“Payroll – Always on My Mind”
Six Sigma Strategies
Presenter: Kathy D. Pack, CPP
Payroll Manager, National Federation of Independent
Business
Tennessee Statewide Payroll Conference
Six Sigma
“To apply Six Sigma to your business and produce
the best results, you need to understand what Six
Sigma is, the principles of Six Sigma and DMAIC
problem solving method. The correct tools and use
of Six Sigma methods will keep your data
dependable and reusable.”
Six Sigma For Dummies, 2nd Edition; Craig Gygi, Bruce Williams, Stephen R. Covey
Agenda
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The Basics: What is Six Sigma
The History of Six Sigma
Six Sigma Principles
Six Sigma Methodology
Six Sigma Tools
Key Roles for Six Sigma
What is Six Sigma?
• A problem solving methodology for reducing
mistakes and maximizing value. Six sigma has
become a symbol of quality.
• Statistical term for 3.4 defects per a million
opportunities, which translates to 99.9997% error
free.
• Sigma represents the variation around the mean.
o The mean of a process is the average outcome of a number of
repetitions.
o Variation is when a process is reapeated many times and the
outcome differs with each repetition.
What is Six Sigma?
• The Sigma level of a company or department
indicates the percentage of defects in a product
or service or the number of defects per one
million opportunities.
• The goal of Six Sigma stratedgy is to reduce
variation so that the opportunity for error is
reduced, increasing quality and productivity; to
be as perfect as practically possible.
• Once a precise narrowly defined term that has
evolved over the years to represent a number of
concepts:
What is Six Sigma?
o Six Sigma Improvement: Key outcomes of a business or work
processes are improved drastically, usually 70% or greater.
o Six Sigma Performance: A statistical term for a process that
produces fewer than 3-4 defects per million opportunities.
o Six Sigma Development: The rollout of Six Sigma methodology
across an organization, with assigned pratices, roles and
procedures according to generally accepted standards.
o The Six Sigma Tool Set: The collection of methods and tools
including statistics and analytics that practitioners use to
consistently achieve break through levels of improvement.
• A data-driven, problem solving methodology of
Define-Measure-Analyze-Improve-Control
(DMAIC).
The History of Six Sigma
• The Six Sigma methodology was formalized in the mid-
1980’s at Motorola.
• This organization combined new theories and ideas with basic
principles and statistical methods that had existed in the quality
engineering domain for decades.
• They enhanced these building blocks using business and
leadership principles to form the basis for a complete
management system.
• This resulted in staggering increases in quality levels for many of
Motorola products.
• Then president Robert Gavin began to share Motorola’s Six
Sigma stradogies and by the mid -1990’s corporations like Texas
Instruments, Allied Signal, General Electric, Ford, and Sony;
began to have similiar results.
The History of Six Sigma
• The engineers at Motorola set up a scale to evaluate the quality
of a process based on the number of defects.
The Six Sigma Scale
Sigma Level
DPMO
% Defects
% Success
1
691,462
69%
31%
2
308,538
31%
69%
3
66,807
6.7%
93.3%
4
6,210
.62%
99.38%
5
233
.023%
99.977%
6
3.4
.00034%
99.99966%
The History of Six Sigma
• The root of Six Sigma can be tracked back to
early quality concepts and even earlier statistical
theories. Forefather’s of Six Sigma:
• Dr Joseph Juran:
• Developed the Quality Trilogy: 1. Quality planning- provide a
system that is capable of meeting quality standards. 2.
Quality control- Used to determine when corrective action is
required. 3. Quality improvements- improvements lead to
better control and quality. (a better way of doing things)
• 80/20 rule; 80% of problems are caused by 20% of potential
causes. (few, 20% are vital, many, 80% are trivial).
• Dr. W. Edward Deming:
• Wrote 14 Points and Seven Deadly Sins of Top Management
which describes the 7 most common barriers that
management faces to improve effectiveness and continued
improvement. (all efforts on a single goal).
• Created the PSDA Cycle: Plan, Do, Study, Act.
The History of Six Sigma
• Dr. Walter Shewhart:
• Developed the Statistical Control Process (SCP): In order for a
process to be most economical it must be brought into a state of
control where the only variation is random.
• Differentiated between assignable and chance cause variation:
Assignable cause variation is a variation that can be traced to a
root cause. Chance cause variation can’t traced back to a
cause and connot be controlled.
• Dr. Genichi Taguchi:
• First person to equate qualtiy with cost.
• Described processes in terms of “noise” and “signal”: processes
are influenced by external factors called “noise”. You must
Identify and eliminate “noise” from the process or “signal”.
Systems and processes should be designed to withstand “noise”
and still produce a quality product.
• Developed the quality loss function: how money is lost because
of variability in a process.
The History of Six Sigma
• Dr. Kaoru Ishikawa:
• Developed the Company Wide Quality Control method
(CWQC): continued customer service, customer should
receive continued customer service even after receiving the
product.
• Developed the cause-and-effect diagram for process
improvement (Ishikawa or fishbone diagram) used to find the
root of process imperfections.
• Dr. Armand Feigenbaum:
• Promoted the performance goal of zero defects.
• Believed in the concept of a “hidden plant”; so much work is
done correcting mistakes that there is a “hidden plant” within
a factory.
The History of Six Sigma
• Philip Crosby:
• Made Six Sigma concepts accessible to ordinary managers.
Key role in spreading Six Sigma and it’s methodology.
• Developed the four absolutes of quality management: DIRFT;
doing it right the first time. 1. quality means conformance to
requirements. 2. quality comes from error prevention. 3.
standard must be zero defects. 4. should be measured in
terms of price of nonconformance (cost of failure)
Six Sigma Principles
• Six Sigma is based on a handful of fundamental
principles:
o Y=f(X) + ε: All outcomes and results (the Y) are determined
by inputs (the Xs) with some degree of uncertainty (ε)
Six Sigma Principles
o To change or improve results (the Y), you have to focus on
the inputs (the Xs), modify and control them.
o Variation is everywhere, and it degrades consistent good
performance. Your job is to first find it and then minimize it.
o Valid measurements and data are required foundations for
consistent breakthrough improvement.
o Only a critical few inputs have signicant effect on the
output. Concentrate on the critical few.
o Every decision and conclusion has a risk (ε), which must be
weighed against the context of the decision.
Methodology
• DMAIC: Define, Measure, Analyze, Improve, Control
o Six Sigma Improvement Methodology
• DMADV: Define, Measure, Analyze, Design, Verify
o Creating new processes which will perform at Six Sigma
Methodology
• DMAIC: Define, Measure, Analyze, Improve, Control
o Define: Set the context and objectives for your
improvement project. Consistent with customer demands
and business strategy.
o Measure: Determine the baseline performance and
capability of the process or system you are improving.
o Analyze: Use data and tools to understand the cause-and
–effect relationships in your process or system. Are you
meeting customer demands.
o Control: Establish plans and procedures to ensure that your
improvements are sustainable.
Methodology
• DMADV: Define, Measure, Analyze, Design, Verify
o Define: Set the context and objectives for the NEW project.
What is being designed and why. Consistent with customer
demands and business strategy. Create a project team.
o Measure: Translate customer requirements into project goals.
Set performance goals for the project. Develop risk
assessment.
o Analyze: Develop CTQ’s (Critical to Quality Tree) Review risk
assessment. Set project schedule.
o Design: Develop models and project plans, set system
parameters, create processes around your project design.
o Verify: Compare product to internal specifications.
Document, Document, Document. Review documentation to
ensure your project meets the needs of the customer.
Six Sigma Tools
• Having the right tools and knowing how to apply them to your
project will help you produce accurate, acceptable and reusable
outcomes.
• Below is an overview of the Six Sigma Landscape:
Define
Project Selection
Problem Statement
Objective Statement
QTC Tree (Critical to Quality)
VOC Data (voice of the customer)
Measure
Data Audit
Attribute Measurement Analysis
Gauge Repeatability & Reproducibility (R&R)
As Is Performance Baseline
Process Flowcharting/Mapping
Six Sigma Tools
Input (X) Identification
SIPOC Diagram – Suppliers, Inputs, Process, Outputs,
Customers
Affinity Diagram – Brainstorming
Fishbone Diagram – (Ishikawa Diagram)
Value Add/Non Value Add Analysis
Input (X)Funneling
Cause-Effect (C-E)/X-Y Matric Analysis
Failure Mode Effects Analysis (FMEA)
Basic Statistics
Analyze
Mean (average), Mode (most frequent) Median (mid
range)
Range (R), Standard Deviation (σ)
Graphical Analysis
Dot Plots/Histograms
Box & Whisker Plots
Scatter (X-Y) Plots
Capability Analysis
Sigma Score
Defect Rate Metrics (DPU, DPO, DPMO, DPPM)
Yield Metrics
Six Sigma Tools
Analyze
Analyze problem
Cause & Effect
Identify Root Causes of Defects
Verify Root Causes
Quantify Root Causes
Control
Process Management Summary
Process Control Plan
Quantify Financial Results
Present Final Project Results
Close Project
Six Sigma Tools
DMADV- Define, Measure, Analyze, Design, Verify
Six Sigma design for new projects.
Six Sigma Tools
Key Roles for Six Sigma
• Executive Leadership- Senior executive who sponsors the overall
Six Sigma initiative.
• Champions-Middle or senior-level executive who sponsors a specific
Six Sigma project, ensuring that resources are available and crossfunctional issues are resolved.
• Black Belt-Full-time professional who acts as a team leader on Six
Sigma projects. Typically has four to five weeks of classroom
training in methods, statistical tools and sometimes team skill
Key Roles for Six Sigma
• Master Black Belt- Highly experienced and successful Black Belt
who has managed several projects and is an expert in Six Sigma
methods/tools. Responsible for coaching/mentoring/training Black
Belts and for helping the Six Sigma leader and Champions keep the
initiative on track.
• Green Belt-Part-time professional who participates on a Black Belt
project team or leads smaller projects. Typically has two weeks of
classroom training in methods and basic statistical tools.
• Team Member-Professional who has general awareness of Six
Sigma (through no formal training) and who brings relevant
experience or expertise to a particular project.
Q&A