1
Lean Six Sigma
Green Belt Training
Define Phase
Understanding Six Sigma
Welcome to Open Source Six Sigma’s Yellow Belt Training Course.
This course has been designed to build your knowledge and capability to improve the
performance of processes and subsequently the performance of the business of which you are a
part. The focus of the course is process centric. Your role in process performance improvement
is to be through the use of the methodologies of Six Sigma, Lean and Process Management.
By taking this course you will have a well rounded and firm grasp of many of the tools of these
methodologies. We firmly believe this is one of the most effective classes you will ever take and it
is our commitment to assure that this is the case.
We begin in the Define Phase with “Understanding Six Sigma”.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
2
Understanding Six Sigma
Overview
The core fundamentals
of this phase are
Definitions, History,
Strategy, Problem
Solving and Roles and
Responsibilities.
Understanding Six Sigma
Definitions
History
We will examine the
meaning of each of
these and show you
how to apply them.
Strategy
Problem Solving
Roles & Responsibilities
Six Sigma Fundamentals
Selecting Projects
Elements of Waste
Wrap Up & Action Items
What is Six Sigma…as a Symbol?
σ sigma is a letter of the Greek alphabet.
–
–
Mathematicians use this symbol to signify standard
deviation, an important measure of variation.
Variation designates the distribution or spread
about the average of any process.
The variation in a process refers to how tightly all the
various outcomes are clustered around the average. No
process will produce the EXACT same output each time.
Variation is our enemy. Our
customers, both internal and
external, have expectations
relative to the deliverables from
our processes. Variation from
those expectations are likely
dissatisfiers to them. Much of
this course is devoted to
identifying, analyzing and
eliminating variation. So let’s
begin to understand it.
The Blue Line designates
narrow variation while the
Orange Line designated wide
variation.
Obviously the less variation
within a process the more
predictable the process is,
assuming the mean is not moving all over the place. If you took the height of everyone in the class would
you expect a large variation or narrow variation?
What if you had a few professional basketball players in the room, would that widen or narrow the
variation?
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
3
Understanding Six Sigma
What is Six Sigma…as a Value?
Sigma is a measure of
deviation. The
mathematical calculation
for the Standard Deviation
of a population is as
shown.
Sigma can be used
interchangeably with the
statistical term Standard
Deviation.
Standard Deviation is the
average distance of data
points away from the
Mean in a distribution.
By definition, the Standard Deviation is the distance
between the mean and the point of inflection on the
normal curve.
Point of Inflection
When measuring the
sigma value of a process
we want to obtain the
distance from the Mean to
the closest specification
limit in order to determine
how many Standard
Deviations we are from
the mean….our Sigma
Level!
The Mean being our optimal or desired level of performance.
What is Six Sigma…as a Measure?
The probability of creating a defect can be estimated and translated into a
“Sigma” level.
-6
-5
-4
-3
-2
-1
+1
+2
+3
+4
+5
+6
The higher the sigma level, the better the performance. Six Sigma refers to a process having six
Standard Deviations between the average of the process center and the closest specification limit or
service level.
This pictorial depicts the percentage of data which falls between Standard Deviations within a Normal
Distribution. Those data points at the outer edge of the bell curve represent the greatest variation in our
process. They are the ones causing customer dissatisfaction and we want to eliminate them.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
4
Understanding Six Sigma
Measure
“Sigma Level” is:
–
–
A statistic used to describe the performance of a process relative to the
specification limits
The number of Standard Deviations from the mean to the closest
specification limit of the process
USL
6 Sigma
5 Sigma
4 Sigma
3 Sigma
2 Sigma
1 Sigma
The likelihood of a defect decreases as the number of Standard Deviations that
can be fit between the Mean and the nearest spec limit increases.
Each gray dot represents one Standard Deviation. As you can see the Normal Distribution is
tight.
Said differently, if all the outputs of our process fall within six Standard Deviations from the
Mean, we will have satisfied our customers nearly all the time. In fact, out of one million
customer experiences, only 3.4 will have experienced a defect.
What is Six Sigma…as a Metric?
Each of these metrics serves a different purpose and may be used at different levels in the
organization to express the performance of a process in meeting the organization’s (or
customer’s) requirements. We will discuss each in detail as we go through the course.







Defects
Defects per unit (DPU)
Parts per million (PPM)
Defects per million opportunities (DPMO)
Rolled Throughput yield (RTY)
First Time Yield (FTY)
Sigma (s)
20
18
16
14
12
10
8
0
20
40
60
80
100
Above are some key metrics used in Six Sigma. We will discuss each in detail as we go through the
course.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
5
Understanding Six Sigma
What is Six Sigma…as a Benchmark?
This data represents the sigma level of companies. As you can see less than 10% of companies
are at a 6 sigma level!
What is Six Sigma…as a Method?
The Six Sigma Methodology is made up of five stages: Define, Measure, Analyze, Improve and
Control.
Each has highly defined steps to assure a level of discipline in seeking a solution to any variation or
defect present in a process.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
6
Understanding Six Sigma
What is Six Sigma…as a Tool?
Six Sigma has not created new tools. It is the use and flow of the tools that is important. How they
are applied makes all the difference.
Six Sigma is also a business strategy that provides new knowledge and capability to employees so
they can better organize the process activity of the business, solve business problems and make
better decisions. Using Six Sigma is now a common way to solve business problems and remove
waste resulting in significant profitability improvements. In addition to improving profitability,
customer and employee satisfaction are also improved.
Six Sigma is a process measurement and management system that enables employees and
companies to take a process oriented view of the entire business. Using the various concepts
embedded in Six Sigma, key processes are identified, the outputs of these processes are
prioritized, the capability is determined, improvements are made, if necessary, and a management
structure is put in place to assure the ongoing success of the business.
People interested in truly learning Six Sigma should be mentored and supported by seasoned
Belts who truly understand how Six Sigma works.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
7
Understanding Six Sigma
What is Six Sigma…as a Goal?
To give you a better example the concept of the sigma level can be related to hanging fruit. The higher
the fruit, the more challenging it is to obtain. And, the more sophisticated the tools necessary to obtain
them.
5+ Sigma
3 - 5 Sigma
3 Sigma
1 - 2 Sigma
Sweet Fruit
Design for Six Sigma
Bulk of Fruit
Process
Characterization
and Optimization
Low Hanging Fruit
Basic Tools of
Problem Solving
Ground Fruit
Simplify and
Standardize
What is Six Sigma…as a Philosophy?
General Electric: First, what it is not. It is not a secret society, a slogan or a cliché. Six Sigma is
a highly disciplined process that helps us focus on developing and delivering near-perfect products
and services. The central idea behind Six Sigma is that if you can measure how many "defects" you
have in a process, you can systematically figure out how to eliminate them and get as close to "zero
defects" as possible. Six Sigma has changed the DNA of GE — it is now the way we work — in
everything we do and in every product we design.
Honeywell: Six Sigma refers to our overall strategy to improve growth and productivity as well as
a measurement of quality. As a strategy, Six Sigma is a way for us to achieve performance
breakthroughs. It applies to every function in our company, not just those on the factory floor. That
means Marketing, Finance, Product Development, Business Services, Engineering and all the other
functions in our businesses are included.
Lockheed Martin: We’ve just begun to scratch the surface with the cost-saving initiative called Six
Sigma and already we’ve generated $64 million in savings with just the first 40 projects. Six Sigma
uses data gathering and statistical analysis to pinpoint sources of error in the organization or products
and determines precise ways to reduce the error.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
8
Understanding Six Sigma
History of Six Sigma
Simplistically, Six
Sigma was a
program that was
generated around
targeting a process
Mean (average) six
Standard Deviations
away from the
closest specification
limit.
By using the process
Standard Deviation
to determine the
location of the Mean
the results could be
predicted at 3.4
defects per million by
the use of statistics.
There is an allowance for the process Mean to shift 1.5 Standard Deviations. This number is another
academic and esoteric controversial issue not worth debating. We will get into a discussion of this
number later in the course.
The Phase Approach of Six Sigma
Six Sigma created a realistic and quantifiable goal in terms of its target of 3.4 defects per million
operations. It was also accompanied by a methodology to attain that goal.
That methodology was a problem solving strategy made up of four steps: measure, analyze,
improve and control.
When GE launched Six Sigma they improved the methodology to include the Define Phase.
Define
Measure
GENERAL ELECTRIC
Analyze
Improve
Control
MOTOROLA
Today the Define Phase is an important aspect to the methodology. Motorola was a mature culture
from a process perspective and didn’t necessarily have a need for the Define Phase.
Most organizations today DEFINITELY need it to properly approach improvement projects.
As you will learn, properly defining a problem or an opportunity is key to putting you on the right
track to solve it or take advantage of it.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
9
Understanding Six Sigma
Cha mpion
/
Process
O w ner
DMAIC Phases Roadmap
Identify Problem Area
Define
Determine Appropriate Project Focus
Estimate COPQ
Assess Stability, Capability, and Measurement Systems
Identify and Prioritize All X’s
Improve
Prove/ Disprove Impact X’s Have On Problem
Identify, Prioritize, Select Solutions Control or Eliminate X’s Causing Problems
Control
Ana lyze
M ea sure
Charter Project
Implement Control Plan to Ensure Problem Does Not Return
Implement Solutions to Control or Eliminate X’s Causing Problems
Verify Financial Impact
This roadmap provides an overview of the DMAIC approach.
Define Phase Deployment
Business Case
Selected
Here is a more granular
look of the Define
Phase.
N otify Belts and Stakeholders
This is what you will
later learn to be a Level
2 Process Map.
Create High-Level Process Map
Determine Appropriate Project Focus
(Pareto, Project Desirability)
Define & Charter Project
(Problem Statement, Objective, Primary Metric, Secondary Metric)
N
Estimate COPQ
Approved
Project
Focus
Recommend Project Focus
Y
Create Team
Charter Team
Ready for Measure
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
10
Understanding Six Sigma
Define Phase Deliverables
Listed below are the type of Define Phase deliverables that will be reviewed by this course.
By the end of this course, you should understand what would be necessary to provide these
deliverables in a presentation.









Charter Benefits Analysis
Team Members (Team Meeting Attendance)
Process Map – high level
Primary Metric
Secondary Metric(s)
Lean Opportunities
Stakeholder Analysis
Project Plan
Issues and Barriers
Six Sigma Strategy
Six Sigma places the emphasis on the Process
– Using a structured, data driven approach centered on the customer Six Sigma can resolve
business problems where they are rooted, for example:
 Month end reports
 Capital expenditure approval
 New hire recruiting
Six Sigma is a Breakthrough Strategy
– Widened the scope of the definition of quality
 includes the value and the utility of
the product/service to both the
company and the customer.
Success of Six Sigma depends on the extent of
transformation achieved in each of these levels.
Six Sigma as a breakthrough strategy to process improvement. Many people mistakenly
assume that Six Sigma only works in manufacturing type operations. That is categorically
untrue. It applies to all aspects of either a product or service based business.
Wherever there are processes, Six Sigma can improve their performance.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
11
Understanding Six Sigma
Conventional Strategy
Conventional definitions of quality focused on conformance to standards.
Requirement
or
LSL
Bad
Target
Requirement
or
USL
Good
Bad
Conventional strategy was to create a product or service that met certain specifications.
 Assumed that if products and services were of good quality then their
performance standards were correct.
 Rework was required to ensure final quality.
 Efforts were overlooked and unquantified (time, money, equipment
usage, etc).
The conventional strategy was to create a product or service that met certain specifications. It was
assumed that if products and services were of good quality, then their performance standards were
correct irrespective of how they were met.
Using this strategy often required rework to ensure final quality or the rejection and trashing of some
products and the efforts to accomplish this “inspect in quality” were largely overlooked and unquantified.
You will see more about this issues when we investigate the Hidden Factory.
Problem Solving Strategy
The Problem Solving M ethodology focuses on:
•
•
•
•
Understanding the relationship between independent variables
and the dependant variable.
Identifying the vital few independent variables that effect the
dependant variable.
Optimizing the independent variables so as to control our
dependant variable(s).
Monitoring the optimized independent variable(s).
There a re m a ny ex a m ples to describe dependa nt a nd
independent rela tionships.
•
W e describe this concept in terms of the equation:
•
This equation is also commonly referred to as a transfer function
Y=f (Xi)
This sim ply sta tes tha t Y is a function of the
X ’ s. In other w ords Y is dicta ted by the X ’ s.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
12
Understanding Six Sigma
Problem Solving Strategy (contd)
Y = f(x) is a key concept that you must fully understand and remember. It is a fundamental principle
to the Six Sigma methodology. In its simplest form it is called “cause and effect”. In its more robust
mathematical form it is called “Y is equal to a function of X”. In the mathematical sense it is data
driven and precise, as you would expect in a Six Sigma approach. Six Sigma will always refer to an
output or the result as a Y and will always refer to an input that is associated with or creates the
output as an X.
Another way of saying this is that the output is dependent on the inputs that create it through the
blending that occurs from the activities in the process. Since the output is dependent on the inputs
we cannot directly control it, we can only monitor it.
Example
Y=f (Xi)
W hich process va ria bles (ca uses) ha ve critica l impa ct on
the output (effect)?
Crusher Yield
Time to Close
Tool
= f ( Feed, Speed,Material
Type , Wear , Lubricant )
Correct
Trial
Sub
Credit
Entry
= f (Balance
,Accounts,Accounts,Memos,Mistakes,X )
n
Applied
If we are so good at the X’s why are we
constantly testing and inspecting the Y?
Y=f(x) is a transfer function tool to determine what input variables (X’s) affect the output responses
(Y’s). The observed output is a function of the inputs. The difficulty lies in determining which X’s
are critical to describe the behavior of the Y’s.
The X’s determine how the Y performs.
In the Measure Phase we will introduce a tool to manage the long list of input variable and their
relationship to the output responses. It is the X-Y Matrix or Input-Output Matrix.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
13
Understanding Six Sigma
Y=f(X) Exercise
Exercise:
Consider establishing a Y = f(x) equation for a
simple everyday activity such as producing a
cup of espresso. In this case our output or Y is
espresso.
Espresso
=f
( X1 , X , X , X , X
n
2
3
4
)
Notes
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
14
Understanding Six Sigma
Six Sigma Strategy
We use a variety of Six Sigma
tools to help separate the “vital
few” variables effecting our Y from
the “trivial many.”
Some processes contain many,
many variables. However, our Y is
not effected equally by all of them.
By focusing on the vital few we
instantly gain leverage.
(X1)
(X10)
(X4)
(X8)
(X7)
(X3)
(X5)
(X9)
Archimedes said: “ Give me a lever big enough and
fulcrum on which to place it and I shall move the world.”
(X2)
(X6)
Archimedes not
shown actual size!
As you go through the application of DMAIC you will have a goal to find the root causes to the
problem you are solving. Remember that a vital component of problem solving is cause and effect
thinking or Y=f(X). To aid you in doing so, you should create a visual model of this goal as a funnel a funnel that takes in a large number of the “trivial many contributors,” and narrows them to the
“vital few contributors” by the time they leave the bottom.
At the top of the funnel you are faced with all possible causes - the “vital few” mixed in with the
“trivial many.” When you work an improvement effort or project, you must start with this type of
thinking. You will use various tools and techniques to brainstorm possible causes of performance
problems and operational issues based on data from the process. In summary, you will be applying
an appropriate set of “analytical methods” and the “Y is a function of X” thinking, to transform data
into the useful knowledge needed to find the solution to the problem. It is a mathematical fact that 80
percent of a problem is related to six or fewer causes, the X’s. In most cases it is between one and
three.
The goal is to find the one to three Critical X’s from the many potential causes when we start an
improvement project. In a nutshell, this is how the Six Sigma methodology works.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
15
Understanding Six Sigma
Breakthrough Strategy
Performa nce
Ba d
66-Sigm
-Sigmaa
Brea
Breakkthrough
through
UCL
UCL
O ld Sta nda rd
LCL
LCL
UCL
UCL
N ew Sta nda rd
LCL
LCL
Good
Time
Juran’s Quality Handbook by Joseph Juran
By utilizing the DMAIC problem solving methodology to identify and optimize the vital few variables we
will realize sustainable breakthrough performance as opposed to incremental improvements or, even
worse, temporary and non-sustainable improvement..
The image above shows how after applying the Six Sigma tools, variation stays within the specification
limits.
VOC, VOB, VOE
The
foundation of
Six Sigma
requires
Focus on the
voices of the
Customer, the
Business, and
the Employee
which
provides:
VOC is Customer Driven
VOB is Profit Driven
VOE is Process Driven
 Awareness of the needs that are critical to the quality (CTQ) of our products and
services
 Identification of the gaps between “what is” and “what should be”
 Identification of the process defects that contribute to the “gap”
 Knowledge of which processes are “most broken”
 Enlightenment as to the unacceptable Costs of Poor Quality (COPQ)
Six Sigma puts a strong emphasis on the customer because they are the ones assessing our performance
and they respond by either continuing to purchase our products and services or….by NOT!
So, while the customer is the primary concern we must keep in mind the Voice of the Business – how do we
meet the business’s needs so we stay in business? And we must keep in mind the Voice of the Employee how do we meet employees needs such that they remain employed by our firm and remain inspired and
productive?
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
16
Understanding Six Sigma
Six Sigma Roles and Responsibilities
There are many roles and responsibilities for successful implementation of Six Sigma.
MBB
Black Belts
Green Belts






Executive Leadership
Champion/Process Owner
Master Black Belt
Black Belt
Green Belt
Yellow Belt
Yellow Belts
Just like a winning sports team, various people who have specific positions or roles have defined
responsibilities. Six Sigma is similar - each person is trained to be able to understand and perform the
responsibilities of their role. The end result is a knowledgeable and well coordinated winning business
team.
The division of training and skill will be delivered across the organization in such a way as to provide a
specialist: it is based on an assistant structure much as you would find in the medical field between a
Doctor, 1st year Intern, Nurse, etc. The following slides discuss these roles in more detail.
In addition to the roles described herein, all other employees are expected to have essential Six Sigma
skills for process improvement and to provide assistance and support for the goals of Six Sigma and the
company.
Six Sigma has been designed to provide a structure with various skill levels and knowledge for all
members of the organization. Each group has well defined roles and responsibilities and communication
links. When all individuals are actively applying Six Sigma principles, the company operates and performs
at a higher level. This leads to increased profitability, and greater employee and customer satisfaction.
Executive Leadership
Not all Six Sigma deployments are driven from the top by executive leadership. The data is clear,
however, that those deployments that are driven by executive management are much more successful
than those that are not.
 Makes decision to implement the Six Sigma initiative and develop accountability
method
 Sets meaningful goals and objectives for the corporation
 Sets performance expectations for the corporation
 Ensures continuous improvement in the process
 Eliminates barriers
The executive leadership owns the vision for the business, they provide sponsorship and set
expectations for the results from Six Sigma. They enable the organization to apply Six Sigma and then
monitor the progress against expectations.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
17
Understanding Six Sigma
Champion/Process Owner
Champions identify and select the most meaningful projects to work on, they provide guidance to the
Six Sigma Belt and open the doors for the belts to apply the process improvement technologies.
 Own project selection, execution control, implementation and realization of
gains
 Own Project selection
 Obtain needed project resources and eliminates roadblocks
 Participate in all project reviews
 Ask good questions…
 One to three hours per week commitment
Champions are responsible for functional business activities and to provide business deliverables to
either internal or external customers. They are in a position to be able to recognize problem areas of
the business, define improvement projects, assign projects to appropriate individuals, review projects
and support their completion. They are also responsible for a business roadmap and employee
training plan to achieve the goals and objectives of Six Sigma within their area of accountability.
Master Black Belt
MBB should be well versed with all aspects of Six Sigma, from technical applications to Project
Management. MBBs need to have the ability to influence change and motivate others.
 Provide advice and counsel to Executive Staff
MBB
 Provide training and support
- In class training
- On site mentoring
 Develop sustainability for the business
 Facilitate cultural change
A Master Black Belt is a technical expert, a “go to” person for the Six Sigma methodology. Master
Black Belts mentor Black Belts and Green Belts through their projects and support Champions. In
addition to applying Six Sigma, Master Black Belts are capable of teaching others in the practices
and tools.
Being a Master Black Belt is a full time position.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
18
Understanding Six Sigma
Black Belt
Black Belts are application experts and work projects within the business. They should be well
versed with The Six Sigma Technologies and have the ability to drive results.
 Project team leader
Black Belts
 Facilitates DMAIC teams in applying Six Sigma
methods to solve problems
 Works cross-functionally
 Contributes to the accomplishment of organizational
goals
 Provides technical support to improvement efforts
A Black Belt is a project team leader, working full time to solve problems under the direction of a
Champion, and with technical support from the Master Black Belt. Black Belts work on projects
that are relatively complex and require significant focus to resolve. Most Black Belts conduct an
average of 4 to 6 projects a year -- projects that usually have a high financial return for the
company.
Green Belt
Green Belts are practitioners of Six Sigma Methodology and typically work within their
functional areas or support larger Black Belt Projects.
• Well versed in the definition & measurement of critical processes
- Creating Process Control Systems
 Typically works project in existing functional area
Green Belts
 Involved in identifying improvement opportunities
 Involved in continuous improvement efforts
- Applying basic tools and PDCA
 Team members on DMAIC teams
- Supporting projects with process knowledge & data
collection
Green Belts are capable of solving problems within their local span of control. Green Belts remain in
their current positions, but apply the concepts and principles of Six Sigma to their job environment.
Green Belts usually address less complex problems than Black Belts and perform at least two projects
per year. They may also be a part of a Black Belt’s team, helping to complete the Black Belt project.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
19
Understanding Six Sigma
Yellow Belt
 Provide support to Black Belts and Green Belts as
needed
Yellow Belts
 May be team members on DMAIC teams
- Supporting projects with process
knowledge and data collection
Yellow Belts participate in process management activities. They fully understand the principles of Six
Sigma and are capable of characterizing processes, solving problems associated with their work
responsibilities and implementing and maintaining the gains from improvements. They apply Six Sigma
concepts to their work assignments. They may also participate on Green and Black Belt projects.
The Life of a Six Sigma Belt
Training as a Six Sigma Belt can be one of the most rewarding undertakings of your career and
one of the most difficult.
You can expect to experience:
 Hard work (becoming a Six Sigma Belt is not
easy)
 Long hours of training
 Be a change agent for your organization
 Work effectively as a team leader
 Prepare and present reports on progress
 Receive mentoring from your Master Black Belt
 Perform mentoring for your team members
 ACHIEVE RESULTS!
You’re going places!
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
20
Understanding Six Sigma
Black & Green Belt Certification
To achieve certification, Belts typically must:
 Complete all course work:
- Be familiar with tools and their application
- Practice using tools in theoretical situations
- Discuss how tools will apply to actual projects
 Demonstrate application of learning to training project:
- Use the tools to effect a financially measurable
and significant business impact through their
projects
- Show ability to use tools beyond the training
environment
 Must complete two projects within one year from beginning of training
We’ll be
watching!
 Achieve results and make a difference
 Submit a final report which documents tool understanding and
application as well as process changes and financial impact for each
project
Organizational Behaviors
All players in the Six Sigma process must be willing to step up and act according to the Six Sigma
set of behaviors.
 Leadership by example: “walk the talk”
 Encourage and reward individual initiative
 Align incentive systems to support desired behaviors
 Eliminate functional barriers
 Embrace “systems” thinking
 Balance standardization with flexibility
Six Sigma is a system of improvement. It develops people skills and capability for the participants. It
consists of proven set of analytical tools, project-management techniques, reporting methods and
management methods combined to form a powerful problem-solving and business-improvement
methodology. It solves problems, resulting in increased revenue and profit, and business growth.
The strategy of Six Sigma is a data-driven, structured approach to managing processes, quantifying
problems, and removing waste by reducing variation and eliminating defects.
The tactics of Six Sigma are the use of process exploration and analysis tools to solve the equation
of Y = f(X) and to translate this into a controllable practical solution.
As a performance goal, a Six Sigma process produces less than 3.4 defects per million
opportunities. As a business goal, Six Sigma can achieve 40% or more improvement in the
profitability of a company. It is a philosophy that every process can be improved, at breakthrough
levels.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
21
Understanding Six Sigma
At this point, you should be able to:
 Describe the objectives of Six Sigma
 Describe the relationship between variation and sigma
 Recognize some Six Sigma concepts
 Recognize the Six Sigma implementation model
 Describe the general roles and responsibilities in Six
Sigma
You have now completed Define Phase – Understanding Six Sigma.
Notes
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
22
Lean Six Sigma
Green Belt Training
Define Phase
Six Sigma Fundamentals
Now we will continue in the Define Phase with the “Six Sigma Fundamentals”.
The output of the Define Phase is a well developed and articulated project. It has been correctly
stated that 50% of the success of a project is dependent on how well the effort has been defined.
There’s that Y=f(X) thinking again.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
23
Six Sigma Fundamentals
Overview
The core fundamentals
of this phase are
Process Maps, Voice of
the Customer, Cost of
Poor Quality and
Process Metrics.
Understa nding Six Sigm a
Six Sigm a Funda m enta ls
Process
Process M
Maaps
ps
We will examine the
meaning of each of
these and show you
how to apply them.
Voice
Voice of
of the
the Custom
Customer
er
Cost
Cost of
of Poor
Poor Q
Qua
uality
lity
Process
Process M
Metrics
etrics
Selecting Projects
Elem ents of W a ste
W ra p Up & Action Item s
What is a Process?
W hy ha ve a process focus?
– So we can understand how and why work gets done
– To characterize customer & supplier relationships
– To manage for maximum customer satisfaction while utilizing
minimum resources
– To see the process from start to finish as it is currently being
performed
– Blame the process, not the people
proc•
proc• ess
ess (pros′es)
(pros′es) n.
n. –– A
A repetitive
repetitive aand
nd systema
systematic
tic series
series
of
steps
or
a
ctivities
where
inputs
are
modified
to
achieve
of steps or a ctivities where inputs are modified to achieve
aa value-added
value-added output
output
What is a Process? Many people do or conduct a process everyday but do you really think of it as a
process? Our definition of a process is a repetitive and systematic series of steps or activities where inputs
are modified to achieve a value-added output.
Usually a successful process needs to be well defined and developed.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
24
Six Sigma Fundamentals
Examples of Processes
We go thru processes everyday. Below are some examples of processes. Can you think
of other processes within your daily environment?
 Injection molding
 Recruiting staff
 Decanting solutions
 Processing invoices
 Filling vial/bottles
 Conducting research
 Crushing ore
 Opening accounts
 Refining oil
 Reconciling accounts
 Turning screws
 Filling out a timesheet
 Building custom homes
 Distributing mail
 Paving roads
 Backing up files
 Changing a tire
 Issuing purchase orders
Process Maps
Process Mapping, also called
flowcharting, is a technique to
visualize the tasks, activities and
steps necessary to produce a product
or a service. The preferred method for
describing a process is to identify it
with a generic name, show the
workflow with a Process Map and
describe its purpose with an
operational description.
• The purpose of Process Maps is to:
– Identify the complexity of the process
– Communicate the focus of problem solving
• Process Maps are living documents and must be changed as the
process is changed
– They represent what is currently happening, not what you think is
happening.
– They should be created by the people who are closest to the process
Step C
sp
e
Step B
Step D
Finish
In
Step A
ct
Process Map
Remember that a process is a
blending of inputs to produce some
desired output. The intent of each
task, activity and step is to add value,
Sta rt
as perceived by the customer, to the
product or service we are producing.
You cannot discover if this is the case
until you have adequately mapped the process.
There are many reasons for creating a Process Map:
- It helps all process members understand their part in the process and how their process fits into the
bigger picture.
- It describes how activities are performed and how the work effort flows, it is a visual way of standing
above the process and watching how work is done. In fact, Process Maps can be easily uploaded into
model and simulation software allowing you to simulate the process and visually see how it works.
- It can be used as an aid in training new people.
- It will show you where you can take measurements that will help you to run the process better.
- It will help you understand where problems occur and what some of the causes may be.
- It leverages other analytical tools by providing a source of data and inputs into these tools.
- It identifies many important characteristics you will need as you strive to make improvements.
The individual processes are linked together to see the total effort and flow for meeting business and
customer needs. In order to improve or to correctly manage a process, you must be able to describe it
in a way that can be easily understood. Process Mapping is the most important and powerful tool you
will use to improve the effectiveness and efficiency of a process.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
25
Six Sigma Fundamentals
Process Map Symbols
Standard symbols for Process Mapping:
(available in Microsoft Office™, Visio™, iGrafx™ , SigmaFlow™ and other products)
A RECTANGLE indicates an
activity. Statements within
the rectangle should begin
with a verb
A PARALLELAGRAM shows
that there are data
A DIAMOND signifies a decision
point. Only two paths emerge from
a decision point: No and Yes
An ARROW shows the
connection and direction
of flow
An ELLIPSE shows the start
and end of the process
1
A CIRCLE WITH A LETTER OR
NUMBER INSIDE symbolizes
the continuation of a
flowchart to another page
There may be several interpretations of some of the process mapping symbols; however, just
about everyone uses these primary symbols to document processes. As you become more
practiced you will find additional symbols useful, i.e. reports, data storage etc. For now we will start
with just these symbols.
High Level Process Map
At a minimum a high
level Process Map
must include; start
and stop points, all
process steps, all
decision points and
directional flow.
Also be sure to
include Value
Categories such as
Value Added
(Customer Focus) and
Value Enabling
(External Stakeholder
focus).
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
26
Six Sigma Fundamentals
Process Map Example
B
START
LOGON TO PC &
APPLICATIONS
LOGOFF PHONE, CHECK
MAIL,E-MAIL,VOICE MAIL
E
C
SCHEDULED
PHONE TIME?
Y
TRANSFER
APPROPRIATE?
TRANSFER
CALL
Y
A
PHONE
TIME
N
CALL or
WALK-IN?
Z
IMMEDIATE
RESPONSE
AVAILABLE?
Y
Y
WALK-IN
N
CALL
PROVIDE
RESPONSE
PHONE&
NOTE
DATA ENDS
PUT ON HOLD,
REFER TO
REFERENCES
PHONE DATA
CAPTURE BEGINS
ANSWER?
DETERMINE WHO
IS INQUIRING
Y
ANSWER?
N
C
Y
F
ENTER APPROPRIATE
SSAN (#,9s,0s)
CREATE A CASE
INCL CASE TYPE
DATE/TIME, &
NEEDED BY
N
Y
UPDATE ENTRIES
INCL OPEN DATE/TIME
Y
OFF HOLD AND
ARRANGE CALL
BACK PHONE DATA
ENDS
B
Y
AUTO
ROUTE
ROUTE
N
CASE
CLOSED
N
CASE TOOL
RECORD?
ACCESS CASE TOOL
OLD
CASE
N
DETERMINE NATURE
OF CALL & CONFIRM
UNDERSTANDING
A
N
IF EMP DATA NOT
POPULATED, ENTER
QUERY INTERNAL
HRSC SME(S)
ACCESS CASE TOOL
D
EXAMINE NEXT NOTE
OR RESEARCH ITEM
N
LOGON
TO PHONE
D
Y
SCHEDULED
PHONE TIME?
N
Z
Call Center
Process
Map
Z
REVIEW CASE
TOOL HISTORY &
TAKE NOTES
ADD TO
RESEARCH
LIST
N
TAKE ACTION
or
DO RESEARCH
Y
CLOSE CASE
W/
DATE/TIME
E
GO TO
F or E
DEPENDING ON
CASE
E
NEXT
F
Cross Functional Process Map
When multiple departments or functional groups are involved in a complex process it is often useful
to use cross functional Process Maps.
– Draw in either vertical or horizontal Swim Lanes and label the functional
groups and draw the Process Map
General
Accounting
Bank
Financial
Accounting
Vendor
Department
These are best
Sending Fund Tra nsfers
used in
transactional
ACH – Automated
Attach ACH
Request
Clearing House.
form to
Start
transfer
processes or
Invoice
where the
Fill out ACH
Receive
No
Produce an
process involves
End
enrollment
payment
Invoice
form
several
Match against
departments.
Maintain database
Vendor
bank batch
to balance ACH
Input info into
Yes
info in
transfers
and daily cash
The lines drawn
web interface
FRS?
batch
horizontally
Accepts transactions,
across the map
transfer money, and
provide batch total
represent
different
Review and
21.0
3.0
Process
departments in
Bank
Journey Entry
transfer in
Reconciliation
FRS
the company
and are usually
referred to as Swim Lanes. By mapping in this manner one can see how the various departments
are interdependent in this process.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
27
Six Sigma Fundamentals
Process Map Exercise
Notes
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
28
Six Sigma Fundamentals
Do you know your Customer?
Knowing your customer is more than just a handshake. It is
necessary to clearly understand their needs. In Six Sigma we call
this “understanding the CTQ ’s” or critical to customer
characteristics.
Voice Of the Customer
Critical to Customer
Characteristics
An important element of Six Sigma is understanding your customer. This is called VOC or Voice of
the Customer. By doing this allows you to find all of the necessary information that is relevant
between your product/process and customer, better known as CTQ’s (Critical to Quality). The
CTQ’s are the customer requirements for satisfaction with your product or service.
Voice of the Customer
Do you feel confident
that you know what
your customer wants?
There of four steps
that can help you in
understanding your
customer. These
steps focus on the
customer’s
perspective of
features, your
company’s integrity,
delivery mechanisms
and perceived value
versus cost.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
29
Six Sigma Fundamentals
What is a Customer?
Every process has a
deliverable. The
person or entity who
receives this
deliverable is a
customer.
There are two
different types of
customers; External
and Internal. People
generally forget about
the Internal customer
and they are just as
important as the
customers who are
buying your product.
There are different types of customers which dictates how we interact
with them in the process, in order to identify customer and supplier
requirements we must first define who the customers are:
Ex terna l
– Direct: those who receive the output of your services, they generally are
the source of your revenue
– Indirect: those who do not receive or pay for the output of your services
but have a vested interest in what you do (government agencies)
Interna l
- those within your organization
who receive the output of your
work
Value Chain
The disconnect from Design and Production in some organizations is a good example. If Production
is not fed the proper information from Design how can Production properly build a product?
Every activity (process) must be linked to move from raw materials to a finished product on a store
shelf.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
30
Six Sigma Fundamentals
What is a CTQ?
Example: Making an
Online Purchase
Reliability – Correct
amount of money is
taken from account
Responsiveness –
How long to you wait
for product after the
Merchant receives
their money
Security – is your
sensitive banking
information stored in
secure place
Developing CTQ’s
The steps in developing
CTQ’s are identifying
the customer, capturing
the Voice of the
Customer and finally
validating the CTQ’s.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
31
Six Sigma Fundamentals
Cost of Poor Quality (COPQ)
Another important tool from
this phase is COPQ, Cost of
Poor Quality. COPQ
represents the financial
opportunity of your team’s
improvement efforts. Those
opportunities are tied to
either hard or soft savings.
COPQ, is a symptom
measured in loss of profit
(financial quantification) that
results from errors (defects)
and other inefficiencies in our
processes. This is what we
are seeking to eliminate!
•
COPQ stands for Cost of Poor Quality
•
As a Six Sigma Belt, one of your tasks will be to estimate COPQ for
your process
•
Through your process exploration and project definition work you will
develop a refined estimate of the COPQ in your project
•
This project COPQ represents the financial opportunity of your
team’s improvement effort (VOB)
•
Calculating COPQ is iterative and will change as you learn more
about the process
No, n ot t hat k i n d
o f co p queue!
You will use the concept of COPQ to quantify the benefits of an improvement effort and also to
determine where you might want to investigate improvement opportunities.
The Essence of COPQ
There are four
elements that make up
COPQ; External Costs,
Internal Costs,
Prevention Costs and
Appraisal Costs.
Internal Costs are
opportunities of error
found in a process that
is within your
organization. Whereas,
External Costs are
costs associated to the
finish product
associated with the
internal and external
customer.
Prevention Costs are typically cost associated to product quality, this is viewed as an investment that
companies make to ensure product quality. The final element is Appraisal costs, these are tied to
product inspection and auditing.
This idea was of COPQ was defined by Joseph Juran and is a great point of reference to gain a further
understanding.
Over time with Six Sigma, COPQ has migrated towards the reduction of waste. Waste is a better term,
because it includes poor quality and all other costs that are not integral to the product or service your
company d provides. Waste does not add value in the eyes of customers, employees or investors.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
32
Six Sigma Fundamentals
COPQ - Categories
COPQ - Iceberg
Generally speaking
COPQ can be
classified as tangible
(easy to see) and
intangible (hard to
see). Visually you can
think of COPQ as an
iceberg. Most of the
iceberg is below the
water where you
cannot see it.
Inspection
W a rra nty
Recode
Rew ork
Rejects
Visible Costs
Lost sa les
Engineering cha nge orders
Tim e va lue of money
M ore Set-ups
(less obvious)
La te delivery
Ex pediting costs
Ex cess inventory
W ork ing Ca pita l
Similarly the tangible
Long cy cle tim es
a lloca tions
quality costs are costs
Ex cessive M a teria l
O rders/ Pla nning
the organization is
Hidden Costs Lost Custom er Loya lty
rather conscious of,
may be measuring
already or could easily be measured. The COPQ metric is reported as a percent of sales revenue. For
example tangible costs like inspection, rework, warranty, etc can cost an organization in the range of 4
percent to 10 percent of every sales dollar it receives. If a company makes a billion dollars in revenue,
this means there are tangible wastes between 40 and 100 million dollars.
Even worse are the intangible Costs of Poor Quality. These are typically 20 to 35% of sales. If you
average the intangible and tangible costs together, it is not uncommon for a company to be spending
25% of their revenue on COPQ or waste.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
33
Six Sigma Fundamentals
COPQ and Lean
W a ste does not a dd, subtra ct or otherw ise modify the
throughput in a w a y tha t is perceived by the customer to
a dd va lue.
•
In some cases, waste may be
necessary, but should be
recognized and explored:
–
–
•
•
Lea n Enterprise
Seven Elements of W a ste *
Inspection, Correction, W aiting
in suspense
Decision diamonds, by
definition, are non-value added







Often, waste can provide
opportunities for additional defects
to occur.
W e will discuss Lean in more
detail later this week.
Correction
Processing
Conveyance
Motion
W aiting
Overproduction
Inventory
Implementing Lean fundamentals can also help identify areas of COPQ. Lean will be discussed later.
COPQ and Lean
W hile ha rd sa vings a re a lw a ys more desira ble
beca use they a re ea sier to qua ntify, it is a lso
necessa ry to think a bout soft sa vings.
CO PQ – Ha rd Sa vings
•
•
•
•
•
Labor Savings
Cycle Time Improvements
Scrap Reductions
Hidden Factory Costs
Inventory Carrying Cost
CO PQ – Soft Sa vings
•
•
•
•
•
Gaining Lost Sales
Missed Opportunities
Customer Loyalty
Strategic Savings
Preventing Regulatory Fines
Here are examples are COPQ’s Hard and Soft Savings.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
34
Six Sigma Fundamentals
COPQ Exercise
Ex ercise objective: Identify current COPQ
opportunities in your direct area.
1. Brainstorm a list of COPQ opportunities.
2. Categorize the top 3 sources of COPQ for the
four classifications:
•
•
•
•
Internal
External
Prevention
Detection
Notes
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
35
Six Sigma Fundamentals
The Basic Six Sigma Metrics
The previous slides have been discussing process management and the concepts behind a process
perspective. Now we begin to discuss process improvement and the metrics used.
Some of these metrics are:
DPU: defects per unit produced.
DPMO: defects per million opportunities, assuming there is more than one
opportunity to fail in a given unit of output.
RTY: rolled throughput yield, the probability that any unit will go through a process
defect-free.
Cycle Time Defined
Think of Cycle Time in terms of your product or tra nsa ction
in the eyes of the customer of the process:
– It is the time required for the product or transaction to go through the
entire process, from beginning to end
– It is not simply the “ touch time” of the value-added portion of the process
W ha t is the cycle time of the process you ma pped?
Is there a ny va ria tion in the cycle time? W hy?
Cycle time includes any wait or queue time for either people or products.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
36
Six Sigma Fundamentals
Defects Per Unit (DPU)
DPU or Defects per Unit
quantifies individual defects
on a unit and not just
defective units. A returned
unit or transaction can be
defective and have more
than one defect.
Defect: A physical count of
all errors on a unit,
regardless of the disposition
of the unit.
EXAMPLES: An error in a
Online transaction has
(typed wrong card number,
internet failed). In this case
one online transaction had 2
defects (DPU=2).
Six Sigma methods quantify individual defects and not just defectives
– Defects account for all errors on a unit
• A unit may have multiple defects
• An incorrect invoice may have the wrong amount due and the wrong
due date
– Defectives simply classifies the unit bad
• Doesn’t matter how many defects there are
• The invoice is wrong, causes are unknown
– A unit:
• Is the measure of volume of output from your area.
• Is observable and countable. It has a discrete start and stop point.
• It is an individual measurement and not an average of
measurements.
Tw o Defects
O ne Defective
A Mobile Computer that has 1 broken video screen, 2 broken keyboard keys and 1 dead battery,
has a total of 4 defects. (DPU=4)
Is a process that produces 1 DPU better or worse than a process that generates 4 DPU? If you
assume equal weight on the defects, obviously a process that generates 1 DPU is better; however,
cost and severity should be considered. However, the only way you can model or predict a process
is to count all the defects.
First Time Yield
Traditional metrics
when chosen
poorly can lead the
team in a direction
that is not
consistent with the
focus of the
business. Some
of the metrics we
must be
concerned about
would be FTY FIRST TIME
YIELD. It is very
possible to have
100% FTY and
spend tremendous
amounts in excess
repairs and
rework.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
37
Six Sigma Fundamentals
Rolled Throughput Yield
Instead of relying on FTY - First Time Yield, a more efficient metric to use is RTY-Rolled Throughput
Yield. RTY has a direct correlation (relationship) to Cost of Poor Quality.
In the few organizations where data is readily available, the RTY can be calculated using actual defect
data. The data provided by this calculation would be a binomial distribution since the lowest yield
possible would be zero.
As depicted here, RTY is the multiplied yield of each subsequent operation throughout a process (X1 *
X2 * X3…)
RTY Estimate
Sadly, in most companies there is
not enough data to calculate RTY
in the long term. Installing data
collection practices required to
provide such data would not be
cost effective. In those instances,
it is necessary to utilize a
prediction of RTY in the form of edpu (e to the negative dpu).
• In many organizations the long term data required to
calculate RTY is not available, we can however estimate
RTY using a known DPU as long as certain conditions are
met.
• The Poisson distribution generally holds true for the
random distribution of defects in a unit of product and is
the basis for the estimation.
– The best estimate of the proportion of units containing
no defects, or RTY is:
When using the e-dpu equation to
-dpu
RTY = e-dpu
calculate the probability of a
The mathematical constant e is the base of the natural logarithm.
product or service moving through
e ≈ 2.71828 18284 59045 23536 02874 7135
the entire process without
a defect, there are several things that must be held for consideration. While this would seem to be a
constraint, it is appropriate to note that if a process has in excess of 10% defects, there is little need to
concern yourself with the RTY.
In such extreme cases, it would be much more prudent to correct the problem at hand before worrying
about how to calculate yield.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
38
Six Sigma Fundamentals
Deriving RTY from DPU
The Binomial distribution is the true model for defect data, but the Poisson is the
convenient model for defect data. The Poisson does a good job of predicting
when the defect rates are low.
Poisson
Poisson VS
VS Binomial
Binomial (r=0,n=1)
(r=0,n=1)
120%
120%
100%
100%
Probability
Yield
Probability
Yield
of
ofaadefect
defect (Binomial)
(Binomial)
0.0
100%
0.0
100%
0.1
90%
0.1
90%
0.2
80%
0.2
80%
0.3
70%
0.3
70%
0.4
60%
0.4
60%
0.5
50%
0.5
50%
0.6
40%
0.6
40%
0.7
30%
0.7
30%
0.8
20%
0.8
20%
0.9
10%
0.9
10%
1.0
0%
1.0
0%
(RTY)
Yield(RTY)
Yield
Yield
Yield (Binomial)
(Binomial)
Yield
Yield (Poisson)
(Poisson)
80%
80%
60%
60%
40%
40%
20%
20%
0%
0%
0.0
0.0
0.1
0.1
0.2
0.2
0.3
0.3
0.4
0.4
0.5
0.5
0.6
0.6
Probability
Probabilityof
ofaadefect
defect
0.7
0.7
0.8
0.8
0.9
0.9
Yield
Yield
(Poisson)
(Poisson)
100%
100%
90%
90%
82%
82%
74%
74%
67%
67%
61%
61%
55%
55%
50%
50%
45%
45%
41%
41%
37%
37%
%
%Over
Over
Estimated
Estimated
0%
0%
0%
0%
2%
2%
4%
4%
7%
7%
11%
11%
15%
15%
20%
20%
25%
25%
31%
31%
37%
37%
1.0
1.0
Binom ia l
n = number of units
r = number of predicted defects
p = probability of a defect occurrence
q = 1 -p
Poisson
For low defect rates (p < 0.1), the Poisson approximates the Binomial fairly well.
Our goal is to predict yield. For process improvement, the “yield” of interest is the ability of a process
to produce zero defects (r=0). Question: What happens to the Poisson equation when r=0?
Deriving RTY from DPU - Modeling
To what value is
the P(0)
converging?
Unit
O pportunity
•
•
•
Note: Ultimately,
this means that
you need the
ability to track all
the individual
defects which
occur per unit via
your data
collection system.
Ba sic Q uestion: W hat is the likelihood of
producing a unit with zero defects?
For the unit shown above the following
data was gathered:
–
60 defects observed
–
60 units processed
W hat is the DPU?
RTY
RTY for
for DPU
DPU =
= 11
0.368
0.368
0.364
0.364
Yield
Yield
Given a
probability that
any opportunity is
a defect = #
defects / (# units
x # opps per unit):
0.36
0.36
0.356
0.356
0.352
0.352
W hat is probability that any given
opportunity will be a defect?
0.348
0.348
10
10
100
100
1000
1000
10000
10000
100000
100000
1000000
1000000
Chances
Chances Per
Per Unit
Unit
•
W hat is the probability that any given
opportunity will N OT be a defect is:
•
The probability that all 10 opportunities
on single unit will be defect-free is:
Opportunities
10
100
1000
10000
100000
1000000
P(defect)
0.1
0.01
0.001
0.0001
0.00001
0.000001
P(no defect)
0.9
0.99
0.999
0.9999
0.99999
0.999999
RTY (Prob defect free unit)
0.34867844
0.366032341
0.367695425
0.367861046
0.367877602
0.367879257
If we extend the concept to an infinite number
of opportunities, all at a DPU of 1.0, we will
approach the value of 0.368.
Probability that an opportunity is a defect = 0.1
Probability that an opportunity is not a defect = 1 - 0.1 = 0.9
Probability that all 10 opportunities are defect-free = 0.910 = 0.34867844
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
39
Six Sigma Fundamentals
RTY Prediction — Poisson Model
When r =
1, this
equation
simplifies
to:
(dpu)*edpu
•
Use the binomial to estimate the probability of a discrete event
(good/ bad) when sampling from a relatively large population,
n > 16, & p < 0.1.
•
W hen r=0, we compute the probability of finding zero defects per
unit (called “ rolled throughput yield” ).
•
The table to the right shows the proportion of product which will
have
–
0 defects (r=0)
–
1 defect (r=1)
–
2 defects (r=2), etc…
Y=
(dpu) r e – dpu
r r! p[r]
W hen DPU=1
•
W hen, on average, we have a process, with 1 defect per unit,
then we say there is a 36.79% chance of finding a unit with zero
defects. There is only a 1.53% chance of finding a unit with 4
defects.
•
W hen r=1, this equation simplifies to:
•
To predict the % of units with zero defect (i.e., RTY):
–
count the number of defects found
–
count the number of units produced
–
compute the dpu and enter it in the dpu equation:
0
1
2
3
4
5
6
7
8
0.3679
0.3679
0.1839
0.0613
0.0153
0.0031
0.0005
0.0001
0.0000
The point of this slide is to demonstrate the mathematical model used to predict the probability of an
outcome of interest. It has little practical purpose other than to acquaint the Six Sigma Belt with the math
behind the tool they are learning and let them understand that there is a logical basis for the equation.
Six Sigma Metrics – Calculating DPU
The DPU for a given operation can be calculated by dividing the number of
defects found in the operation by the number of units entering the operational
step.
1 0 0 pa rts built
2 defects identified a nd corrected
dpu = 0 .0 2
So RTY for this step w ould be e-.0 2 (.9 8 0 1 9 9 ) or 9 8 .0 2 %.
RTY 1 =0 .9 8
dpu = .0 2
RTY 2 =0 .9 8
dpu = .0 2
RTY 3 =0 .9 8
dpu = .0 2
RTY 4 =0 .9 8
dpu = .0 2
RTY 5 =0 .9 8
dpu = .0 2
RTY
= 0 .9 0
RTYTO
TOTT= 0 .9 0
44
dpu
= .1
dpuTO
TOTT = .1
If the process had only 5 process steps with the same yield the process
RTY would be: 0.98 * 0.98 * 0.98 * 0.98 * 0.98 = 0.903921 or 90 .39%. Since our
metric of primary concern is the COPQ of this process, we can say that in less than 9% of
the time we will be spending dollars in excess of the pre-determined standard or value
added amount to which this process is entitled.
N ote: RTY’s must be multiplied a cross a process,
DPU’s a re a dded a cross a process.
When the number of steps in a process continually increase, we then continue to multiply the yield
from each step to find the overall process yield. For the sake of simplicity let’s say we are calculating
the RTY for a process with 8 steps. Each step in our process has a yield of .98. Again, there will be a
direct correlation between the RTY and the dollars spent to correct errors in our process.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
40
Six Sigma Fundamentals
Focusing our Effort – FTY vs. RTY
Assume we are creating two products in our organization
that use similar processes.
Product A
FTY = 80%
Product B
FTY = 80%
How do you k now w ha t to w ork on?
*None of the data used herein is associated with the products shown herein. Pictures are no more than illustration to make a point to teach the concept.
If we chose only to examine the FTY in our decision making process, it would be difficult to determine
the process and product on which our resources should be focused.
As you have seen, there are many factors behind the final number for FTY. That’s where we need to
look for process improvements.
Focusing our Effort – FTY vs. RTY
Answer Slide
questions.
Let’s look at the DPU of each product assuming equal opportunities and
margin…
Now we have a better
idea of:
“What does a defect
cost?”
“What product should
get the focus?”
Product B
dpu 100 / 100 = 1 dpu
Product A
dpu 200 / 100 = 2 dpu
N ow, can you tell which to work on?
“ the product with the highest DPU?” …think again!
How
How
How
How
How
much more time and/ or raw material are required?
much extra floor space do we need?
much extra staff or hours required to perform the rework?
many extra shipments are we paying for from our suppliers?
much testing have we built in to capture our defects?
*None of the data used herein is associated with the products shown herein. Pictures are no more than illustration to make a point to teach the concept.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
41
Six Sigma Fundamentals
At this point, you should be able to:
 Describe what is meant by “Process Focus”
 Generate a Process Map
 Describe the importance of VOC, VOB and VOE, and CTQ’s
 Explain COPQ
 Describe the Basic Six Sigma metrics
 Explain the difference between FTY and RTY
 Explain how to calculate “Defects per Unit” (DPU)
You have now completed Define Phase – Six Sigma Fundamentals.
Notes
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
42
Lean Six Sigma
Green Belt Training
Define Phase
Selecting Projects
Now we will continue in the Define Phase with the “Selecting Projects”.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
43
Selecting Projects
Overview
The core fundamentals of this
phase are Selecting Projects,
Refining and Defining and
Financial Evaluation.
The output of the Define Phase
is a well developed and
articulated project. It has been
correctly stated that 50% of the
success of a project is
dependent on how well the
effort has been defined.
Understa nding Six Sigm a
Six Sigm a Funda m enta ls
Selecting Projects
Selecting
Selecting Projects
Projects
Refining
Refining &
& Defining
Defining
Financial
Financial Evaluation
Evaluation
Elem ents of W a ste
W ra p Up & Action Item s
Approaches to Project Selection
Here are three approaches
for identifying projects. Do
you know what the best
approach is?
The most popular process
for generating and selecting
projects is by holding
“brainstorming” sessions. In
brainstorming sessions a
group of people get together,
sometimes after polling
process owners for what
“blatantly obvious” problems
are occurring, and as a team
try to identify and refine a list
of problems that MAY be
causing issues in the
organization. Furthermore in an organization that does not have an intelligent problem-solving
methodology in-place, such as Six Sigma, Lean or even TQM, what follows the project selection process
brainstorm is ANOTHER brainstorming session focused on coming up with ideas on how to SOLVE these
problems.
Although brainstorming itself can be very structured it falls far short of being a systematic means of
identifying projects that will reduce cost of poor quality throughout the organization. Why…for several
reasons. One, it does not ensure that we are dealing with the most important high-impact problems, but
rather what happens to be the recent fire fight initiatives. Two, usually brainstorming does not utilize a data
based approach, it relies on tribal knowledge, experience and what people THINK is happening. As we
know what people THINK is happening and what is ACTUALLY happening can be two very different things.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
44
Selecting Projects
Project Selection – Core Components
Business Case – The Business Case is a high level articulation of
the area of concern. This case answers two primary questions;
one, what is the business motivation for considering the project
and two, what is our general area of focus for the improvement
effort?
Project Charter – The Project Charter is a more detailed version of
the Business Case. This document further focuses the
improvement effort. It can be characterized by two primary
sections, one, basic project information and, two, simple project
performance metrics.
Benefits Analysis – The Benefits Analysis is a comprehensive
financial evaluation of the project. This analysis is concerned with
the detail of the benefits in regard to cost & revenue impact that
we are expecting to realize as a result of the project.
With every project there must be a minimum of 3 deliverables:
Business Case
Project Charter
Benefits Analysis
Project Selection - Governance
Business
Ca se
Project
Cha rter
Benefits
Ana ly sis
Responsible
Pa rty
Resources
Champion
(Process Owner)
Business Unit
Members
N/ A
Six Sigma Belt
Champion (Process
Owner) &
Master Black Belt
Ongoing
Benefits Capture
Manager or
Unit Financial Rep
Champion (Process
Owner) &
Six Sigma Belt
Ongoing /
D,M,A,I,C
Sampson Gholston, UAH Green Belt Manual v11 MT
Frequency
of Upda te
© Dr. Sampson Gholston
45
Selecting Projects
A Structured Approach – A Starting Point
These are some
examples of
Business Metrics or
Key Performance
Indicators.
What metric should
you focus on…it
depends? What is
the project focus?
What are your
organizations
strategic goals?
The Starting Point is defined by the Champion or Process Owner and the
Business Case is the output.
– These are some examples of business metrics or Key Performance Indicators
commonly referred to as KPI’s.
– The tree diagram is used to facilitate the process of breaking down the metric of
interest.
 EBIT
Level 2
 Cycle time
 Defects
 Cost
Level 2
Level 1
Level 2
 Revenue
Are Cost of Sales
preventing growth?
 Compla ints
Level 2
Are customer
 Complia nce
complaints
resulting in lost
 Sa fety
earnings? Are
excess cycle times
and yield issues eroding market share? Is the fastest growing division of the business the
refurbishing department?
It depends because the motivation for organizations vary so much and all projects should be directly
aligned with the organizations objectives. Answer the question: What metrics are my department not
meeting? What is causing us pain?
A Structured Approach - Snapshot
Once a metric point
has been determined
another important
question needs to be
asked - What is my
metric a function of?
In other words what
are all of the things
that affect this metric?
The KPI’s need to brok en dow n into a ctiona ble levels.
Business M ea sures
Key Performa nce Indica tors (KPIs)
Actiona ble Level
Level 2
Level 3
Activities
Processes
We utilize the Tree
Diagram to facilitate
Level 1
the process of
Level 4
Level 2
Activities
Processes
breaking down the
metric of interest.
When creating the tree diagram you will eventually run into activities which are made up of
processes. This is where projects will be focused because this is where defects, errors and
waste occur.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
46
Selecting Projects
Business Case Components – Level 1
Prima ry Business M ea sure or Key Performa nce
Indica tor (KPI)
Level 2
Level 3
Activities
Processes
Level 2
Level 4
Activities
Processes
Level 1
– Focus on one primary business measure or KPI.
– Primary business measure should bear a direct line of site with the
organizations strategic objective.
– As the Champion narrows in on the greatest opportunity for
improvement, this provides a clear focus for how the success will be
measured.
Be sure to start with higher level metrics, whether they are measured at the Corporate Level,
Division Level or Department Level, projects should track to the Metrics of interest within a given
area. Primary Business Measures or Key Performance Indicators (KPI’s) serve as indicators of the
success of a critical objective.
Business Case Components – Business Measures
Post business measures (product/service) of the primary
business measure are lower level metrics and must focus on
the end product to avoid internal optimization at expense of
total optimization.
Prim a ry Business
M ea sure
Business
M ea sure
Business
M ea sure
Activities
Processes
Business
M ea sure
Business
M ea sure
Activities
Processes
Post business measures (product/service) are lower level metrics and must focus on the end
product.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
47
Selecting Projects
Business Case Components - Activities
Prim a ry Business
M ea sure
Business
M ea sure
Business
M ea sure
Activities
Processes
Business
M ea sure
Business
M ea sure
Activities
Processes
Y = f (x 1 , x 2 , x 3 …x n )
1 st Call Resolution = f (Calls, Operators, Resolutions…xn )
Black Box Testing = f (Specifications, Simulation, Engineering…x n)
Business measures are a function of activities. These activities are usually created or enforced by
direct supervision of functional managers. Activities are usually made up of a series of processes or
specific processes.
Business Case Components - Processes
Prim a ry Business
M ea sure
Business
M ea sure
Business
M ea sure
Activities
Processes
Business
M ea sure
Business
M ea sure
Activities
Processes
Y = f (x 1 , x 2 , x 3 …x n )
Resolutions = f (N ew Customers, Existing Customers, Defective Products…xn )
Simulation = f (Design, Data, modeling…xn )
The processes represent the final stage of the matrix where multiple steps result in the delivery
of some output for the customer. These deliverables are set by the business and customer and
are captured within the Voice of the Customer, Voice of the Business or Voice of the Employee.
What makes up these process are the X’s that determine the performance of the Y which is
where the actual breakthrough projects should be focused.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
48
Selecting Projects
What is a Business Case?
The Business Case
is created to ensure
the strategic need
for your project. It
is the first step in
project description
development.
Business Case Example
During FY 2005, the 1st Time Call Resolution
Efficiency for New Customer Hardware Setup
was 89% .
This represents a gap of 8% from the industry
standard of 93% that amounts to US
$2,000,000 of annualized cost impact.
Here is an example of an
Business Case. This defines
the problem and provides
evidence of the problem.
As you review this statement remember the following format of what needs to be in a Business Case:
WHAT is wrong, WHERE and WHEN is it occurring, what is the BASELINE magnitude at which it is
occurring and what is it COSTING me?
You must take caution to avoid under-writing a Business Case. Your natural tendency is to write too
simplistically because you are already familiar with the problem. You must remember that if you are to
enlist support and resources to solve your problem, others will have to understand the context and the
significance in order to support you.
The Business Case cannot include any speculation about the cause of the problem or what actions will
be taken to solve the problem. It’s important that you don’t attempt to solve the problem or bias the
solution at this stage. The data and the Six Sigma methodology will find the true causes and solutions
to the problem.
The next step is getting project approval.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
49
Selecting Projects
The Business Case Template
Fill in the Bla nk s for Your Project:
During ___________________________________ , the ____________________ for
(Period of tim e for ba seline perform a nce) (Prim a ry business m ea sure)
________________________ was _________________ .
(A k ey business process) (Ba seline perform a nce)
This gap of ____________________________
(Business objective ta rget vs. ba seline)
from ___________________ represents ____________________ of cost impact.
(Business objective)
(Cost im pa ct of ga p)
You need to make sure that your own Business Case captures the units of pain, the business measures,
the performance and the gaps. If this template does not seem to be clicking use your own or just free
form your Business Case ensuring that its well articulated and quantified.
Business Case Exercise
Using the Excel file ‘Define Templates.xls’, Business Case, perform this exercise.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
50
Selecting Projects
What is a Project Charter?
The Charter expands on the Business Case, it clarifies the projects focus and measures of
project performance and is completed by the Six Sigma Belt.
Components:
• The Problem
• Project Scope
• Project Metrics
• Primary & Secondary
• Graphical Display of Project Metrics
• Primary & Secondary
• Standard project information
• Project, Belt & Process Owner
names
• Start date & desired End date
• Division or Business Unit
• Supporting Master Black Belt
(Mentor)
• Team Members
The Project Charter is an important document – it is the initial communication of the project. The first
phases of the Six Sigma methodology are Define and Measure. These are known as
“Characterization” phases that focus primarily on understanding and measuring the problem at hand.
Therefore some of the information in the Project Charter, such as primary and secondary metrics, can
change several times. By the time the Measure Phase is wrapping up the Project Charter should be in
its final form meaning defects and the metrics for measuring them are clear and agreed upon.
As you can see some of the information in the Project Charter is self explanatory, especially the first
section. We are going to focus on establishing the Problem Statement and determining Objective
Statement, scope and the primary and secondary metrics.
Project Charter - Definitions
•
Problem Sta tement - Articulates the pain of the defect or error in the
process.
•
O bjective Sta tement – States how much of an improvement is desired
from the project.
•
Scope – Articulates the boundaries of the project.
•
Prima ry M etric – The actual measure of the defect or error in the process.
•
Seconda ry M etric(s) – Measures of potential consequences (+ / -) as a
result of changes in the process.
•
Cha rts – Graphical displays of the Primary and Secondary Metrics over a
period of time.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
51
Selecting Projects
Project Charter - Problem Statement
Migrate the Business Case into a Problem Statement…
First the Business
Case will serve as the
Problem Statement, as
the Belt learns more
about the process and
the defects that are
occurring.
Project Charter – Objective & Scope
Consider the following for
constructing your Objective &
Scope:
What represents a significant
improvement?
 X amount of an increase in
yield
 X amount of defect reduction
 Use Framing Tools to establish
the initial scope
A project’s main objective is to solve a
problem! The area highlighted is for
articulating how much of a reduction or
improvement will yield a significant
impact to the process and business.
This is the starting point creating your
project’s Objective Statement.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
52
Selecting Projects
Pareto Analysis
Assisting you in determining what inputs are having the greatest impact on your process is the
Pareto Analysis approach.
The 80:20 Rule Examples
•
20% of the time expended produced 80% of the results
•
80% of your phone calls go to 20% of the names on your list
•
20% of the streets handle 80% of the traffic
•
80% of the meals in a restaurant come from 20% of the menu
•
20% of the paper has 80% of the news
•
80% of the news is in the first 20% of the article
•
20% of the people cause 80% of the problems
•
20% of the features of an application are used 80% of the time
Sampson Gholston, UAH Green Belt Manual v11 MT
Here are some
examples of the 80:20
Rule. Can you think of
any other examples?
© Dr. Sampson Gholston
53
Selecting Projects
Pareto Chart - Tool
Multi level Pareto Charts are used in a drill down fashion to get to Root Cause of the tallest bar.
Level 1
Level 2
Level 3
The Pareto Charts are often referred to as levels. For instance the first graph is called the first level,
the next the second level and so on.
Start high and drill down. Let’s look at how we interpret this and what it means.
Let’s look at the following example.
By drilling down from the first level we see
that Department J makes up approximately
60% of the scrap and part Z101 makes up
80% of Dept J’s scrap.
Level 2
See how we are creating focus and
establishing a line of sight?
You many be eager to jump into trying to fix
the problem once you have identified it, BE
CAREFUL. This is what causes rework and
defects in the first place.
Level 3
Follow the methodology, be patient and you
will eventually be led to a solution.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
54
Selecting Projects
Pareto Chart - Example
 Open MINITABTM and select
Pareto Analysis as shown above
• Use the “Call Center.mtw”
worksheet to create a Pareto Chart
What would you do with this Pareto?
When your
Pareto shows up
like this your focus
is on the 80-20
which is across
the “incorrectly
routed and
dropped calls”
totaling to about
80%.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
55
Selecting Projects
Pareto Chart – Example (Cont.)
Let’s look at the problem a little differently…
- Using a higher level scope for the first Pareto may help in providing focus.
- Create another Pareto as shown below.
This gives a deeper picture of which product category contributes the highest defect count.
Now we’ve got something to work with. Notice the 80% area…. draw a line from the 80%
mark across to the cumulative percent line (Red Line) in the graph as shown here.
Which cards create the highest Defect Rates?
Now you are beginning to see what needs work to improve the performance of your project.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
56
Selecting Projects
Pareto Chart – Example (cont.)
Now that we have more of a focus area, drill down one more level.
– This chart will only use the classifications within the first bar on the
previous chart.
– Create another Pareto which will drill down to the categories within
the Card type from the previous Pareto.
Remember to keep focused on finding the biggest bang for the buck.
Now what? We’ve got ourselves another “Pareto”…
Essentially this tells us that there is clear direction to the major defects within the Platinum Business
Accounts.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
57
Selecting Projects
Project Charter – Primary Metric
Moving on to the next
element of the Project
Charter…, Using the
Excel file ‘Define
Templates.xls’,
Project Charter,
perform the following
exercise:
Since we will be
narrowing in on the
defect thru the
Measure Phase it is
common for the
Primary Metric to
change several times
while we struggle to
understand what is
happening in our
process of interest.
The Primary Metric also serves as the gauge for when we can claim victory with the project.
Project Charter – Secondary Metrics
Consider a project
focused on improving
duration of call times
(cycle time) in a call
center. If we realize a
reduction in call time
you would want to
know if anything else
was effected.
Think about it…did
overtime increase /
reduce, did labor
increase / reduce, what
happened to customer
satisfaction ratings?
These are all things
that should be
measured in order to
accurately capture the
true effect of the
improvement.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
58
Selecting Projects
Project Charter – Metric Charts
The Project Charter
template includes the
graphing capabilities
shown here. It is OK
to not use this
template but in any
case ensure you are
regularly measuring
the critical metrics.
Project Charter Exercise
Using the Excel
file ‘Define
Templates.xls’,
Project Charter,
perform this
exercise.
Ex ercise objective: To begin planning the Project Charter
deliverable.
1. Complete the Project Charter template to the best of your
ability.
2. Be prepared to present your Stakeholder Analysis to your
mentor.
Project Charter Template.xls
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
59
Selecting Projects
What is the Financial Evaluation?
The Financial Evaluation establishes the value of the project.
The components are:
– Impact
OK, l et ’s a d d i t up!
• Sustainable
• One-off
– Allocations
• Cost Codes / Accounting System
– Forecast
• Cash flow
• Realization schedule
Typically a financial representative is responsible for evaluating the financial
impact of the project. The Belt works in coordination to facilitate the proper
information.
Standard financial principles should be followed at the beginning and end of the project to provide a
true measure of the improvement’s effect on the organization.
A financial representative of the firm should establish guidelines on how savings will be calculated
throughout the Six Sigma deployment.
Benefits Capture - Calculation “Template”
Whatever your
organization’s
protocol may be
these aspects
should be
accounted for
within any
improvement
project.
I
M
P
A
C
T
C
O
S
T
C
O
D
E
S
Sustainable Impact
Reduced
Costs
Increased
Revenue
F
O
R
E
C
A
S
T
Sampson Gholston, UAH Green Belt Manual v11 MT
There are two
types of Impact:
One Off &
Sustainable
“One-Off” Impact
Costs
Realization Schedule
(Cash Flow)
By Period
(i.e. Q1,Q2,Q3,Q4)
Implementation
Capital
Cost Codes
allocate the impact
to the appropriate
area in the
“Books”
Forecasts allow for
proper
management of
projects and
resources
© Dr. Sampson Gholston
60
Selecting Projects
Benefits Capture - Basic Guidelines
When calculating project benefits you should follow these steps.
Benefits Capture - Categorization
Here is an example of how to categorize your project’s impact.
A
•
B
•
C•
D•
Projects directly impact the Income Statement or Cash Flow
Statement.
Projects impact the Balance Sheet (working capital).
Projects avoid expense or investment due to known or expected
events in the future (cost avoidance).
Projects are risk management, insurance, Safety, Health,
Environment and Community related projects which prevent or
reduce severity of unpredictable events.
Yo u d o n ’t wa nt to t ak e t hi s o n e ho m e!
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
61
Selecting Projects
Benefits Calculation Involvement & Responsibility
Project Selection
D-M -A-I-C
Implementa tion
6 M onth Audit
Financial
Representative
Financial
Representative
Financial
Representative
Financial
Representative
Champion
&
Process Owner
Black Belt
Champion
&
Process Owner
Process Owner
It is highly recommended that you follow the involvement governance shown here.
Benefits Capture - Summary
•
Performance tracking for Six Sigma Projects should use the
same discipline that would be used for tracking any other
high-profile projects.
•
The A-B-C-D categories can be used to illustrate the impact of
your project or a “portfolio” of projects.
•
Establish The Governess Grid for Responsibility &
Involvement.
I t ’s a
wr a p!
Just some recommendations to consider when running your projects or program.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
62
Selecting Projects
Benefits Calculation Template
The Benefits Calculation Template facilitates and aligns with the aspects discussed for Project
Accounting.
The Excel file ‘Define Templates.xls’, BENEFITS CALCULATION TEMPLATE.
Sampson Gholston, UAH Green Belt Manual v11 MT
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Selecting Projects
At this point, you should be able to:
 Understand the various approaches to project selection
 Articulate the benefits of a “Structured Approach”
 Refine and Define the business problem into a Project
Charter to display critical aspects of an improvement
project
 Make initial financial impact estimate
You have now completed Define Phase – Selecting Projects.
Notes
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64
Lean Six Sigma
Green Belt Training
Define Phase
Elements of Waste
Now we will continue in the Define Phase with “Elements of Waste”.
Sampson Gholston, UAH Green Belt Manual v11 MT
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65
Elements of Waste
Overview
The core fundamentals
of this phase are the 7
components of waste
and 5S.
We will examine the
meaning of each of
these and show you
how to apply them.
Understa nding Six Sigm a
Six Sigm a Funda m enta ls
Selecting Projects
Elem ents of W a ste
77 Com
Components
ponents of
of W
W aaste
ste
55S
S
W ra p Up & Action Item s
Definition of Lean
“ Lean Enterprise is based on the premise that anywhere
work is being done, waste is being generated.
The Lean Enterprise seeks to organize its processes to the
optimum level, through the continual focus on the
identification and elimination of waste.”
-- Ba rba ra W hea t
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
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Elements of Waste
Lean – History
1885
Craft Production
1913
Mass Production
- Machine then harden
- Fit on assembly
- Customization
- Highly skilled workforce
- Low production rates
- High Cost
- Part inter-changeability
- Moving production line
- Production engineering
- "Workers don't like to
think"
- Unskilled labor
- High production rates
- Low cost
- Persistent quality
problems
- Inflexible models
1955 - 1990
Toyota Production
System
- Worker as problem
solver
- Worker as process
owner enabled by:
-- Training
-- Upstream quality
-- Minimal inventory
-- Just-in-time
- Eliminate waste
- Responsive to change
- Low cost
- Improving productivity
- High quality product
1993 Lean Enterprise
- "Lean" applied to all
functions in enterprise
value stream
- Optimization of value
delivered to all
stakeholders and
enterprises in value chain
- Low cost
- Improving productivity
- High quality product
- Greater value for
stakeholders
Lean Manufacturing has been going on for a very long time, however the phrase is credited to
James Womac in 1990. A small list of accomplishments are noted in the slide above primarily
focused on higher volume manufacturing.
Lean Six Sigma
The essence of Lean is to
concentrate effort on removing
waste while improving process
flow to achieve speed and agility
at lower cost. The focus of Lean
is to increase the percentage of
value-added work performed by
a company. Lean recognizes
that most businesses spend a
relatively small portion of their
energies on the true delivery of
value to a customer. While all
companies are busy, it is
estimated for some companies
that as little as 10% of their
time is spent on value-added work, meaning as much as 90% of time is allocated to non value-added
activities, or waste.
Forms of waste include: Wasted capital (inventory), wasted material (scrap), wasted time (cycle time),
wasted human effort (inefficiency, rework) and wasted energy (energy inefficiency). Lean is a
prescriptive methodology for relatively fast improvements across a variety of processes, from
administrative to manufacturing applications. Lean enables your company to identify waste where it
exists. It also provides the tools to make improvements on the spot.
Sampson Gholston, UAH Green Belt Manual v11 MT
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Elements of Waste
Lean Six Sigma (cont.)
Lean focuses on what calls the Value Stream, the sequence of activities and work required to
produce a product or to provide a service. It is similar to a Linear Process Flow Map, but it
contains its own unique symbols and data. The Lean method is based on understanding how the
Value Stream is organized, how work is performed, which work is value added vs. non-value
added and what happens to products and services and information as they flow through the Value
Stream. Lean identifies and eliminates the barriers to efficient flow through simple, effective tools.
Lean removes many forms of waste so that Six Sigma can focus on eliminating variability.
Variation leads to defects, which is a major source of waste. Six Sigma is a method to make
processes more capable through the reduction of variation. Thus the symbiotic relationship
between the two methodologies.
Project Requirements for Lean
•
Perhaps one of the most criminal employee performance issues in
today’s organizations is generated not by a desire to cheat one’s
employer but rather by a lack of regard to waste.
•
In every work environment there are multiple opportunities for
reducing the non-value added activities that have (over time)
become an ingrained part of the standard operating procedure.
•
These non-value added activities have become so ingrained in our
process that they are no longer recognized for what they are,
WASTE.
•
waste (v.) Anything other than the minimum amount of time,
material, people, space, energy, etc needed to add value to the
product or service you are providing.
•
The Japanese word for waste is muda.
G et t hat st uf f
o utt a her e!
Employees at some level have been de-sensitized to waste: “That’s what we’ve always done.”
Lean brings these opportunities for savings back into focus with specific approaches to finding
and eliminating waste.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
68
Elements of Waste
Seven Components of Waste
M uda is cla ssified into seven components:
–
–
–
–
–
–
–
Overproduction
Correction (defects)
Inventory
Motion
Overprocessing
Conveyance
W aiting
Sometimes a dditiona l forms of muda a re a dded:
– Under use of talent
– Lack of safety
Being Lea n m ea ns elim ina ting w a ste.
Overproduction
Overproduction is producing more than the next step needs or more
than the customer buys.
–
It may be the worst form of waste because it contributes to all
the others.
Examples are:
Preparing extra reports
Reports not acted upon or
even read
Multiple copies in data storage
Over-ordering materials
Duplication of effort/reports
Waste of Overproduction relates to the excessive
accumulation of work-in-process (WIP) or finished
goods inventory.
Producing more parts than necessary to satisfy the customer’s quantity demand thus leading to
idle capital invested in inventory.
Producing parts at a rate faster than required such that a work-in-process queue is created –
again, idle capital.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
69
Elements of Waste
Correction
Correction of defects are as obvious as it sounds.
Examples are:
Incorrect data entry
Paying the wrong vendor
Misspelled words in
communications
Making bad product
Eliminate erors!!
Materials or labor discarded
during production
Waste of Correction includes the waste of handling
and fixing mistakes. This is common in both
manufacturing and transactional settings.
Correcting or repairing a defect in materials or parts adds unnecessary costs because of
additional equipment and labor expenses. An example is the labor cost of scheduling employees
to work overtime to rework defects.
Inventory
Inventory is the liability of materials that are bought, invested in and
not immediately sold or used.
Examples are:
Transactions not processed
Bigger “in box” than “out
box”
Over-ordering materials
consumed in-house
Over-ordering raw materials
– just in case
Waste of Inventory is identical to overproduction except
that it refers to the waste of acquiring raw material before
the exact moment that it is needed.
Inventory is a drain on an organization’s overhead. The greater the inventory, the higher the
overhead costs become. If quality issues arise and inventory is not minimized, defective material
is hidden in finished goods.
To remain flexible to customer requirements and to control product variation, we must minimize
inventory. Excess inventory masks unacceptable change-over times, excessive downtime,
operator inefficiency and a lack of organizational sense of urgency to produce product.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
70
Elements of Waste
Motion
Motion is the unnecessary movement of people and equipment.
–
This includes looking for things like documents or parts as well as
movement that is straining.
Examples are:
Extra steps
Extra data entry
Having to look
for something
Waste of Motion examines how people
move to ensure that value is added.
Any movement of people or machinery that does not contribute added value to the product, i.e.
programming delay times and excessive walking distance between operations.
Overprocessing
Overprocessing is tasks, activities and materials that don’t add value.
–
Can be caused by poor product or tool design as well as from not
understanding what the customer wants.
Examples are:
Sign-offs
Reports that contain more
information than the
customer wants or needs
Waste of Over-processing relates to
over-processing anything that may not
be adding value in the eyes of the
customer.
Communications, reports,
emails, contracts, etc that
contain more than the
necessary points (briefer is
better)
Voice mails that are too
long
Processing work that has no connection to advancing the line or improving the quality of the
product. Examples include typing memos that could be had written or painting components or
fixtures internal to the equipment.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
71
Elements of Waste
Conveyance
Conveyance is the unnecessary movement of material and Goods.
–
Steps in a process should be located close to each other so
movement is minimized.
Examples are:
Extra steps in the
process
Distance traveled
Moving paper from
place to place
Waste of Conveyance is the movement of material.
Conveyance is incidental, required action that does not directly contribute value to the product.
Perhaps it must be moved however, the time and expense incurred does not produce product or
service characteristics that customers see.
It’s vital to avoid conveyance unless it is supplying items when and where they are needed (i.e.
just-in-time delivery).
Waiting
Waiting is nonproductive time due to lack of material, people, or
equipment.
–
Can be due to slow or broken machines, material not arriving on time,
etc.
Examples are:
Processing once each month
instead of as the work comes in
Showing up on time for a
meeting that starts late
Delayed work due to lack of
communication from another
internal group
Waste of Waiting is the cost of an idle resource.
Idle time between operations or events, i.e. an employee waiting for machine cycle to finish or a
machine waiting for the operator to load new parts.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
72
Elements of Waste
Waste Identification Exercise
Ex ercise objective: To identify waste that occurs in
your processes.
W rite an example of each type of muda below:
–
–
–
–
–
–
–
Overproduction
Correction
Inventory
Motion
Overprocessing
Conveyance
W aiting
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Notes
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
73
Elements of Waste
5S – The Basics
5S is a process designed to organize the workplace, keep it neat and
clean, maintain standardized conditions, and instill the discipline
required to enable each individual to achieve and maintain a world
class work environment.
Seiri - Put things in order
Seiton - Proper Arrangement
Seiso – Clean
Seiketsu – Purity
Shitsuke - Commitment
The term “5S” derives from the Japanese words for five practices leading to a clean and
manageable work area. The five “S” are:
‘Seiri' means to separate needed tools, parts and instructions from unneeded materials and to
remove the latter.
'Seiton' means to neatly arrange and identify parts and tools for ease of use.
'Seiso' means to conduct a cleanup campaign.
'Seiketsu' means to conduct seiri, seiton and seiso at frequent, indeed daily, intervals to maintain a
workplace in perfect condition.
'Shitsuke' means to form the habit of always following the first four S’s.
Simply put, 5S means the workplace is clean, there is a place for everything and everything is in its
place. The 5S will create a work place that is suitable for and will stimulate high quality and high
productivity work. Additionally it will make the workplace more comfortable and a place of which you
can be proud.
Developed in Japan, this method assume no effective and quality job can be done without clean and
safe environment and without behavioral rules.
The 5S approach allows you to set up a well adapted and functional work environment, ruled by
simple yet effective rules. 5S deployment is done in a logical and progressive way. The first
three S’s are workplace actions, while the last two are sustaining and progress actions.
It is recommended to start implementing 5S in a well chosen pilot workspace or pilot process and
spread to the others step by step.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
74
Elements of Waste
English Translation
There have been many attempts to force 5 English “S” words to maintain the original intent of 5S
from Japanese. Listed below are typical English words used to translate:
1. Sort (Seiri)
2. Straighten or Systematically Arrange (Seiton)
3. Shine or Spic and Span (Seiso)
4. Standardize (Seiketsu)
5. Sustain or Self-Discipline (Shitsuke)
Place things in such a
way that they can be
easily reached
whenever they are
needed
Straighten
Shine
Sort
Identify necessary items and
remove unnecessary ones, use
time management
Self - Discipline
Make 5S strong in
habit. Make
problems appear and
solve them.
5S
Visual sweep of areas,
eliminate dirt, dust and
scrap. Make workplace
shine.
Standardize
Work to standards,
maintain standards,
wear safety equipment.
Regardless of which “S” words you use, the intent is clear: Organize the workplace, keep it neat
and clean, maintain standardized conditions and instill the discipline required to enable each
individual to achieve and maintain a world class work environment.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
75
Elements of Waste
5S Exercise
Ex ercise objective: : To identify elements of 5S in
your workplace.
W rite an example for each of the 5S’s below:
•
•
•
•
•
Sort
Straighten
Shine
Standardize
Self-Discipline
____________________
____________________
____________________
____________________
____________________
Notes
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
76
Elements of Waste
At this point, you should be able to:
 Describe 5S
 Identify and describe the 7 Elements of Waste
 Provide examples of how Lean Principles can affect your area
You have now completed Define Phase – Elements of Waste.
Notes
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© Dr. Sampson Gholston
77
Lean Six Sigma
Green Belt Training
Define Phase
Wrap Up and Action Items
Now we will conclude the Define Phase with “Wrap Up and Action Items”.
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© Dr. Sampson Gholston
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Wrap Up and Action Items
Define Phase Overview—The Goal
The goa l of the Define Pha se is to:
• Identify a process to improve and develop a specific Six Sigma
project.
– Six Sigma Belts define critical processes, sub-processes and
elaborate the decision points in those processes.
• Define is the “ contract” phase of the project. W e are determining
exactly what we intend to work on and estimating the impact to
the business.
• At the completion of define you should have a description of the
process defect that is creating waste for the business.
Define Action Items
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Wrap Up and Action Items
Six Sigma Behaviors
•
Being tenacious, courageous
•
Being rigorous, disciplined
•
Making data-based decisions
•
Embracing change & continuous learning
•
Sharing best practices
Wal k
t he
Wal k !
Each “player” in the Six Sigma process must be
A ROLE MODEL
for the Six Sigma culture.
Define Phase — The Roadblocks
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Wrap Up and Action Items
Champion/
Process Owner
DMAIC Roadmap
Identify Problem Area
Define
Determine Appropriate Project Focus
Estimate COPQ
Measure
Establish Team
Assess Stability, Capability, and Measurement Systems
Improve
Analyze
Identify and Prioritize All X’s
Prove/Disprove Impact X’s Have On Problem
Identify, Prioritize, Select Solutions Control or Eliminate X’s Causing Problems
Control
Implement Solutions to Control or Eliminate X’s Causing Problems
Implement Control Plan to Ensure Problem Doesn’t Return
Verify Financial Impact
Define Phase Deployment
The importance of the Define
Phase is to begin to understand
the problem and formulate it into a
project. Notice that if the
Recommended Project Focus is
approved the next step would be
team selection.
Business Case
Selected
N otify Belts and Stakeholders
Create High-Level Process Map
Determine Appropriate Project Focus
(Pareto, Project Desirability)
Define & Charter Project
(Problem Statement, Objective, Primary Metric, Secondary Metric)
N
Approved
Project
Focus
Estimate COPQ
Recommend Project Focus
Y
Create Team
Charter Team
Ready for Measure
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Wrap Up and Action Items
Action Items Support List
Define Questions
Step One: Project Selection, Project Definition And Stakeholder Identification
Project Charter
 What is the problem statement? Objective?
 Is the business case developed?
 What is the primary metric?
 What are the secondary metrics?
 Why did you choose these?
 What are the benefits?
 Have the benefits been quantified? It not, when will this be done?
Date:____________________________
 Who is the customer (internal/external)?
 Has the COPQ been identified?
 Has the controller’s office been involved in these calculations?
 Who are the members on your team?
 Does anyone require additional training to be fully effective on the team?
Voice of the Customer (VOC) and SIPOC defined
 Voice of the customer identified?
 Key issues with stakeholders identified?
 VOC requirements identified?
 Business Case data gathered, verified and displayed?
Step Two: Process Exploration
Processes Defined and High Level Process Map
 Are the critical processes defined and decision points identified?
 Are all the key attributes of the process defined?
 Do you have a high level process map?
 Who was involved in its development?
General Questions
 Are there any issues/barriers that prevent you from completing this phase?
 Do you have adequate resources to complete the project?
 Have you completed your initial Define report out presentation?
These are some additional questions to ensure all the deliverables are achieved.
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston
82
Wrap Up and Action Items
At this point, you should:
 Have a clear understanding of the specific action items
 Have started to develop a project plan to complete the action items
 Have identified ways to deal with potential roadblocks
 Be ready to apply the Six Sigma method within your business
You have now completed Define Phase.
Notes
Sampson Gholston, UAH Green Belt Manual v11 MT
© Dr. Sampson Gholston