introduction to six sigma

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Introduction To Six Sigma

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  • Purpose of six sigma : To make customer happier and increase profitsIntroduction To Six Sigma

  • Origin of Six Sigma1987 Motorola Develops Six SigmaRaised Quality Standards

    Other Companies Adopt Six SigmaGEPromotions, Profit Sharing (Stock Options), etc. directly tied to Six Sigma training.Dow Chemical, DuPont, Honeywell, Whirlpool

  • Time Line20021995199219871985Dr Mikel J Harry wrote aPaper relating early failures to qualityMotorolaAllied SignalGeneral ElectricJohnson & Johnson,Ford, Nissan,Honeywell

  • Current Leadership ChallengesDelighting Customers.Reducing Cycle Times.Keeping up with Technology Advances.Retaining People.Reducing Costs.Responding More Quickly.Structuring for Flexibility. Growing Overseas Markets.

  • Six Sigma Benefits?Generated sustained successProject selection tied to organizational strategy Customer focusedProfitsProject outcomes / benefits tied to financial reporting system.Full-time Black Belts in a rigorous, project-oriented method.Recognition and reward system established to provide motivation.

  • Management involvement?Executives and upper management drive the effort through:Understanding Six SigmaSignificant financial commitmentsActively selecting projects tied to strategySetting up formal review processSelecting ChampionsDetermining strategic measures

  • Key issues for Leadership:How will leadership organize to support Six Sigma ? (6 council, Director 6 , etc)Transition rate to achieve 6 .Level of resource commitment.Centralized or decentralized approach.Integration with current initiatives e.g. QMSHow will the progress be monitored?Management Involvement?

  • What can it do?Motorola: 5-Fold growth in SalesProfits climbing by 20% paCumulative savings of $14 billion over 11 yearsGeneral Electric:$2 billion savings in just 3 yearsThe no.1 company in the USABechtel Corporation:$200 million savings with investment of $30 million

  • GE Six Sigma EconomicsSource: 1998 GE Annual Report, Jack Welch Letter to Share Owners and Employees - progress based upon total corporation cost/benefits attributable to Six Sigma.6 Sigma Project Progress

  • Overview of Six Sigma

  • Overview of Six SigmaIt is a PhilosophyAnything less than ideal is an opportunity for improvementDefects costs moneyUnderstanding processes and improving them is the most efficient way to achieve lasting results

    It is a ProcessTo achieve this level of performance you need to: Define, Measure, Analyse, Improve and Control

    It is Statistics6 Sigma processes will produce less than 3.4 defects per million opportunities

  • PhilosophyKnow Whats Important to the Customer (CTQ)Reduce Defects (DPMO) Center Around Target (Mean) Reduce Variation (Standard Deviation)

  • Critical ElementsGenuine Focus on the CustomerData and Fact Driven ManagementProcess FocusProactive managementBoundary-less CollaborationDrive for Perfection; Tolerance for failure

  • Data Driven DecisionYDependentOutputEffectSymptomMonitorX1 . . . XnIndependentInput-ProcessCauseProblemControlf(X)Y=The focus of Six sigma is to identify and control Xs

  • Two ProcessesDefineMeasureAnalyzeImproveControlDefineMeasureAnalyzeDesignVerifyDMAICDMADVExisting ProcessesNew ProcessesDFSS

  • Key Concepts

  • COPQ (Cost of Poor Quality)- Lost Opportunities- The Hidden Factory- More Setups- Expediting Costs- Lost Sales- Late Delivery- Lost Customer Loyalty- Excess Inventory- Long Cycle Times- Costly Engineering ChangesAverage COPQ approximately 15% of Sales Hidden Costs: Intangible Difficult to MeasureTraditional Quality Costs: Tangible Easy to Measure- Inspection- Warranty- Scrap- Rework- Rejects

  • Cost of Quality % SalesSigma LevelCOPQ v/s Sigma Level

  • CTQ (Critical-To-Quality)CTQ characteristics for the process, service or processMeasure of What is important to Customer6 Sigma projects are designed to improve CTQExamples:Waiting time in clinicSpelling mistakes in letter% of valves leaking in operation

  • Defective and DefectA nonconforming unit is a defective unitDefect is nonconformance on one of many possible quality characteristics of a unit that causes customer dissatisfaction.A defect does not necessarily make the unit defectiveExamples:Scratch on water bottle (However if customer wants a scratch free bottle, then this will be defective bottle)

  • Defect OpportunityCircumstances in which CTQ can fail to meet.Number of defect opportunities relate to complexity of unit.Complex units Greater opportunities of defect than simple unitsExamples:A units has 5 parts, and in each part there are 3 opportunities of defects Total defect opportunities are 5 x 3 = 15

  • DPO (Defect Per Opportunity)Number of defects divided by number of defect opportunitiesExamples:In previous case (15 defect opportunities), if 10 units have 2 defects.Defects per unit = 2 / 10 = 0.2DPO = 2 / (15 x 10) = 0.0133333

  • DPMO (Defect Per Million Opportunities)DPO multiplies by one millionExamples:In previous case (15 defect opportunities), if 10 units have 2 defects.Defects per unit = 2 / 10 = 0.2DPO = 2 / (15 x 10) = 0.0133333DPMO = 0.013333333 x 1,000,000 = 13,333 Six Sigma performance is 3.4 DPMO 13,333 DPMO is 3.7 Sigma

  • YieldProportion of units within specification divided by the total number of units.Examples:If 10 units have 2 defectivesYield = (10 2) x 100 /10 = 80 %Rolled Through Yield (RTY)Y1 x Y2 x Y3 x . x YnE.g 0.90 x 0.99 x 0.76 x 0.80 = 0.54

  • Forms of Waste

  • What are the forms of waste?Waste of CorrectionWaste of OverproductionWaste of processingWaste of conveyance (or transport)Waste of inventoryWaste of motionWaste of waiting

  • 1. Waste of correctionRepairing a defect wastes time and resources (Hidden factory)Operation 1TestTestProductOperation 2FailureInvestigationReworkFailureInvestigationReworkHiddenFactory

  • 2. Waste of OverproductionProducing more than necessary or producing at faster rate than requiredExcess labor, space, money, handling

  • 3. Waste of processingProcessing that does not provide value to the productExcess level of approvalsTying memos that could be handwrittenCosmetic painting on internals of equipmentPaint thickness more than specific values

  • 4. Waste of conveyanceUnnecessary movement of material from one place to other to be minimized because -It adds to process timeGoods might get damagedConvey material and information ONLY when and where it is needed.

  • 5. Waste of inventoryAny excess inventory is drain on an organization.Impact on cash flowIncreased overheadsCovers Quality and process issuesExamplesSpares, brochures, stationary,

  • 6. Waste of MotionAny movement of people, equipment, information that does not contribute value to product or service

  • 7. Waste of WaitingIdle time between operationsPeriod of inactivity in a downstream process because an upstream activity does not deliver on time.Downstream resources are then often used in activities that do not add value, or worst result in overproduction.

  • Some more sources of WasteWaste of untapped human potential.Waste of inappropriate systemsWasted energy and waterWasted materialsWaste of customer timeWaste of defecting customers

  • What is Sigma?

  • Have you everShot a rifle?Played darts?

    What is the point of these sports?What makes them hard?

  • Who is the better shooter? Have you everShot a rifle?Played darts?

  • VariabilityDeviation = distance between observations and the mean (or average)

    ObservationsDeviations1010 - 8.4 = 1.699 - 8.4 = 0.688 - 8.4 = -0.488 - 8.4 = -0.4 77 - 8.4 = -1.4averages8.40.0

  • Deviation = distance between observations and the mean (or average)

    Variability

    ObservationsDeviations77 - 6.6 = 0.477 - 6.6 = 0.477 - 6.6 = 0.46 6 - 6.6 = -0.666 - 6.6 = -0.6averages6.60.0

  • Variance = average distance between observations and the mean squaredVarianceVariability

    ObservationsDeviations1010 - 8.4 = 1.699 8.4 = 0.688 8.4 = -0.488 8.4 = -0.4 77 8.4 = -1.4averages8.40.0

    Squared Deviations2.560.360.160.161.961.0

  • Variance = average distance between observations and the mean squaredVarianceVariability

    ObservationsDeviations77 - 6.6 = 0.477 - 6.6 = 0.477 - 6.6 = 0.466 6.6 = -0.6 66 6.6 = -0.6averages6.60.0

    Squared Deviations0.160.160.160.360.360.24

  • VariabilityStandard deviation = square root of variance

    JackJill

    AverageVarianceStandard DeviationJack8.41.01.0Jill6.60.240.4898979

  • The world tends to be bell-shapedVariability

  • Here is why: Even outcomes that are equally likely (like dice), when you add them up, become bell shapedVariability

    Chart1

    0.166666666711

    0.16666666670.02777777782

    0.16666666670.05555555560.0046296296

    0.16666666670.08333333330.0138888889

    0.16666666670.11111111110.0277777778

    0.16666666670.13888888890.0462962963

    70.16666666670.0694444444

    80.13888888890.0972222222

    90.11111111110.1157407407

    100.08333333330.125

    110.05555555560.125

    120.02777777780.1157407407

    13130.0972222222

    14140.0694444444

    15150.0462962963

    16160.0277777778

    17170.0138888889

    18180.0046296296

    1 die

    2 dice

    3 dice

    Sum of dots

    Probability

    Add up the dots on the dice

    Sheet1

    observationsdeviationsquared deviationdeviationsquare deviation

    101.62.5670.40.16

    90.60.3670.40.16

    8-0.40.1670.40.16

    8-0.40.166-0.60.36

    7-1.41.966-0.60.36

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