Six Sigma
6
Sam Tomas, CFPIM, CRM, C.P.M.
Kokopelli
What is Six Sigma?
Six Sigma is a reference to
a particular goal of reducing
defects to near zero.
• Sigma is the Greek letter “” that represents the
“standard deviation” or variability of a group of
items from their average value.
• A Six Sigma program is therefore a variability
reducing program.

– The key objectives include improved processes, product
performance, and reliability
2
What Else is Six Sigma?
• A concept that provides a relatively new way
to measure how good a product is. It relates
to a manufacturing or service failure rate of
only 3.4 rejects per million operations, or a
yield of 99.99 99 99 8%.

When a product is six sigma,
it tells us that the quality level
is excellent.
3
Why Six Sigma?
Why spend money to achieve six sigma quality when
perhaps 99% or 98% perfect would be totally
adequate?
• The inadequacy of 99.9% accuracy can be illustrated
as follows:

– 22,000 checks will be deducted from the wrong bank
accounts in the next 60 minutes
– 880,000 credit cards in circulation will have incorrect
cardholder information on their magnetic strips
– 268,500 defective tires will be shipped this year
– 18,322 pieces of mail will be mishandled the next hour
– 14,208 defective computers will be shipped this year
4
But With Six Sigma Quality • Drug prescriptions
– One incorrect drug prescriptions
every 25 years.
• Surgical operations
– One incorrect surgical operation
every 20 years
• Mail Delivery
– Only one article of mail
every 35 years
lost
5
The Bathtub Curve
• Shows reliability of a product in terms of failure rate
per month
• The curve presents two shaded areas
– Latent defect rate
• Causes early failure after a product is delivered
– Inherent failure rate
• Function of product design, materials, processes, and
technologies used in manufacturing.
• Defects in manufacturing are caused by:
– Narrow design margins for the product
– Insufficient manufacturing process controls
– Poor incoming materials/parts quality
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The Bathtub Curve
Failure Rate
I
Infant
Mortality
II
Useful
Life
Latent
Defects
III
Wear
out
Overall Life Characteristic curve
Inherent Failure Area
Failure Rate
Time
Quality Failures due to
Process & Material
Wear out
Failures
Design-Related (Inherent) Failures
Time
7
6 Sigma Versus 4 Sigma

Why attempt to achieve 6 sigma when 4 sigma
(99.9937%) may be adequate?
• Even well controlled processes experience
shifts in the mean as great as ± 1-1/2
standard deviations.
• A normal 4 sigma process plus a 1-1/2 sigma
shift in the process average would result in 4
sigma variations of 6,210 defects per million
operations.
8
Yield Rates of
Six Sigma Products
• It is possible to build a product in which each
component is a six sigma component and yet
have the product exhibit yields of only 90%,
80%, 70%, 60% etc.
• What we are talking about is rolledthroughput yield or the probability that all
product, process and material characteristics
will simultaneously conform to their
respective standards.
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Improvement Efforts Required
to Reach Six Sigma
66,810 dpm
3
10 X Improvement
6,210 dpm
223 dpm
3.4 dpm
4
5
6
30 X Improvement
70 X Improvement
Dpm = defects per million
10
10
Where are Average
Companies in Quality?
• Approximately 2 Sigma
– IRS – Tax advice over the phone
2
• Approximately 4 Sigma (Average)
–
–
–
–
Restaurant bills
Doctor prescription writing
Payroll processing
Order write-ups
• Approximately 6 Sigma
– Best in class – Seiko, HP Inc., etc.
• 6.5 Sigma
– Domestic flight fatality rate (0.43 ppm)
4
6
6.5
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Relationship of
Defects to Other Factors
• The 6 sigma concept indicates there are strong
relationships between product “defects” and such
factors as:
–
–
–
–
–

Reliability
Product yields
Cycle times
Inventories
Schedules
The higher the sigma value, the more reliable the
process being monitored and the higher the
improvement in all areas.
12
Financial Implications
of Low Sigma
• The lower the sigma level, the higher the
repair costs
• A 4 sigma company spends more than
15% of its sales dollars for internal and
external repairs
• A 6 sigma company spends about 1%
• Over the long run, a 4 sigma company will
not be able to compete with a 6 sigma
company.
13
What is the Cost of Quality?

Goal: Improve cost, quality, and schedule
performance via process improvement and
reduction of process variations.
Sigma Level
Defects Per Million Opportunities
Cost of Quality
2
308,537 (Noncompetitive companies)
N/A
3
66,807
25-40% of sales
4
6,210 (Industry average)
15-25% of sales
5
233
5-15% of sales
6
3.4 (World Class)
1% of sales
Note: Each sigma improvement represents a 10% net
improvement in income.
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The Tools of Six Sigma
•Design to standard parts/ materials
•Design to standard processes
•Design to known capabilities
•Design for assembly
•Design for simplicity
•Process optimization
•Process characterization
•Process standardization
•Short-cycle manufacturing
•Statistical process control
Process
Design
Material
•Parts standardization
•Supplier SPC (SSPC)
•Supplier certification
•ERP/MRP
Region of
Six Sigma Synergy
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Overcome Process Variation:
First Strategy
• Anticipate problems – develop controls during the
design cycle for both the product and the
manufacturing process steps to include the
following:
– Define 6 sigma tolerances on all critical product and
process parameters
– Minimize the total number of parts in the product
– Minimize the number of process steps
– Standardize on parts and procedures
– Use SPC during initial design and prototype
design phases
16
Overcome Process Variation:
Second Strategy
• Use statistical process control (SPC) on the
process to continually isolate, control and
eliminate variation resulting from people,
machines and the environment.
17
Overcome Process Variation:
Third Strategy
• The third strategy addresses suppliers
– Institute a supplier qualification program using
SSPC techniques
– Require suppliers to provide process control plans
and process control charts
– Minimize the number of suppliers used
– Work towards a long term “win-win” partnership
with all selected suppliers
18
Five Steps to Six Sigma
for Manufacturing
1. Identify product characteristics necessary to
2.
3.
4.
5.
satisfy customers (Use QFD)
Determine if characteristics are controlled by
part, process or both
Decide max allowed tolerance for correct
performance
Determine existing process variations
Change product design, process, or both to
attain the correct characteristics
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What Are Some Possible
Applications for Six Sigma?
• In the stockroom
– Used to reduce parts counts that are found to be inaccurate
• In personnel
– Used to reduce the number of requisitions unfilled after 30 days
• In customer service
– Used to measure number of calls unanswered on the 2nd or 3rd ring
• In sales
– Used to track errors in completing order forms
• In order fulfillment
– Used to eliminate returns because of wrong product being shipped
• In finance
– Used to reduce the instances of accounts being paid after a specified time
limit has elapsed
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Six Sigma
Dilbert