“Six Sigma for Managers”Top-Down Six Sigma Implementation

for

American Society of Quality

Breakfast MeetingMarch 18, 2004

Two Key Aspects to Six Sigma• Initiative

– Improvement– Breakthrough– Systematic, Focused Approach– Right projects

• Linked to business goals– Right people

• Selected and Trained

– Project Management• Management Reviews

– Sustain the gains• New projects

– Results• Process and Financials

• Methods and Tools– Process Thinking

– Process Variation

– Facts, Figures and Data

– Define, Measure, Analyze, Improve and Control

– 8 Key Tools• Sequenced and Linked

– Statistical Tools

– Statistical Software

– Critical FEW Variables

Hoerl, Roger W., and Ronald D. Snee. (2003). Leading Six Sigma; p. 5

Six Sigma Project Outlook

Practical Problem

Statistical Problem

Statistical Solution

Practical Solution

Key Inputs for Deployment

• Strategy and Goals for Six Sigma• Process Performance Measures

• Project Selection Criteria• Project Identification/Prioritization System• Deployment Processes for Champions, MBBs, BBs, etc• Roles of Management, Champions, MBBs, BBs and Functional

Groups• Curricula and Training System

• Project and Six Sigma Initiative Review Schedule• Project Reporting and Tracking System

• Audit System for Previously Closed Projects• Reward and Recognition Plan• Communication Plan

Hoerl, Roger W., and Ronald D. Snee. (2003). Leading Six Sigma; p. 65

Keys to Successful Deployment

• Committed Leadership

• Top Talent

• Supporting Infrastructure

The Right People

Black BeltsBlack Belts Black BeltsBlack Belts Black BeltsBlack Belts

Green Green BeltsBelts

Green Green BeltsBelts

Green Green BeltsBelts

Green Green BeltsBelts

Each Level Drives the Team to Breakthrough Project Performance Each Level Drives the Team to Breakthrough Project Performance

Six Sigma Leaders

Master Black Belts

Six Sigma Champions

YellowYellowBeltsBelts

YellowYellowBeltsBelts

YellowYellowBeltsBelts

YellowYellowBeltsBelts

YellowYellowBeltsBelts

YellowYellowBeltsBelts

Six Sigma Project Team MembersSix Sigma Project Team Members

•Black Belts•Full Time Six Sigma Resource•4 Weeks Initial training, plus follow-up advanced statistical training•Work 3-4 projects Simultaneously•Mentor 5-10 Green Belt project•Train all Yellow Belts and some Green Belts

•Green Belts•Initially trained Manufacturing or Operations GBs•2 Week training -- equivalent Define and Measure skills•Expectation is to complete at least 1 project per year, and then workon 2nd project•Currently 25% of savings is from Green Belts•Evolved to DFSS, Technical Service, Transactional, Analytical and Reliability GBs

•Yellow Belts•One day of training focusing on Define and Measure tools•Target team members, then future project resources

Six Sigma Resource Definitions

Types of Projects

• Cost Reduction– Yield and Rate Improvement– Downtime Reduction/Equipment Utilization– Raw Material Selection– Utility Optimization (Gas, Steam, Air and Electricity)– Trailer/Railcar Utilization– Accounts Payable Process– Corporate Credit Card Usage

• Cost Avoidance– Reducing effects of future cost increases (disposal/environmental)– Inventory Control

• Capital Avoidance– Plant Utilization– Rate Improvement

• Revenue Enhancement– Plant Capacity Improvement– Tech Service Offerings

About Six Sigma at Grace

• What is Six Sigma (at Grace, at Davison)– Improving business performance by

improving process performance– All kinds of processes -- from mfg to corporate– Leadership, alignment, support– Objectives, financial and otherwise– Organization, infrastructure– Staffing, training (6σ staff and everyone else)

– Projects, scoping, tools, review & follow-up– Results at departmental, product line... Grace levels– Individual mind-set, organizational culture

Davison Six Sigma Savings

05

10

1520

25

30

3540

45

Sav

ings

$,0

00,0

00

2000A 2001A 2002A 2003F

(A = actual; F = forecast)

HardSoftTotal

• Hard orEBIT savings– Revenues up– Costs down

• Soft savings are– Cash Flow– Cost and Capital

Avoidance

EBIT: Earnings Before Interest & Taxes

A project’s savings are tracked over a 12 months period.

Implementing Six Sigma in a Manufacturing Environment

• Evolution• Training• Resources• Projects• Project selection & management• Expansion• Measurement Systems

Sept - Oct. 1999

January 2000

February 2000

June 2000

December 2000

May 2001

June 2001

December 2001

January 2002

April 2002

September 2002

September 2003

Champion training in U.S. and Europe

First Black Belt Wave Training Complete

First Green Belt Training (Admin)

Second Black Belt Wave Training Complete

Second Ops Green Belt Wave Training Complete

First Yellow Belt Training Complete

Six Sigma Project Hopper - 100% Utilized

First Catalyst DFSS Green Belt Class Complete

First German “Regional” Ops GB Class Complete

Sales/Tech Service Green Belt Training Complete

Analytical Green Belt Training Complete

Reliability Green Belt Training Scheduled

Six Sigma – Evolution at Grace

Trained Belts - Davison

Goal is for each salariedemployee to hold an active, engaged Six Sigma role

0

200

400

600

800

1000

1200

1400

1600

2000 A 2001 A 2003 YTD 2008 T

Leaders

Champions

Yellow Belts

Green Belts

Black Belts

805.3%

61641.4%

91561.0%

1500100%

2000 A 2001 A 2003 YTD 2008 TBlack Belts 21 23 19 20Green Belts 33 100 232 560Yellow Belts 0 442 572 800Champions 20 45 82 100Leaders 6 6 10 20Total 80 616 915 1500

Entitlement 5.3% 41.1% 61.0% 100%

RTY studies

CpKstudies

BB/GB Follow-Up

ProjectsChampion

InputsBus. Leader

InputsP

roje

ct H

opp

e r

Business LeaderAcceptance

BB Project LoadingEvaluation (3-4)and Assignment

Project Work

Project ReviewsMonthly General ManagerReviews for Black BeltsMonthly Plant Manager Reviews for Green Belts

Hig

h Pr

iorit

y Pr

ojec

ts•Drive Project Speed•Instant Business Feedback•Opportunity to devote more resources•Understand Barriers•Opportunity to Kill a Project•Unearth additional projects

Hold, Reject,or More Info

Project Selection & Management Process

Some of the tools we use• Project Charter• Process Map, Flowchart• Cause & Effect Analysis (C&E)• Failure Modes and Effects Analysis (FMEA)• Statistics and Data Analysis

– Graphs, plots, etc... Multi-Vari Studies– Control Charts– Measurement Systems Analysis (MSA)– Regression, ANOVA– DOE (improve, optimize)– Surface Response (improve, optimize)– Process Capability

• Control Plan– procedures, specifications, etc.

Define

Measure

Analyze

Improve

Control

2003 Six Sigma Savings

~

1

S ix S ig m a P la n b y Q u a r te r2 0 0 3 T y p e C o n t r ib u t io n ($ K )

C a t a l y s t s

• E a c h Q u a r te r C o n s is te n t in S a v in g s• M is s e d F o r e c a s t b y $ 1 .3 M

• 2 0 0 3 O f f E B IT G o a l b y $ 6 M , b u t G r e a te r th a n 2 0 0 2 b y $ 2 M

More capable savings accountability was used in 2003. Goal was to drive projects more directly and accurately to the bottom line with the use of EBIT Metrics.

Silicas/Adsorbents

• May, 2003 Started New Six Sigma Review Format• Better Six Sigma Alignment to Drive Higher Performance

40302010Subgroup 0

600000

500000

400000

300000

200000

100000

0

Indi

vidu

al V

alue

2/1/20034/1/20026/1/2001C4

6

1

Mean=373679

UCL=543004

LCL=204354

Wave 1 & 2 2002 Focus New Review

200000

100000

0

Mo

ving

Ran

ge

R=63666

UCL=208016

LCL=0

Wave 1 & 2 2002 Focus New Review

I and MR Chart for S/A Cost Red by C6

Forecast

Tracking Cost Reduction Performance using a Control

Chart

Individual Project SavingsCBHP-125 Savings Chart

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04

Month

Sa

vin

gs

Goal

Goal Sum

Actual

Actual Sum

•Every project must report savings monthly.

•Savings accounting is reviewed by the Black Belt and Champion to insure accuracy. Expenses or Capital Investment are subtracted from the savings.

•Savings are tracked for 12 months and subject to audit after one year. This drives the continuous use of the Control Plan.

Six Sigma Program InvestmentWR Grace (Total Commitment)• 44 GBs (2 classes) + 25 GBs (1 class) = $ 1,000,000 (~ $15,000/person)

– Davison Catalyst Portion is approximately 25% - $250,000

• $ 75,000 per GB Class (External Training)

– $50K fee; $25K travel and expense

• $ 25,000 per GB Class (Internal Training)

• Grace has done 10 externally and 10 internally

ROI: Grace Davison Catalysts (~25% of Grace)• Total Savings: $ 15,000,000/year (60 times initial investment annually)

– BB Savings (70%): $ 10,500,000/year– GB Savings (30%): $ 4,500,000/year

• Resources– Black Belts: ~ 20– Green Belts: ~ 230

• Annual Savings per Resource– Black Belts: $ 525,000 per year– Green Belts: $ 20,000 per year

Where We’re going with Six Sigma

• Beyond manufacturing...• Administrative,

Transactional,

Corporate,

Business processes• Sales and Technical Service• Maintenance, Reliability• Lean Manufacturing

– Value Chain

• Factory Physics• Customized Six Sigma Training

The Roadmap “funnels” down the Xs from the trivial many to a “vital few”

What the Six Sigma Project Has Accomplished

Y = f (x1, x2, x3, x4, . . . xn)

Performance of the Y over Time

Variation of the Y

Reproducibility (people / methods)

We begin with the “Y”: Process Map

Reduced measurement error ,“true” capability assessment !

} InitialCapability

Assessment

FMEA reduces variation andeffects for “inputs gone wrong”

C&E Matrix

FMEA

Measurement variation

Actual variation

Repeatability (equipment)

Multi-vari

Multi-vari studieshelp develop associationbetween the Y and key Xs

x1, x7, x18, x22, x31, x44, x57

Multi-Vari identifies Noise variables and reduces the x’s for

DOE

Y = f (x7, x22, x57)DOEs identify the Critical x’s and

their relationship to the Y

3020100

55

50

45

Observation Number

Indi

vidu

al V

alue

I Chart for Chart 1

1

X=50.35

3.0SL=54.21

-3.0SL=46.50 Controls in place for Critical x’s

Summary

• Six Sigma• Grace, and Davison• Six Sigma at Grace

– Evolution– Strategic, infrastructure– Tactical, execution– Results

• Questions...• Drawing...

30+ Inputs

8 - 10

4 - 8

3 - 6

10 - 15