Six Sigma
An Overview
The Pennsylvania State University
Smeal College of Business
Frank L. Chelko
March 8, 2007
Six Sigma
Statistical Definition
The Statistical Definition of Six Sigma is +/- 6
Standard Deviations of a Normal Distribution.
This is equivalent to < 3.4 Defects per Million
Opportunities.
Sigma
1
2
3
4
5
6
Defects per Million
700,000
310,000
67,000
6,200
230
3.4
Quality Cost % Sales
Benchmark
HIGH
Noncompetitive
15%-25%
Noncompetitive
10%-15%
Noncompetitive
5%-10%
Industry Average
2%-5%
Best in Class
< 2%
World Class
As A Measure of Quality
Activity
Defects @ 99%
( +/- 3.8 Sigma )
Drinking
Water
Unsafe drinking water
for 15 minutes per day
Mail
Delivery
20,000 lost articles
of mail per hour
Hospital
Surgery
5000 incorrect
procedures per week
Air
Travel
2 abnormal landings
at most airports each day
Defects @ 99.9997%
(+/- 6 Sigma )
Unsafe drinking water
for 2 minutes per year
7 lost articles
of mail per hour
2 incorrect
procedures per week
1 abnormal landing
every 5 years
As An
Improvement Strategy
It is however much more than a statistical
term. Six Sigma as an improvement strategy is:
– A rigorous, focused and highly effective
implementation of proven quality principles and
techniques that aims for virtually error free
business performance.
– The near elimination of defects from any process,
product, or service far beyond where virtually all
companies are currently operating.
– A highly structured and disciplined improvement
process.
Comments from Business
Six Sigma is……..
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•
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A statistical approach to problem solving
A management culture
A way of thinking
A set of new behaviors
Synonymous with:
– Improving quality
– Reducing cost
– Improving customer loyalty/customer
satisfaction
– Achieving bottom-line results
Six Sigma’s Modern Evolution
1980
– Established by Motorola in response to
foreign competition and Baldridge Quality
Award goal.
1990’s
– Focus on process improvement using
statistical tools.
2005
– “Lean Six Sigma” combines the structured
management methodology and problem
solving tools of Six Sigma with the business
strategy, objectives and goals of “Lean
Enterprise”.
The Business Experience
•
•
•
•
•
•
Reduced cycle times, defects and costs
Reduction/elimination of waste
Improved productivity and efficiency
Measurable financial results
Increased product quality and reliability
Significant improvement in customer
satisfaction!
• Directly supports World Class performance
goals.
GE Results from 6 Sigma
$3.4B
$3.5B
6 Sigma Cost
6 Sigma Productivity
Delighting Customers
$500
$900
$2.5B
$3.0B
$2.5B
$1.2B
$700
$200 $170
$450
$380
$500
Cost Benefit
Cost Benefit
Cost Benefit
Cost Benefit
1996
1997
1998
1999
$600
$600
Cost Benefit Cost Benefit
2000
2001
$3.4 Billion in 2001 … Customers & Shareholders Love It!
$ in Millions Unless Otherwise Stated
Enabler for Change
Six Sigma Functions
Champions (Part-Time)
Resource Deployment
@ GE ( # employees )
All Business Leaders
Master Black Belts (MBB)
500
Black Belts (BB)
5,000
Green Belts (GB)
100,000
Six Sigma Associates
100%
The Business Experience
*Six Sigma is
currently active
in over 80% of
Fortune 500
companies.
* Masset, LLC Consulting
•
•
•
•
•
•
•
•
Motorola
Johnson & Johnson
Honeywell
TRW
Merrill Lynch
Xerox
McKesson
Sony
Management and
Project Support
Executives
Process
Owner
Senior Deployment
Champion
Finance
Champion
Information
Technology
Champion
Deployment
Champion
Human
Resources
Champion
Project
Champion
Management and Project Support
• Executives
– Create the Six Sigma vision and company environment.
– Define strategic and business goals.
• Senior Deployment Champions
– Day-to-Day management of Six Sigma throughout the business.
– Reports to and updates the executives on the progress of deployment.
– Liaison between the executives and deployment champions.
• Deployment Champions or Sponsors
– Responsible for the deployment of Six Sigma within the division or
business unit.
– Facilitates the identification and prioritization of projects assuring
alignment with the business goals.
– Establishes and executes training plans.
– Selects the project champions.
– Removes barriers for the project team.
Management and Project Support
• Project Champion
– Selects and mentors the Black Belts
– Leads in project identification, prioritization, and defining the project scope.
– Removes barriers for Black Belts and aligns resources.
• Process Owner
– Is a team member
– Takes ownership of a project when it is complete
– Responsible for maintaining the project’s gain
• Finance Champion
– Estimates and certifies project savings
– Works with deployment champions to identify potential project
opportunities.
– Assigns a finance representative on to each project team.
• Information Technology Champion
•
– Insures computer and software resourcing.
– Works with project teams to access data from existing databases
HR Champion
– Works with Black Belts to develop a MBB, BB, and GB selection process.
Six Sigma
Roles and Responsibilities
Six Sigma
Project
Teams
Analyze
• Full Time 6 Sigma Leaders
• Manage BB Projects & Plant 6 Sigma
• Run 6 Sigma Projects
• Instruct & Train BB, GBs, & YBs
MB
B
define
Black
Belt
Improve
Green Belt
Measure
Control
• Full or Part Time 6 Sigma Leaders
• Manage 6 Sigma Projects
• Instruct & Train GBs & YBs
Yellow Belt
• Part-Time 6 Sigma Leaders
• Run Mini 6 Sigma Projects
• Data Collection Experts
• Assist in Measure & Control.
Belt Structure
Yellow Belts: Entry Level team member. Understands
the fundamentals of Six Sigma. Data collection.
Green Belts: Lead and execute process-level
improvement projects.
Belt Structure
Black Belts: Implement the principles, practices, and
techniques of Six Sigma for maximum
cost reductions. (Lead the project teams)
Master Black Belts: Successfully completed 20 or
more Six Sigma projects.
The Methodologies
Six Sigma Methodologies
Improvement Model:
Define
Measure
(Re)Design Model:
Define
Measure
DMAIC (dee-may-ic)
Analyze
Improve
Control
DMADV (dee-mad-v)
Analyze
Design
Verify
The DMAIC Model
At the heart of Six Sigma is a systematic method for
analyzing and improving business processes called
DMAIC. The model includes five elements:
Define opportunities
Measure performance
Analyze opportunity
Improve performance
Control performance
Define
q
Next
Next Project
Project
q
q
q
q
q
q
What is the business case for the
project?
Identify the customer
Current state map
Future state map
What is the scope of this project?
Deliverables
Due date
Control
q
q
q
q
During the project, how will I control
risk, quality, cost, schedule, scope,
and changes to the plan?
What types of progress reports should
I create?
How will I assure that the business
goals of the project were
accomplished?
How will I keep the gains made?
Improve
q What is the work breakdown
structure?
q What specific activities are necessary
to meet the project's goals?
q How will I re -integrate the various
subprojects?
Measure
q What are the key metrics for this
business process?
q Are metrics valid and reliable?
q Do we have adequate data on this
process?
q How will I measure progress?
q How will I measure project success?
Analyze
q Current state analysis
q Is the current state as good as the
process can do?
q Who will help make the changes?
q Resource requirements
q What could cause this change effort to
fail?
q What major obstacles do I face in
completing this project?
Project Phase
Candidate Six Sigma Tools
Define
q
q
q
q
q
Measure
q
q
q
q
q
q
Analyze
q
q
q
q
q
q
q
q
q
q
Improve
q
q
q
q
Control
q
q
q
q
q
Project charter
VOC tools (surveys, focus groups, letters, comment cards)
Process map
QFD, SIPOC (suppliers, inputs, process, outputs, customers)
Benchmarking
Measurement systems analysis
Exploratory data analysis
Descriptive statistics
Data mining
Run charts
Pareto analysis
Cause-and-effect diagrams
Tree diagrams
Brainstorming
Process behavior charts (SPC)
Process Maps
Design of Experiments
Enumerative statistics (hypothesis tests)
Inferential statistics (Xs and Ys)
FMEA (failure mode effects analysis)
Simulation
Force field diagrams
7M tools
Project planning and management tools
Prototype and pilot studies
SPC
FMEA
ISO 900x
Change budgets, bid models, cost estimating models
Reporting system
Six Sigma Methodologies
Improvement Model:
Define
Measure
(Re)Design Model:
Define
Measure
DMAIC (dee-may-ic)
Analyze
Improve
Control
DMADV (dee-mad-v)
Analyze
Design
Verify
The DMADV Model
Systematic method for creating or reinventing
business processes is DMADV. Typically use:
• New designs
• Existing product or process was optimized
however continues not to meet Six Sigma
objectives.
The model also includes five elements:
Define opportunities
Measure performance
Analyze opportunity
(Re) Design opportunity
Verify performance
DMADV vs. DMAIC
DMADV
Develop
Measurement
Criteria
DMAIC
Define
NO
Does a
process
exist?
YES
In
Control?
Analyze
Design
Measure
Existing
Process
Improve
NO
Remove
Special
Causes
Capable?
Analyze
Verify
Control
Tollgate Reviews
•
•
Another component of DMADV and DMAIC that
helps to ensure that the requirements of all
customers are met is the tollgate review.
At the end of each phase of the DMADV or
DMAIC process, all stakeholders meet to ensure
that:
1) The requirements have not changed
2) What is being designed still addresses the requirements.
3) The measurements really address the requirements.
The tollgate review is an excellent tool for keeping all
customers on the same page, involved in the process and
communicating requirements.
The Six Sigma Project
Typical “Project” Examples
Thermal insulator pad improvement
Laser test time cycle reduction
Reduce past due orders, delivery
Reduction of forge cracks
Reduction of job change down time
Reduce cycle time of paint batches
Wash water generation reduction
Reducing dppm of cell phone mfg.
Reduce brazing costs of tail cone assy.
Computer storage component test
$207,000
$500,000
$1,040,000
$635,046
$900,000
$119,000
$83,690
$408,000
$194,000
$1,100,000
Six Sigma Pitfalls
1. Companies that adopt Six Sigma as there
quality improvement strategy believe that
every problem should be resolved by a Six
Sigma project team.
2. Insufficient cross-functional team
representation.
3. Inadequate participation by executive
management.
4. Initially a part-time BB requires significant
start-up time to achieve success and may
conflict with other duties.
5. Unrealistic Goals. 3.4 parts per million on
Every Process, Excessive Time and Cost to
Gather Performance Data, etc.
Questions???
Six Sigma Process
and the Statistical Tools
Define
D
• Voice of the Customer (VOC)
- QFD
• XY Matrix
• Process Analysis and FMEA
• Data Collection Methods
• Data Integrity and Accuracy
• Basic Statistics
- Common Distributions
- Central Limit Theorem
- Sampling Distribution of Mean
- Basic Probability Concepts
• Decision-Making
• Non-Normal Data Graphical
• Short vs. Long Term Capability
• Data Analysis (B7)
- Cause and Effect Diagram
- Check Sheets
- Control Charts
- Flowcharts
- Histogram
- Pareto Chart
- Scatter Diagram
• Measurement System
(Gage) Analysis
• Process Capability Assessment
Measure
M
Analyze
A
• Graphic Data Analysis
• Multi-Vari Analysis
• Inferential Statistics
- Confidence Intervals
- Sample Size
• Hypothesis Tests
- Means, Variances and Proportions
- ANOVA
- T-Tests
- Test for Equal Variance
- Paired Comparison Tests
- Chi-Square
- Proportion
- Contingency Tables
- Point and Interval Estimation
- Non-Parametric Tests
• Simple Linear Correlation
• Regression-Simple and Multiple
- Measure and Model Relationships
Between Variables
- Binary Logistics
• Process Modeling and Simulation
Improve
I
Control
C
• Hypothesis Tests
- ANOVA
- Non-Parametric tests
- Contingency Tables
• Design of Experiments
- Terminology
- Plan and Organize Experiments
- Design Principles
- One Factor
- Full-Factorial
- Two Level Fractional
- Mixture Experiments
- Taguchi Robustness Concepts
• Response Surface Methodology
- Steepest Ascent/Decent
- High Order Experiments
• Evolutionary Optimization (EVOP)
Design for Six Sigma
• Quality Function Deployment (QFD)
• Robust Design and Process
- Functional Requirements
- Noise Strategies
- Tolerance Design
- Tolerance and Process Capability
• Design Analysis and FMEA
• Reliability Fundamentals
• Control Charts
- Theory, Objectives, Benefits
- Variable Selection
- Rational Sub-grouping
- Selection/Application
- Analysis
- Moving Average
- Exponentially Weighted
Moving Average (EWMA)
- CuSum
• Process Capability
Assessment
Six Sigma Process
and the Management Tools
Define
D
Measure
M
• Business Case
• Problem/Objective Statement
• Project Scope
• Project Goals
• Project Definition
• Project Charter
• Identify Owners and Stakeholders
• Identify Customers
• Financial Benefits
• Benchmarking
• Team Leadership
• Team Dynamics and Performance
• Change Agent
• Performance Measurements
• Gap Analysis
• High Level Process Mapping/ SIPOC
(Suppliers, Inputs, Process, Output, and Customers)
Analyze
A
Improve
I
The Six Sigma Journey
• Enterprise View
• Leadership
• Business Strategy
• Organizational Goals/Objectives
• Project Management Tools (N7)
- Activity Network Diagram
- Affinity Diagram
- Interrelationship Digraph
- Matrix Diagram
- Prioritization Matrix/Grid
- Tree Diagram
- Process Decision Program Chart
• What’s Next-Six Sigma Evolution
Design for Six Sigma
• Design for (X)
- Manufacturing (DFM)
- Cost (DFC)
- Test (DFT)
- Maintainability (DFMA)
- Quality/Reliability (DFQ)
• Special Design Tools
- Inventive Problem Solving
- Axiomatic Design
Control
C
• Lean Enterprise
- Lean Thinking
- Theory of Constraints
- Continuous Flow Manufacturing
- Non-Value Added Activities
- Cycle Time Reduction
- Cost of Quality
- Tools
Visual Factory, Kanban, Poka-Yoke
• Solution Implementation
- Mistake-Proofing (Poka-Yoke)
- Visible Enterprise
• Control Plans
- Training
- Documentation
- Monitoring
- Response
- Systems and Structures
• Total Productive Maintenance (TPM)
• Best Practice Sharing/Translation