate those factors that
have the most significant impact on a process, from
which you will form your conclusions and
recommendations to senior management.
Technical
Definition:
DOE is a methodology of varying a number of input
factors simultaneously in a carefully planned manner,
such that their individual and combined effects on the
output can be identified.
93
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DOE - Advantages
σ Allows you to identify the critical factor(s)
σ Allows many factors to be evaluated simultaneously
σ Economical and less disruptive to normal operations
σ Provides a fact-based approach to making conclusions in
confidence
94
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Control
DEFINE THE OPPORTUNITY
CONTROL AND ADJUST
M
EASURE THE
CURRENT PERFORMANCE
NEW PROCESSES
Customer Focused
Data Driven
ROI Oriented
IMPLEMENT IMPROVEMENTS
ANALYZE THE CURRENT PROCESSES
IMPROVE PROCESS EFFICIENCY
95
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Define
Measure
Analyze
Improve
Implement
Control
σ Form a dedicated team to monitor the process
σ Perform continuous improvement
σ “Lock-in” the gains
96
No. Activity
Owner
Frequency
1
Develop Control Charts
Industrial
Engineering
Weekly /
Monthly
2
Produce Key Metrics Reports
(DPMO, Sigma Level, Cpk)
Industrial
Engineering
Weekly /
Monthly
3
Develop Financial Reporting
(billed revenue)
Finance
Industrial
Engineering
Monthly by
State and
Region
4
Review technical issues with
software (i.e., bugs)
Field Ops
Vendor
As needed
5
Continuous improvement
through interviews / focus
groups with Technicians
Industrial
Engineering
/ Field Ops
Monthly
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Team Activity
σ Develop a control plan for your project
97
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Pizza Express Control Plan
No. Activity
1 Develop and interpret control charts
2
Review key metric reports (DPMO, Sigma Level, Cost)
3
Review technical issues with new solution
Continuous improvement via interviews / focus groups
with customers and other stakeholders
4
98
Owner(s)
Rachael
Rachael /
Larry
Team
Frequency
Weekly / Monthly
Team
Monthly
Weekly / Monthly
Weekly / Monthly
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Six Sigma
Action Plan
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Six Sigma Action Plan
Talk to your customers
to understand their
needs!
1
Layout and understand your end-to-end business process
σ Identify gaps, bottlenecks, redundancies
Marketing
100
Sales
Fulfill &
Deliver
Support
Billing
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Six Sigma Action Plan
2
Determine which parts of your service processes are the best
candidates:
Category
Description
Highly Customized
Poor candidates for 6 Sigma campaigns (low ROI), i.e., Complex IT systems
Mass-Customized
Good candidates for 6 Sigma campaigns if the volume of activity is high
enough, i.e., Web-based marketing / customer accounts / fulfillment, customer
support
Standardized
Great candidates for 6 Sigma campaigns (high ROI); i.e., Account Processing /
Maintenance, Billing, Accounts Payable, Payroll
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Six Sigma Action Plan
Key Activities
Application of Six Sigma
Marketing
• Increase pipeline of prospective customers
• Reduce time-to-market for product and service launches
Sales
• Improve sales close rates
• Reduce sales cycle times
Fulfillment and
Delivery
• Improve on-time delivery of products
• Improve accuracy of orders (i.e., reduce returns)
• Reduce inventory levels to better manage cash flow
Support
• Improve first-contact resolution
• Lower handling time for contacts
• Improve customer satisfaction
Billing
• Improve accuracy of invoice
• Shorten accounts receivable days outstanding
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Six Sigma Action Plan
3
Measure your key activities over time:
σ New sales cycle times / success rate
σ Account processing cycle times / defect rate
σ Other
“If you don’t measure it, you can’t manage it.”
W. Edwards Deming
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Preliminary Project Screener
Focus on specific, achievable process improvements!
104
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Six Sigma Action Plan
105
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Wrap Up
σQ &A
σ Tools: www.sherman6sigma.com
σ Resources (next page)
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Six Sigma Resources
Professional Organizations:
σ American Society for Quality (http://www.asq.org)
σ Int’l Society for Six Sigma Professionals (http://www.isssp.com)
Key Books / Trade Journals / Websites:
σ The Six Sigma Revolution, G. Eckes (2001)
σ The Six Sigma Way, P. Pande, R. Neuman, R Cavanaugh (2000)
σ The Six Sigma Handbook, T. Pyzdek (2000)
σ iSixSigma Magazine (http://www.isixsigma.com)
σ Six Sigma Forum Magazine (http://www.asq.org/sixsigma)
σ General Electric (www.ge.com/sixsigma)
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