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Chapter-13

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Six Sigma
Six Sigma was initiated and developed in Motorola. Motorola won Malcolm Baldridge Quality Award. Six Sigma is a business concept that answers customers demand for high quality and Defect-free Business process. It is the Business improvement approach that seeks to find and eliminate causes of defects and errors in processes. Six Sigma is based on a statistical measure that equates 3.4 or fewer errors or defects per million opportunities. GE (specifically CEO Jack Welch) extensively promoted it.

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Eg: Godrej -G E Assembly Plant


Defective Components were coming at the rate of 3,00,000 for one Million Parts. Applying Six Sigma saved Rs 4 Crores.
Mr. Vijay Krishna, C.E.O, Godrej-G E.

Were not talking about intangible savings here. Six Sigma has given us the power to measure and control costs. And that goes straight to our bottom line.
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Is 99% Quality Good Enough?


22,000 checks will be deducted from the wrong bank accounts in the next 60 minutes. 20,000 incorrect drug prescriptions will be written in the next 12 months. 12 babies will be given to the wrong parents each day.
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Six Sigma Quality

6
A philosophy and set of methods companies use to eliminate defects in their products and processes Seeks to reduce variation in the processes that lead to product defects The name six sigma refers to the variation that exists within plus or minus six standard deviations of the process outputs
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What is Six Sigma?


Six Sigma means 3.4 Defects in 1,000,000 (MOTOROLA)

A goal of near perfection in meeting customer requirements.


An effort to position a company for greater customer satisfaction, profitability and competitiveness.

A comprehensive and flexible system for achieving, sustaining and maximizing business success; uniquely driven by close understanding of customer needs, disciplined use of facts, data, and statistical analysis, and diligent attention to managing, improving and reinventing business processes.

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Process variation

LSL

USL

Upper/Lower specification limits


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Six Sigma
Two meanings 2,700 defects/million
Lower limits Upper limits

Statistical definition of a process that is 3.4 defects/million 99.9997% capable, 3.4 defects per million opportunities (DPMO) A program designed to reduce defects, lower costs, and improve customer Mean satisfaction
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3 Sigma and 6 Sigma Quality


Lower specification Upper specification

Process mean +/- 3 Sigma +/- 6 Sigma

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PROCESS CAPABILITY
Process capability is simply a measure of how good a metric is performing against established standard(s).
Upper and Lower Standards (Specifications) Spec (Low er) Out of Spec In Spec Spec (Upp er) Out of Spec Single Standard (Specification) Spec

In Spec

Out of Spec

Probabi lity

Probabi lity

Probabil ity
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Normal Distribution
normdist(x,.,.,1)
Probab

normdist(x,.,.,0)

Mean
95.44% 99.74%

Excel statistical functions : normdist ( x, mean , st _ dev,0) normal pdf at x. Excel statistical functions : normdist ( x, mean , st _ dev,1) normal cdf at x.
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Six Sigma
Core philosophy based on key concepts: Think in terms of key business processes and customer requirements with focus on strategic objectives. Focus on corporate sponsors responsible for championing projects. Emphasize quantifiable measures such as defects per million opportunities (dpmo). Ensure appropriate metrics is identified to maintain accountability. Provide extensive training. Create highly qualified process improvement experts belts. Set stretch objectives for improvement.

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Six Sigma
A business process for improving quality, reduce cost and increasing customer satisfaction. Statistically
Having no more than 3.4 defects per million

Conceptually
Program designed to reduce defects Requires the use of certain tools and techniques

EX: Motorola, GE, TI, Kodak

Six Sigma Programs


Six Sigma programs
Improve quality Save time Cut costs

Employed in
Design Production Service Inventory management Delivery

Six Sigma Management components:


Providing strong leadership Defining performance merits Selecting projects likely to succeed Selecting and training appropriate people

Six Sigma Technical components:


Improving process performance Reducing variation Utilizing statistical models Designing a structured improvement strategy

Six Sigma Organization

Six Sigma Team


Top management: essential Program champions Master black belts: tools Black belts: pivotal role implement process improvement projects, facility change convey knowledge to Green belts Green belts Six Sigma Process
Define Measure Analyze Improve Control

6-Sigma Team
Master Black Belt
- Leadership

- Experts on Six Sigma - Mentor Green and Black Belts

Black Belt

- Backbone of Six Sigma Org. Black Belt - Mentor Green Belts - Deployed to complex or high risk projects Green Belt

Green Belt

Green Belt

- Deployed to less complex projects in areas of functional expertise

Six Sigma Improvement Methods


DMAIC vs. DMADV
Define
Measure Analyze
Continuous Improvement Reengineering

Improve
Control

Design
Validate

Six Sigma DMAIC Process


Control Improve Define Analyze Measure

Define: Define who your customers are, and what their requirements are for your products and services Their expectations. Define your team goals, project boundaries, what you will focus on and what you wont. Define the process you are striving to improve by mapping the process.

DEFINE
Determine Bench mark Set the foundation Determine Customer requirements / Create Problem Statement Determine product specifications

Map Product flow process

Six Sigma DMAIC Process


Control Improve Define Analyze Measure

Measure: Eliminate guesswork and assumptions about what customers need and expect and how well processes are working. Collect data from many sources to determine speed in responding to customer requests, defect types and how frequently they occur, client feedback on how processes fit their needs, how clients rate us over time, etc.

MEASURE
Develop Defect Measurement Develop Data Collection process Collect Data

Interpret data

Compile and Display Data

Six Sigma DMAIC Process


Control Improve Define Analyze Measure

Analyze: Grounded in the context of the customer and competitive environment, analyze is used to organize data and look for process problems and opportunities. This step helps to identify gaps between current and goal performance, prioritize opportunities to improve, identify sources of variation and root causes of problems in the process.

ANALYSE
Verify Data Draw Conclusions From Data Test Conclusions Determine Improvement Opportunities

Determine Root Causes

Six Sigma DMAIC Process


Control Improve Define Analyze Measure

Improve: Generate both obvious and creative solutions to fix and prevent problems. Finding creative solutions by correcting root causes requires innovation, technology and discipline.

IMPROVE
Create Improvement Ideas

Create Models
Experiment

Study the results of experiment


Implement the solution Create Solution Statements Implement Improvement Methods

Six Sigma DMAIC Process


Control Improve Define Analyze Measure

Control: Ensure that the process improvements, once implemented, will hold the gains rather than revert to the same problems again. Various control tools such as statistical process control can be used. Other tools such as procedure documentation helps institutionalize the improvement.

CONTROL
Monitor Improvement Progress

Measure Improvement Statistically

Assess Effectiveness Make Needed Adjustments

Six Sigma Cost And Savings By Company Year


Motorola 1986-2001 Allied Signal 1998 GE 1996 1997 1998 1999 1996-1999 79.2 90.8 100.5 111.6 382.1 0.2 0.4 0.5 0.6 1.6 0.2 1 1.3 2 4.4 0.2 1.1 1.2 1.8 1.2 15.1 ND 0.5 3.3 356.9 ND 16 4.5

Revenue

Investment in 6-Sigma

Savings

% Revenue Savings

Honeywell
1998 1999 23.6 23.7 ND ND 0.5 0.6 2.2 2.5

Key: All are measured in $B = $ Billions, United States ND = Not Disclosed Note: Numbers Are Rounded To The Nearest Ten

Six Sigma DMADV Process


Validate Design Define Analyze Measure

Design: Develop detailed design for new process. Determine and evaluate enabling elements. Create control and testing plan for new design. Use tools such as simulation, benchmarking, DOE, Quality Function Deployment (QFD), FMEA analysis, and cost/benefit analysis.

Six Sigma DMADV Process


Validate Design Define Analyze Measure

Validate: Test detailed design with a pilot implementation. If successful, develop and execute a full-scale implementation. Tools in this step include: planning tools, flowcharts/other process management techniques, and work documentation.

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