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Steve Vardeman
vardeman@iastate.edu
304 – D Snedecor
Industrial Engineering 361
Six Sigma
Breakthroughs in Quality
Trent Lewis
Kim Martin
Matt Grennan
September 28, 2001
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.. thing that the truly great companies of the world have in common, regardless of
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the diversity of their industries, is total business focus on servicing customers. With
Six sigma as the enabler, we intend to meet that standard.”
- GE 1999 Annual Report
Six Sigma
So, what is six sigma? The Greek letter Sigma, σ, is used by statisticians to measure the
variability in any process. Six sigma is a philosophy, or journey, of doing business with a focus
to achieve an optimized level of performance approaching zero-defects in a process producing a
product, service or transaction within a company. The term six sigma was conceived at Motorola,
Inc. in the late 1980’s as a way to achieve the company’s goal of a hundred-fold improvement in
quality within a five year time span. (www.mu.motorola.com/sigma.shtml) Motorola adapted the
six sigma processes for “survival” within the competitive marketplace, to produce higher quality
products at a lower cost.
The sigma level of a business process measures a company’s performance. Six sigma
also denotes a specific measure of how well a process or transaction is performing, the six sigma
process produces extremely few defects, 3.45 per million opportunities (99.9997% defect-free).
A defect is something that results in customer dissatisfaction.
(www.pyzdek.com/whatiissixsigma.htm).
Six sigma programs are implemented in five phases: (I) Scope (II) Measure, (III)
Analyze, (IV) Improve, and (V) Control. The Scope step defines and identifies variables and
CTQs (Critical to Quality) for every transactional process. The Measure step draws up a process
map that details the problem areas, redundancies, and waste. The data on response variables
collected are required to establish the current capability of the transactional process, one mush
rely on the analysis of a small subset, called a sample, to infer the defect levels of the population.
The measurement system validated (Gage R&R), and baselines are also established. The Analyze
step identifies the vital causes of variation that are responsible for much of the variation in the
response variables. The Improve step is to work on the vital causes of variation so that they
contribute as little as possible to the variability in the response variables. And, the Control step
objective is to ensure the problems once fixed, stay fixed. This can be done with statistical
monitoring using control charts. Once the programs have been successfully implemented, the
defect rates will decline, customer satisfaction will increase and financial benefits will incline
from one year to the next. (www.sixsigmaquality.com).
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.. 1: MAIC and Statistics
Table
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Element
Statistical Topics
-Measurement Concept
Measure
- Regression &
Linear Calibration
-Data Collection
- Modeling
Measurement Error
-Inference in Measurement Precision Studies
-Descriptive statistics
-Normal
Plotting & Capability Indices
-Statistical Intervals & Testing
-Confidence
Intervals & Testing
Improve
-Regression Analysis & Response Surface Methods
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Probabilistic Tolerancing
-Confidence Intervals & Testing
-Factorial &
Factorial Factorial analysis
Control
-Shewhart Control Charts
(www.public.iastate.edu/~vardeman/stat531/sixsigma.pdf)
The Advantages of Six Sigma
Now that six sigma has clearly been defined in the quality realm, the question arises, how
does this phenomenon translate into actual advantages for a given process or company? Again,
the basic idea of virtually eliminating errors or defects in a process is at the root of all advantages.
At first, this may seem inherently cost-prohibitive; especially for those processes and companies
well entrenched in wasteful and inefficient cultures. Many would wonder if the cost savings
would ever surpass the incredible expenditure of whittling away at the extremes of un-quality.
But looking clearly at the numbers would indicate another story.
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.. that is operating in the more traditional three or four sigma range is producing
A process
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somewhere between 6,200 and 67,000 defective parts per million. This is far from an
insignificant number, especially when considering the increasing demands of the customer and
the continuing complexity of today’s modern parts. The advantages of a six sigma system begin
to come to light when the cost of this poor quality is brought to light. The following chart shows
very clearly the cost of poor quality to a company operating a different sigma levels
(http://www.pyzdek.com/whatissixsigma.htm).
In a three sigma level environment, poor quality is responsible for consuming one-fourth
of the revenue. In a four sigma environment, the cost is still nearly 15% of the total revenue.
These costs come in the form of sorting and the extensive efforts needed to weed-out the good
product from the bad. The more defects, the more that need to be captured before making it to
the customer, but also, the more that still slip through. And thus, a large cost associated with
appeasing and righting the mistakes that make it to customers. But there are even more costs than
these. The cost of reputation or goodwill, which is hard to calculate, must be included and
deteriorates mightily if numerous customers are receiving faulty product.
In a six sigma process the defects have been brought down to a level that eliminates the
need for extensive screening or “weeding-out” procedures. This itself reduces an entire step or
department in a process or company. Also, backtracking and correcting costs are significantly
reduced and goodwill remains intact. Ultimately, customer satisfaction is the goal of six sigma
initiatives. While this is only a partial explanation, it points to the direct cost advantages of
attacking the outer edges of the normal distribution. General Electric estimates that, “the gap
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.. or four sigma and six sigma was costing [them] between $8 billion and $12 billion
between three
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per year in inefficiencies and lost productivity” (http://www.pyzdek.com/whatissixsigma.htm).
As proof of the viable advantages associated with a six sigma mentality, one merely has
to look at the list of companies adopting six sigma practices. They include General Electric,
Texas Instruments, Allied Signal, Citibank, Du Pont, Dow Chemical, J. P. Morgan, 3M
Company, Conseco Financial Services, GlaxcoSmithKline, Johnson & Johnson, Air Products &
Chemicals, Praxair, AIG Financial Services, among numerous others, and the list is rapidly
growing (sixsigmaquality.com/sixsigma.html).
Those providing six sigma consulting want to make it very clear that these advantages are based
on fundamental principles; this is not just a fad. Six sigma is problem solving at its best and
incorporates the leading approaches to quality over the last century into a practical methodology.
In manufacturing environments these advantages look like increased capacity, decreased costs,
reduced energy consumption, and a better handle on quality control. In service sectors, the
advantages can be just as effective as defects are attacked, cycle times increased, costs thinned,
and customer satisfaction solidified as the goal.
Who is Six Sigma for?
The six sigma concepts of eliminating waste and adding value, of an unrelenting
commitment to quality, and of total company focus, apply to all organizations and all processes.
From manufacturing to banking, companies have profited immensely from the implementation of
six sigma quality standards.
There are, however, some instances in which six sigma may not be the preferred, or most
feasible, option. If a project involves a relatively simple fix (“low hanging fruit”), then six
sigma’s stringent approach may take up unnecessary time and resources. In other instances,
smaller companies must make decisions about the high cost of training and implementation
versus the rewards that six sigma quality can offer it.
Implementing Six Sigma?
From Pyzdek’s Breakthrough Strategy’s eight fundamental stages, to Six Sigma
Qualtec’s specialized assessment and program development tailored for a client’s specific needs,
the implementation methods for a six sigma quality program can be as varied as the consultants
who provide them. With all of these choices, companies can find the exact methods and training
that work for their specific financial, time, and change goals.
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.. what package a company chooses, however, all six sigma experts agree on the
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core changes that the organization must be prepared to undergo. Implementing six sigma quality
standards requires a serious commitment of time, effort, and resources. Initially, company
leadership must be trained as six sigma black belts and master black belts (These programs varyas
well—Six Sigma and Advanced controls recommends a two-week program, whereas Six Sigma
Qualtec’s training takes four weeks interrupted by structured six sigma projects). These trained
individuals start the wave through the organization, with master black belts acting as internal
trainers, continuously training employees, and with black belts heading up projects to achieve
better quality levels. Eventually, a six sigma program must permeate all levels of an
organization. It must start with a commitment from the highest levels of management and filter
outward, providing understanding and commitment to everyone, changing the way that the entire
company goes about doing business.
(http://www.isixsigma.com/sixsigma/six_sigma.asp)
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References:..
Advanced Systems Consultants—Six Sigma Quality Program:
http://www.mpcps.com/SIX0.html
American Society for Quality: http://www.asq.org/info/glossary/definition.html#s
i Six Sigma: http://www.isixsigma.com/sixsigma/six_sigma.asp
Motorola University: http://mu.motorola.com/sigma.shtml
Six Sigma Academy: http://6-sigma.com/Bts1.htm
Six Sigma and Advanced Controls, Inc.: http://www.sixsigmaquality.com/sixsigma.html
Six Sigma and Beyond, Pyzdek Consulting: http://www.pyzdek.com/whatissixsigma.htm
Six Sigma Qualtec: http://www.sixsigmaqualtec.com/Products/sixsigma/
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