An Introduction to Six Sigma

Problem to opportunity
Continuous Improvement New Levels of Performance

PERFORMANCE

Initial Euphoria

A Valley of Despair Change is Implemented

8 depth of drop-off (A) 8 time of drop-off (B) 8 Valley of Despair

TIME

We Discuss.
1. What is Six Sigma Quality ? 2. Why would a company adopt Six Sigma ? 3. Is there a roadmap to Six Sigma ? 4. What are the challenges ? 5. What are the rewards ?

What is Six Sigma?

Originated at Motorola in the early 80s Is a methodology for disciplined quality improvement Term Sigma a Greek alphabet, designates the distribution or spread about mean of any parameter of product, process or procedure. Process variation can be described by how many sigmas (i.e how many multiples of standard deviation or SD ) fit within the specification limits Sigma is a statistical measure of the quality consistency for a particular process / product.

What is Six Sigma Quality?

Six Sigmas goal is the near elimination of defects from any process, product, or service. The numerical goal is 3.467 defects per million opportunities. Juran once concluded that in the US, close to 1/3 of the work done consisted of redoing what had already been done. Depending on the industry, this Cost of Poor Quality (COPQ) could be 20 to 40% of total effort!

Sweet fruits DFSS Bulk of fruits Process characterization and optimization Low hanging fruits Simple QC tools

Process limitations

Logic and intuition Quick hits-Kaizen Increase of sigma rating requires an exponential decrease in defect reduction

Six Sigma Process Analysis

SIGMA 6 sigma 5 sigma 4 sigma 3 sigma 2 sigma 1 sigma DPMO 3.4 230 6200 67,000 310,000 700,000 COPQ < 10% of sales 10 to 15% of sales 15 to 20% of sales 20 to 30% of sales 30 to 40% of sales Noncompetitive Industry average CAPABILITY World Class

High

The implications of ignoring non-technical aspects during change. 5

4

Score 4-5; world-class; 6 Sigma is in the DNA; its the way we work; order of magnitude payback

The degree to which 3 positive conditions for 6 Sigma 2 success exist in an 1 organisation

Score 3-4; cultural transformation beginning but may take longer; payback significant Score 2-3; significant tactical results, but 6 Sigma remains just a programme but normal payback

Score 1-2; some tactical results ; 6 Sigma will probably die; we only get our costs back. Score 1 or less; change will fail; costs of training & consultancy will be lost The likely outcome
With acknowledgements to EAI

Low

What is Six Sigma Quality?

Strategy includes Define Measure

Analyze Improve Control

Improvement projects must be integrated with the goals of organization Implementation is top-down CEO drives, and executive management provides the Champion for each project Uses concept of belts for levels of competency in implementation
MBB = Master Black Belt BB = Black Belt GB = Green Belt

Six Sigma Model

Existing Business Processes Suppliers Inputs Manufacturing and service processes Outputs Customers

Define

Six Sigma Methodology

Control

Measure

DMAIC
Analyze Improve

Improved Business Performance

Quality

Productivity

Cost

Profitability

An Example
Six Sigma Project: Engineering Changes Define: Large number of changes from client after approving engineering design. Measure: Number of changes, time involved in changes, compliance to critical path schedule. Analyze: No clear authority on client team to establish scope, any of client team could make changes, verbal communication of changes, conflicting changes by client team members.

Improve: Regular engineering/client meetings conducted topics include: scope for each section and desired objective, known limitations, unclear requirements were questioned and options discussed. Written plan signed by client representative and engineering lead. Change requests in writing and signed by client representative. Changes decrease by a factor of 4.7 and schedule met. Control: Change requests all in writing. Shared approach with other disciplines on project

Concept: Accident Story !! Ques: 1 Ques: 2 Ques: 3 Ques: 4 Ques: 5 Ky a Hua ? Kitna la ga (OR Kuch la ga to nahi)? Ka ise Hua ? Aise Avoid ka r Sa kta tha ? Fir nahi hoega !! DEFINE M EASURE ANALYZE IM PROVE CONTROL

GE Proprieta ry

1/ GE C&I Asia

high Monitory benefits

Six Sigma Methodology

low low Complexity of projects high

Some Results
Motorola 10 years; $11 Billion Savings Allied Signal - $1.5 Billion estimated savings General Electric started efforts in 1995 1998: $1.2 Billion less $450 Million in costs net benefits = $750 Million 1999 Annual Report: more than $2 Billion net benefits 2001: 6,000 projects completed; $3 Billion in savings

Six Sigma according to GE

A highly disciplined process that helps us focus on developing & delivering near-perfect products & services The word Six Sigma is a statistical term that measures how far a given process deviates from perfection The central idea behind Six Sigma is that if you can measure how many defects you have in a process, you can systematically figure out how to eliminate them and get as close to zero defects as possible Six Sigma has changed the DNA at GE it is the way we work in everything we do and in every product we design

A Road Map for Six Sigma

Appoint a Champion Select a Cross-functional team Develop quantifiable goals Develop an implementation plan Establish a training program Address data collection requirements and issues Develop a change control and maintenance program Coordinate your road map

Drivers of Business Performance

What goals do we have for our business efficiency? How do we know how well we are doing?
Order Fulfillment CTB (critical to business) inventory turns (lagging indicator)
Cycle time WIP

Demand Forecasting

Production Planning

Sourcing & Purchasing

Manufacturing and Assembly

Warehousing

Order Entry

Shipping

Yield & Capacity

in-process timeliness (predictive indicators)

Receive raw material

SubAssembly 1

SubAssembly 2

Final Assembly

Test

Packaging

material waste and yields1

line uptime material waste and yields2 material waste and yields3

test set up time

What are the Challenges of Six Sigma?

Culture change Understanding the DFSS (Design For Six Sigma) It is not a quick fix nor a recipe Consultants cant make it happen. Training especially management level Takes careful preparation and a commitment to the foundational change efforts required Statistical analysis is not generally part of the engineering discipline in most IT shops Implementation tends to be uneven and lapses occur frequently

Rewards of Six Sigma

Improved reliability and predictability of software products and services Increased value to the customers and shareholders Improvements in organizational morale Increased marketplace viability Organizational recognition Significant reduction in defects Institutionalization of a process mindset

THE DEFINE PHASE

Before Define Phase

Dashboard A tool used by management to clarify and assign accountability for the critical few key objective, indicators and projects needed to steer the organization
Mission Statement President Direct reports

Key objectives

Key indicators

Key objectives

Key indicators

Potential six sigma projects Six sigma projects used to improve or innovate process to move indicators in proper direction.

Objectives that need to be achieved to attain the mission statement

Indicators showing progress towards attaining the goal

Objectives established to move the presidents key indicators in proper direction

One or more indicator shows progress towards each key objective

Business Objectives Four types a. Financial objectives: Include the management or stakeholders objective to make more profit, market share, dominance of growth, and desire for high turnover, less financial Loss b. Process improvement objectives: Management desire for consistency and uniformity in the output, high productivity, products services and process that exceed the needs & wants of current & future stake holder. Produce products that incur less warranty costs, ease in distribution c. Customer satisfaction: Desired outcome ( joy security, personal time, belonging), Undesired outcome (avoidance or elimination of death, taxes, discomfort, wasted time, frustration.

c. Customer Satisfaction: Desired product/ service outcome: ease of use, accessibility, low cost of ownership, durability and appeal. Desired process characteristics: timely arrival of the product , no waiting time, ease of acquisition. d. Employee growth and development of key objectives: Improving leadership skills Providing training opportunities Providing educational opportunities

Leading and lagging indicators: Financial objectives are the result of customer satisfaction, Customer satisfaction is the result of process improvement and process improvement is a function of employee growth and development objectives.

Key indicators Measurement that monitors the status of the key objective a. Attribute indicators Monitored by the attribute data such as count over time, ex: customer complaints over week, percentage of defects etc b. Measurement indicators Need to actually measure the data, ex: cycle time to file a report, waiting time in a bank, diameter of the ball bearing, etc.. c. Binary indicators Action being accomplished on the said date. Etc.. Yes/ No type of situations d. List by time period indicators List of employees not trained in safety standards etc.. e. Gantt chart indicators: deadlines

Tasks and projects: Task is a process improvement activity in which necessary process change is known by the process owner. But he/she has not had enough opportunity to effect the process change. The need is determined by existing gap between real and ideal value of indicator Project: Project is a process improvement activity, where the necessary process changes are unknown to the process owner, generally process owner forms a team to identify the gap between real and ideal (required) values between the key indicators.

There are three categories of tasks/ projects a. zero project or task: the purpose of zero project or task is to get the current value of the zero. Examples: Zero defects, or to reduce the unit to unit variation from the normal golden ornaments. b. Increase project or task: aim is to increase: example increase the revenue or profit c. Decrease project or task: Reduce the cost, reduce the cycle time

The overall business

Voice of Employee Voice of Customer Voice of Share holder
Key output matrices aligned with strategic goals/objectives of business. Big Ys provide a direct measure of business performance

Big Business (Y s)
Process Ys Y Y Y Y
Project Y
X1 X2 X3

Key out put metric that summarize process performance

Key out put metric that defined from the customers perspective

CTQ Drill down.. CTQ Tree

Average orders Received per hour Timely processing of orders

Orders received by phone Orders received by email Orders received in person Orders received by fax Orders received by snail mail Time to enter the order Time to check the inventory Time to process payment Time to arrange shipment

Average time to process an order

President Business objectives Increase the number of order Increase the number of services

Minimize the production cost Eliminate employee complaints

Business indicators Number of Increase the order per month number of orders for the department Average Increase the number of number of services utilized services utilized by the customer by each customer Std deviation of the services utilized by the customer Production cost Minimize the per month production cost in the division Number of Eliminate the employee employee complaints complaints in the dept

Direct reports Area objectives

Area indicators Number of orders per month a. average and Std deviation of the customer services

Potential six sigma projects New customer or promotion project Existing customer promotion projects

Production cost in the dept Employee complaint per month in dept

Quality project

Employee moral project.

Project Prioritization Matrix

The Define Phase

1. Determine the project CTQs (VoC analysis)
a. Identify customers b. Gather VOC c. Organize and Prioritize VOC d. Translate VOC to CTQs 2. Define the Project

3. Project Charter
a. Business Case b. Problem and Goal Statement c. Project Scope d. Miles stones and responsibilities

4. Map the process

a. Process operational Definition b. benefits of process planning c. SIPOC Model d. Mapping guidelines

VoC analysis a. Reactive data analysis b. Proactive data analysis Procative data analysis (KANO model) Step 1: Collect the voice of customer data a. Identify the heavy and lead users. Heavy users: Actual users of the product Lead users: are the customers/users of the product years ahead of the regular users. Example: washing machine/ hair dryer/ hairdryer used as portable body warmer.

b. collect the data: Step 2: Analyse the data: a.classify the data obtained into product/ service specific and Circumstantial data. Circumstantial data gives idea of which products are used by customer Product/ service data describes about expectations from customer. Develop the features: Determine the key or group of circumstantial parameters. This can be done using an affinity diagram.

Affinity Diagram.
Credit card example
Flexible product Easy process Availability Personal Interface Knowledgeable representatives Advice Consulting

Low interest rate

Easy application

Will come to my facilty

Knows the business Graps my financial status quickly Makes finance Cares about my Has an access to expertise Calls if problem arises

Variable terms All charges clearly stated Pay back when needed

Easy Acess to capital Quick decision Can apply over phone Know the status of loan during application Preference if having a Savings/ current Account

Availability after business hours Availability when I need to talk Responsive to phone calls

Professional Friendly Make me feel comfortable

NO Prepayment Penalities

Pre-approved Credit

Affinity Diagram
Tool that gathers large amount of data and organizes them into groupings based on the natural relationships Steps: Step 1: Generate Ideas (brain storming) Step 2: Display the Ideas Step 3: Sort ideas into groups Step 4: Create header cards Step 5: Draw finished diagram

Step 3: Development of cognitive image of the product: a. Team members restate each focus point into one or more operationally definable CTQs. b. The engineers/ developers use the technical know how or restate the focus point into one or more operationally definable CTQs c. Experts restudy the use of product and restate focus point if required. Carry out Kano Analysis for the desired point

Determine the Project CTQs (recap)

Identify customers Gather VOC
The "voice of the customer" captures the requirements/feedback from the customer (internal or external) to provide the customers with the best in class service/product quality. Captured in a variety of ways: Direct discussion or interviews, surveys, focus groups, customer specifications, observation, warranty data, field reports, complaint logs, etc.

CTQs (recap)
Measurable characteristics that must be met in order to satisfy the customer. Defined by the customer (Internal or External). Interpreted from a qualitative customer statement to an actionable, quantitative business specification. CTQs are what the customer expects of a product... the spoken needs of the customer.

The Kano Model*

Developed in the 80's by Professor Noriaki Kano, Based on the concepts of customer quality Provides a simple ranking scheme which differentiates Basic and Attractive attributes. Basic attributes (must be):
Attributes which must be present in order for the product to be successful

One dimensional attributes (Performance / Linear)

These characteristics are directly correlated to customer satisfaction. Attractive attributes (Exciters / Delighters/ Attractive) Customers get great satisfaction from a feature and are willing to pay a price premium. Satisfaction will not decrease (below neutral) if product lacks feature
Companies carry out QFD or Pareto analysis or Affinity diagram in lieu of Kano Model Analysis

Pictorial form of Kano model

High Satisfaction (delighted)

Performance ( linear)

m Ti

Exciters or delighters

e
High quality performance

Quality of performance not achieved

Basic

Low Satisfaction (disgusted)

Methodology of carrying out Kano model

Determine main features, which need to be classified
Firstly, the features of interest need to be determined

Devise questionnaire
Aims to understand how potential customers would feel if a feature was either present or not present. Achieved by asking two questions for each feature A functional question (ie - the feature is present) and A dys-functional question (ie the feature is not present),
If you have a blue tooth facilty in a mobile phone, how would you feel?
1. Like it 2. Must be 3. Neutral 4. Live with 5. Dislike 1. Like it 2. Must be 3. Neutral 4. Live with 5. Dislike

If you do not have a blue tooth facilty in a mobile phone, how would you feel?

One way (O) user satisfaction is proportional to performance of this feature. Lesser the user satisfaction, more is the performance Must Be (M) User satisfaction is not proportional to the performance less performance, less user satisfaction, but high performance creates feeling of indifference to the feature. Attractive (A) User satisfaction is not proportional to performance Low levels of the performance creates the feeling of indifference to the feature, but high level of performance create feeling of delight Indifferent (I): User does not care about the feature Questionable (Q) Users response does not make any sense Reverse (R ) User offers response opposite to the responses expected by individuals.

 Identify classification Based upon the responses, the type of feature can be determined from a simple look-up table,
Dysfunctional (negative) Question 1. Like 2. Must be 3. Neutral 4. Live with 5. Dislike 1. Like Questionable Attractive Attractive Attractive One dimentional 2. Must be Reverse Indifferent Indifferent Indifferent Must be Functional (positive) 3. Neutral Reverse Indifferent Indifferent Indifferent Must be question 4. Live with Reverse Indifferent Indifferent Indifferent Must be 5. Dislike Reverse Reverse Reverse Reverse Questionable Customers Requirements

Indifferent responses: These are attributes to which the customer pays no attention "If they are present, it is nice. If they are not present, it does not matter" Questionable responses and reversals: Responses which contradict each other

Sum responses*
As with any interview method, sufficient responses must be sought.
Product requirement Battery Life >3 days Camera Bluetooth A 7 10.4 63.8 O 32.3 45.1 21.6 M 49.3 30.5 2.9 I 9.5 11.5 8.5 R 0.4 1.2 0.7 Q 1.5 1.3 2.5 Total 100 100 100

*As per the survey carried in the year 2004

Plot features onto the Kano graph

Ideally, the features should be mapped onto the graph to provide a visual guide to the relative importance from a user perspective of different aspects of functionality; We compute customer satisfaction coefficient.

Customer Satisfaction Coefficient

Extent of satisfaction =
A+O A+O + M + I (O + M ) A+O + M + I

Extent of dis-satisfaction =
Product requirement Battery Life >3 days Camera Bluetooth

Dissatisfaction index Satisfaction Index -0.831804281 7.329255861 -0.775384615 10.8625641 -0.253099174 64.0231405

Definition of the Project and Project Charter

An Agreement between the organization providing the product or service, and the customer organization requesting and receiving project It defines Partners and external stakeholders; The project management framework to be used on project; Roles, responsibilities, accountabilities, and activities of team members; Management commitments (specifically in terms of communications and control); and, The empowerment framework.

Effective project planning tool A communication vehicle that can be referenced throughout the project. It is a quick reference and overview of what the project is about, why it is being conducted, who is involved and in what capacity, and the general approach and timeline that exists for the project.

The Scope

Does project Y link with Business Ys

What is the improvement team seeking to achieve

What is included /not included What are boundaries? Scope/out of scope

Business case/ Benifits

Problem/ opportunity statement

Goal statement

Project Scope

Milestone/ Project plan

Resources/ Team Members Roles

Start with a verb ( reduce, eliminate, increase) Focus on the project ( cycle time, accuracy etc.) Target (by 50%) Deadline

Who are the key resources? Roles of GBs/ BBs

Following needs to be answered in details: Project Purpose

A brief description of the project. Describe in business terms the reason for project and overall timing and expectations. Some background information about how and why the project was initiated should also be included. Describe who will use final outcome of the project and identify any other stakeholders who will be impacted by results of project. The Business Case document may already contain information to be included in section and should be referenced as appropriate.

Project Scope
Defines the spectrum of features and functionality that will be delivered and limits that have been imposed in order to control the release or delivery of the product or service (what project will accomplish) The project scope defines the work that is required to deliver the project product or service to meet the project objectives (how the project will be accomplished).

Project Objectives
Identify the overall objectives for the project. Identify what the project is intended to achieve, in business and technical terms.

Outstanding Issues
Identify any outstanding issues that need to be resolved within the scope of the Project. These are issues that have been identified during the Business Case creation and approval process and/or through project initiation process.

References R

Identify any other documents, that relate to project at the time of e development of project Charter. f e Include the current revision number, issue date, author, location r of the document and method of access for each document or e reference. n c Rather, enough information should be provided to explain how e document relates to the project, what it contains that s is pertinent to the project, and how it can be located. I d e n

MAP the Process

The Business Process

Inputs outputs

Supplier(s)

Customer(s)

The SIPOC Model

The SIPOC Model

S
Suppliers

I
Inputs

P
Process

O
Outputs

C
Customers

The Process Map

List a. CTQs b. Boundry

The SIPOC Model. continued

Supplier: Inputs: Process: The provider of inputs to the process Materials, resources, or data required to execute process A collection of activities that takes one or more inputs and creates and output that is of value to the customer The products or services that results from the process The recipient of the process output Critical to Quality characteristics Limits of a particular process that defines start and stop of the process

Output: Customer: CTQ: Boundry:

GRPI: Goals Roles Process Interpersonal

GRPI is a check list to see how well the personal in the team have understood the project and cope up with other persons in the team Steps to be followed: 1. Distribute the copies of the check list to all the team members prior to the team meeting (after the first meeting). 2. Ask each team member to submit the copies by the next meeting. 3. The team members discuss and resolve the issues related to the check list. 4. Share difficulties if any with the leader.

GRPI Check List

Rating Goals How clear and in agreement are you on the mission and the goals of our team/ projects? Purpose and Outcome Have you understood and agree on your project mission and the desired oct come Cutomer and needs Do you know who the project stake holders are and what they require and what this projct is relly needed. Goals and Deliverabes Have you identified specific, measurable and prioritized project goals and deliverables linked to the business goals Project Scope and definition Do you understand and agree on what in/out of our project scope and tasks. Comfortable Uneasy

GRPI Check List

Rating Roles How well do we understand, agree on and fulfill the roles and responsibilities for our team Roles and responsibilities Have you defined and agreed on our roles, responsibilites, requiredskills and resources for our project team Authority and Autonomy Are you clear on the degree of authority/empowerment we have to meet our project mission Comfortable Uneasy

GRPI Check List

Rating Process Critical Success factors Do you know and focus on the key factors needed to meet the project goals and mission Plans and Activities Do you have a effective game plan to folloe that includes the righttasks; clearly defined / assigned Monitoring and measures Do you have an effective monitoring process and specific metrics linked to process and goals Schedule/ Milestones Have you defined the project schedule and know what the key phases and milestones are Comfortable 5 4 3 2 Uneasy 1

GRPI Check List

Rating Interpersonal Team Operating Agreement Do you have shared expectations, agreed and followed guidelinesfor how our team works together Comfortable 5 4 3 2 Uneasy 1

Interpersonal / team We have necessary relationships, trust, openness, participationand behaviours for a healthyand productive team

If the total score by everybody is greater than 36 means that the team members are ready for the project to be executed.