Six Sigma [1 ed.] 9789350432457, 9788184886061

Citation preview

SIX SIGMA. ---------------------------------

Deepali Kishor Desai B.E. (Production), MBA (HR, Finance) MAEER'S MITCOE - Centre for Management Studies and Research, Pune.

I

First Edition: 2010

I

mat GIfimalaya GpublishingGIfouse MUMBAI • NEW DELHI' NAGPUR • BENGALURU • HYDERABAD • CHENNAI • PUNE • LUCKNOW • AHMEDABAD' ERNAKULAM • BHUBANESWAR • INDORE

© Author Stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanica:!' photocopying, recording and/or otherwise without the prior written permission of the publisher.

ISBN

: 978-81-84886-06-1

First Edition: 2010

Published by

Mrs. Meena Pandey for Himalaya Publishing House Pvt. Ltd., "Ramdoot", Dr. Bhalerao Marg, Girgaon, Mumbai - 400 004. Phone: 2386 01 70/2386 38 63, Fax: 022-2387 71 78 Email: [email protected] Website: www.himpub.com

Branch Offices New Delhi

"Pooja Apartments", 4-B, Murari Lal Street, Ansari Road, Darya Ganj, New Delhi - 110 002. Phone:23270392, 23278631 Fax: 011-23256286

Nagpur

Kundanlal Chandak Industrial Estate, Ghat Road, Nagpur - 440 018. Phone: 2738731, 3296733 Telefax: 0712-2721215

Bengaluru

No. 16/1 (Old 12/1), 1st Floor, Next to Hotel Highlands, Madhava Nagar, Race Course Road, Bengaluru - 560 001. Phone: 22281541, 22385461, Telefax: 080-22286611

Hyderabad

No. 3-4-184, Lingampally, Besides Raghavendra Swamy Matham,Kachiguda, Hyderabad - 500 027. Phone: 040-27560041, 27550139, Mobile:- 09848130433

Chennai

No. 85/50, Bazullah Road, T. Nagar, Chennai - 600 017. Phone: 044-28144004/28144005

Pune

First Floor, "Laksha" Apartment, No. 527, Mehunpura, Shaniwarpeth (Near Prabhat Theatre), Pune - 411 030. Phone: 020-24496323/24496333

Lucknow

C-43, Sector - C, Ali Gunj, Lucknow - 226 024. Phone: 0522-2339329

Ahmedabad

114, "SHAlL", 1st Floor, Opp. Madhu Sudan House, C.G.Road, Navrang Pura, Ahmedabad- 380 009. Phone: 079-26560126, Mobiles:- 09327324149,09314679413

Ernakulam

39/104 A, Lakshmi Apartment, Karikkamuri Cross Rd., Ernakulam, Cochin - 622011, Kerala. Phone: 0484-2378012, 2378016, Mob.: 09344199799

Bhubaneswar

5 Station Square, Bhubaneswar (Orissa) - 751 001. Mobile:- 9861046007, E-mail:- [email protected]

Indore

Kesardeep Avenue Extension, 73, Narayan Bagh, Flat No. 302, IIlrd Floor, Near Humpty Dumpty School, Narayan Bagh, Indore 452 007(M.P.} Mobile:- 09301386468

DTPby

HPH, Editorial Office, Bhandup (Megha)

Printed by

Heramb Printers, Mumbai

......... Path Towards Accuracy This book is developed for ambitious people who are driving their way towards improvement, efficiency, customer targeted business process. As the name suggest, book guides people to travel the Six Sigma way. First part consists of what Six Sigma, ways to Six Sigma, organizing working people and method., of Six Sigma. Whereas, second part guides to implement, use of Six Sigma tools, Six Sigma and top level management and live cases of success with Six Sigma.

Origin of Six Sigma Six sigma was developed at, Motorola in 1980's as a method to improve process quality. It was first used to improve Manufacturing Process Capability and then migrated to Business Processes Capability. Bank of America, Motorola, GE, IBM, Kodak and many more companies are practicing Six Sigma with like business scenarios. Six Sigma Works with(1) Critical To Quality (CTQ) Know what is Important to customer. (2) 3.4 Defects Per Million Opportunities (DPMO) (3) Mean - Center Around Target (4) Standard Variation - Standard Deviation Cost of Poor Quality In addition to the direct costs associated with finding and fixing defects, "Cost of Poor Quality" also includes: • The hidden cost of failing to meet customer expectations the first time • The hidden opportunity for increased efficiency • The hidden potential for higher profits • The hidden loss in market share • The hidden increase in production cycle time • The hidden labour associated with ordering replacement material • The hidden costs associated with disposing of defects For most companies today, the cost of poor quality is likely to be 25% of sales. In almost every company where the COPQ is unknown. The COPQ exceeds the profit margin. CEO of GE Jack Welch in 1977 wrote one report after practicing Six Sigma. "We didn't invent Six Sigma - we learned it. The cumulative impact on the company's numbers is not anecdotal, nor a product of charts. It is the product of 276, 000 people executing and delivering the result of Six Sigma to our bottom line" - lack Welch In this book, we have tried to involve people to feel Six Sigma without neglecting facts and details. I . thought, this will help you to step in Six Sigma world to help Six Sigma to develop further with your work and cumulative improvement approach.

Author

I am so grateful to present this book to the people, those who are interested to step in the new era of quality. Six Sigma, i.e., 3.4 defects per million opportunities is not only a concept but it is achievable. So this book is dedicated to the millions of employees whose firms are adopting Six Sigma methodologies to improve customer satisfaction, work processes, profitability, speed and efficiency. My acknowledgement is to Mr. Sumit Kati and my brother Ajinkya for initiating me into technology, CMSR (Centre for Management Studies and Research), Pune, for giving me opportunity to work with subjects like quantitative techniques and logistic management. These subjects helped me lot for mapping business scenarios with Six Sigma. I would like to thank my husband Kishor for his precious support to develop this book. Finally I would like to make a special dedication of this book to my family, i.e., brother Abhijit, Ajinkya, Mummy, Pappa and Uncle.

Author

1.

The Six Sigma System

2.

Ways to Six Sigma

19 - 30

3.

Organizing Six Sigma

31 - 39

4.

Methods of Six Sigma

40 - 65

5.

Implementing Six Sigma

66 - 75

6.

Six Sigma and Managers

76 - 79

7.

Quick Overview of Six Sigma Tools

8.

Some Six Sigma Success Stories

1 13 - 127

9.

News Cutting of Six Sigma

128 - 145

References

1 - 18

80 - 112

146

"This page is Intentionally Left Blank"

Chapter

Objectives

After going through this chapter you will be able to understand: • Understanding the six sigma system. • Applying six sigma as a powerful strategy. • Vnderstanding difference between TQM and Six Sigma. • Six sigma as a system of management

Structur,s: 1.1 Features of Six Sigma 1.2 What is Six Sigma? 1.3 Definitions 1.4 Key Concepts of Six Sigma 1.5 Six Ingredients of Six Sigma 1.6 A Powerful Strategy 1.7 Why Six Sigma Succeeding Where TQM failed? 1.8 Summary 1.9 Self Assessment Questions

Chapter 1

Six Sigma

Six Sigma stands for six standard. Deviations from mean. Six sigma methodology provides the techniques and tools to improve the capability and reduce defects in any process. Six Sigma was originally developed as a set of practices designed to improve manufacturing processes and eliminate defects, but its application was subsequently extended to other types of business processes. The most challenging question before business leaders and managers in the new millennium is not "How do we succeed?" but "How do we remain/stay successful ?" That's why Six Sigma is so attractive to business right now. Staying successful in business is more challenging today than ever before. In today's marketing world, most people provide services rather than making goods and products, and the case is, most of those services operate at inefficiency level which results in shut down of the factory. Six Sigma provides power tools to improve those services to levels of accuracy and quality. The particulars of Six Sigma was first formulated by Bill Smith at Motorola in 1986, in its manufacturing division where millions of parts are made using the same process repeatedly. Afterwards Six Sigma evolved and applied to other non-manufacturing/service processes. Today, you can apply Six Sigma to many fields such as Services, Medical, Insurance Procedures and Call Centers, etc. Six Sigma was heavily inspired by 6 preceding decades of quality improvement methodologies such as quality control, TQM and zero defects. Six Sigma means: • Continuous efforts to achieve stable and predictable process, i.e., to reduce process variation for business success. • Manufacturing and business process have important characteristics that can be measured, analyzed, improved and controlled. • Continuous Quality Improvement requires dedication and commitment from entire organization, particularly from top level management.

1.1 FEATURES OF SIX SIGMA • A clear focus on achieving measurable and quantifiable financial returns from any Six Sigma project. • More focus on strong and passionate management leadership and support.

2

The Six Sigma System

• A special infrastructure of "Champions", "Master Black Belts", "Black Belts", etc., to lead and implement Six Sigma approach. • A clear commitment for decision making on the basis of verifiable data, rather than assumption and guess work. Understanding Six Sigma

• Six Sigma is all about reducing defects. • It aligns with customer needs by focusing on customer requirements. • It has defined methodology and tools Recognize Define Measure Analyze Improve Control • It involves discrete projects. • It follows a rigorous validation process. • It changes behavior. • It requires "LEADERSHIP". 1.2 WHAT IS SIX SIGMA? Six Sigma

3

Chapter 1

Six Sigma

"The quality performance" is foundation stone of all types of industries. The growth of an industry depends on its performance quality. So checking out of the performance quality of an industry is something which is inevitable. "SIX SIGMA" - The statistical representation, is a process of quality measurement, which helps the organization in the improvement of their quality. Six Sigma is a systematical process of "quality improvement through the disciplined data-analyzing approach, and by improving the organizational process by eliminating the defects or the obstacles which prevents the organizations to reach the peifection ". Six sigma points out the total number of the defects that has come across in an organizational performance. Any type of defects, apart from the customer specification, is considered as the defect, according to Six Sigma. With the help of the statistical representation of the Six Sigma, it is easy to find out how a process is performing on quantitatively aspects. A Defect according to Six Sigma is nonconformity of the product or the service of an organization. Since the fundamental aim of the Six Sigma is the application of the improvement on the specified process, through a measurement-based strategy, Six Sigma is considered as a registered service mark or the trade mark. Six Sigma has its own rules and methodologies to be applied. In order to achieve this service mark, the process should not produce defects more than 3.4. These numbers of defects are considered as "the rate of the defects in a process should not exceed beyond the rate 3.4 per million opportunities". Through the Six Sigma calculation the number of defects can be calculated. For this there is a sigma calculator, which helps in the calculation. In order to attain the fundamental objectives of Six Sigma, there are Six Sigma methodologies to be implemented. This is done through the application of Six Sigma improvement projects, which is accomplished through the two Six Sigma sub-methodologies. Under the improvement projects came the identification, selection and ranking things according to the importance. The major two sub-divisions of the improvement projects are the Six Sigma DMAIC and the Six Sigma DMADV. These sub-divisions are considered as the processes and the execution of these processes are done through three certifications. The three types of certifications used for the execution of the Six Sigma DMAIC and Six sigma DMADV are:

"Six Sigma Green Belts and Six Sigma Black Belts, which is overseen by Six Sigma Master Black Belts"

4

The Six Sigma System

The Six Sigma ensures the quality control, total quality management and zero defects. Through the implementation of the Six Sigma it is made sure that the goals are set on the improvement of all processes to reach the level of better quality. "The Six Sigma" shows the organization's ability of highly capable processing in producing the outputs within the limited specifications. There fore it can be said that the processes that operates with the Six Sigma quality, is able to produce a quality products at a low rate of defects. When a process attains the certification of Six Sigma quality, it is clear that the organization has attained the standard deviations form the means of the production till the specific limitations, and so can make sure that there is no room for the items to fail to meet the specifications. Altogether we can consider the Six Sigma as the professionalizing of the quality management functions Six Si~ma at many organizations simply means a measure of quality that strives for near perfection. Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects (driving towards six standard deviations between the mean and the nearest specification limit) in any process - from manufacturing to transactional and from product to service. The statistical representation of Six Sigma describes quantitatively how a process is performing. To achieve Six Sigma, a process must not produce more than 3.4 defects per million opportunities. A Six Sigma defect is defined as anything outside of customer specifications. A Six Sigma opportunity is then the total quantity of chances for a defect. Process sigma can easily be calculated using a Six Sigma calculator. The fundamental objective of the Six Sigma methodology is the implementation of a measurement-based strategy that focuses on process improvement and variation reduction through the application of Six Si~ma improvement projects. This is accomplished through the use of two Six Sigma sub-methodologies: DMAIC and DMADV. The Six Sigma DMAIC process 5

Six Sigma

Chapter 1

(define, measure, analyze, improve, control) is an improvement system for existing processes falling below specification and looking for incremental improvement. The Six Si~ma DMADV process (define, measure, analyze, design, verify) is an improvement system used to develop new processes or products at Six Sigma quality levels. It can also be employed if a current process requires more than just incremental improvement. Both Six Sigma processes are executed by Six Sigma Green Belts and Six Si~ma Black Belts, and are overseen by Six Si~ma Master Black Belts. According to the Six Sigma Academy, Black Belts save companies approximately $230,000 per project and can complete four to six projects per year. General Electric, one of the most successful companies implementing Six Sigma, has estimated benefits on the order of $10 billion during the first five years of implementation. GE first began Six Sigma in 1995 after Motorola and Allied Signal blazed the Six Sigma trail. Since then, thousands of companies around the world have discovered the far reaching benefits of Six Sigma. The term Six Sigma is derived from a field of statistics known as process capability studies. Originally, it referred to the ability of manufacturing processes to reduce a very high proportion of output within specification. The goal of Six Sigma is to reduce defects to near zero. Sigma is the Greek letter statisticians use to represent the "standard deviation of a population". The sigma tells you, how much variability there is within a group of items. The more variation, there is the bigger standard deviation. In statistical terms, the purpose of Six Sigma is to reduce variation to achieve very small standard deviations. So that almost all of the services/ products meet or exceed customer expectations. Understanding and Implementation of Six Sigma Six Sigma

Is a Statistical Measurement allowing you to measure the Quality .of your Products, Processes and Services.

Six Sigma

Provides a Methodology for Significant and Sustained Improvements in all activities in your Organization.

Six Sigma

Is an Organizational Philosophy in establishing the belief of Doing Things Right First Time and Every Time.

Why Six Sigma? Globalization has intensified competition, worldwide. Competitive pressure is forcing the organizations to look for the ways and means for improving their 6

The Six Sigma System

processes so that quality of the products and services improve, wastes reduce and customer satisfaction increases.

Improved Customer Satisfaction is the goal of Six Sigma. It cannot just happen. The methodology of Six Sigma aims at integrating all operations throughout the corporation to make them produce their outputs right first time. Everything from the receipt of enquiry, internal and external communication, information systems, customer support and down to the level of logistics services must be done correctly to achieve operational excellence and thereby enhancing satisfaction of the customers. Six Sigma Implementation Program covers variety of processes related to manufacturing and services including but not limited to distribution operations, warehousing and inventory management, hospitality, health care, electronics equipment manufacturing, electronics component manufacturing, boiler industry to printed circuit board industry, banking to insurance business and what not. Your Organization shall benefit from Six Sigma initiative regardless of products you make or services you offer. This initiative involves everyone in the organization from the CEO to the shop floor personnel. If you make Six Sigma as a business strategy, your bottom-line as well as top-line results, cash flow and customer satisfaction are bound to improve. The Indian Statistical Institute with its vast hands-on experience in Six Sigma methodology assists organizations in integrating piece meal quality efforts into an overall effective organization-wide initiative that becomes a powerful leverage to take competition by hom.

1.3 DEFINITIONS Alternative Six Sigma Definitions • "Six Sigma is a business improvement approach that seeks to find and eliminate causes of mistakes or defects in business processes by focusing on process outputs that are of critical importance to customers. " (Snee, 2004) • "Six Sigma is a useful management philosophy and problem-solving methodology but it is not a comprehensive management system." (McAdam Evans, 2004) • "A Six Sigma initiative is designed to change the culture in an organization by the way of breakthrough improvement in all aspects of the business." (Breyfogle III et. aI., 2001) 7

Chapter 1

Six Sigma

• "Six Sigma is a program that combines the most effective statistical and • non-statistical methods to make overall business." (Pearson, 200 1) • "Six Sigma is a highly disciplined process that helps us focus on developing and delivering near-perfect products and services. The central idea behind Six Sigma is that you can measure how many defects you have in a process, you can systematically figure out how to eliminate them and get a close to 'zero defects' as possible. Six Sigma has changed the DDNA of GE - it is the way we work - in everything we do in every product we design." (General Electric at www.ge.com)

Definitions of Six Sigma • Business Media describe Six Sigma as "Highly Technical method used by engineers and statisticians to fine-tune products and processes." • Another definition of Six Sigma is that it's a goal of near perfection in meeting customer requirements. • Six Sigma itself refers to a statistically derived performance target of operating with only 3.4 defects for "opportunities". • Six Sigma is as a sweeping "culture change" effort to position a company for greater customer satisfaction, profitability and competitiveness. • Six Sigma is a comprehensive and flexible system for achieving, sustaining and maximizing business success or profit. • Six Sigma is uniquely driven by close understanding of customer needs, disciplined use of facts, data and statistical analysis and attention to manage, improve and reinvent business process.

1.4 KEY CONCEPTS OF SIX SIGMA Traditionally, businesses have described their products and services in terms of averages, example, average cost, average inventory, average delivery time. But this average create a lot of problems, for example, suppose you want to deliver a product within two working days after getting an order from the customer. You consider on an average 2 days but sometimes it takes more than 2 days or less than 2 days to deliver the product. If you want all the products to be delivered in two days or less, you'll have to eliminate problems and variations in your processes.

8

The Six Sigma System

Another, example, Suppose you target time to reach to your workplace is at 9.30 a.m., but you're willing to live with a few minutes either way, say 9.28 to 9.32 a.m. Suppose your drive normally takes 18 minutes this means your targets commute time is anywhere between 16 to 20 minutes. There will be always some variation in a process, the main issue is whether that variation means your services and products fall within or beyond customer requirements. When there are lot of details in the process due to which you are not able to satisfy the customer requirements, there is need to improve the process and here starts the Six Sigma. You find the route that is most reliable (has least traffic and fewest signals). You get up early in the morning. Whatever changes require, you finally implement. New variation or standard deviation of just one-third of a minute means the variation in your process practically guarantees that you will always arrive within 16 to 20 minutes after leaving your house. This example is directly related to business world.

Defects Business offer product/service to the customer. But if product or service doesn't meet the customer requirement, then it becomes defect, example, Vanilla ice-cream is a defect if customer asked for vanilla with choco flavour. If customer don't get courier at time, then courier service is defective. Now, we are able to reduce the defect, if we can define and measure customer requirements, then we can calculate number of defects in the process and output and percentage or good products and services produced. Now, another approach to determine a sigma level is first see number of opportunities in the product or service for things to go wrong. Then calculate how many defects occur and compare it with number of opportunities there are in the product or service for things to go wrong. The outcome of this calculation is called Defects Per Million Opportunities.

1.5 SIX INGREDIENTS OF SIX SIGMA (1) Attention/Focus on the Customer

Today's world is marketing world and most important is, "customer is king" of the market. So to be successful or to survive in the market, any business tries to satisfy the customer requirement by providing improved services. The main reason behind unsuccessful business is lack of updated information regarding customer requirement. Many times through survey, interviews, market research 9

Chapter 1

Six Sigma

updated information is gathered. But remedial action taken by manager is preparation of reports which most of the time remain unread. In context of Six Sigma, top priority is given to the customer. In Six Sigma, the first step is to define and redefine the customer requirement and accordingly improved processes are developed to meet customers requirement. Defects are failures to meet measurable customer requirements. Success of Six Sigma can be measured by its impact on customer satisfaction. By applying Six Sigma, we add value to the product.

(2) Data and Fact-driven Management Nowadays, due to computerization we get data easily. But, still some important business decisions are taken on some assumption, judgment, experience, etc. Six Sigma terms first measure actual business performance, then they collect relative data then analyze it to get variation and finally to improve the overall process to reduce defects.

(3) Focus on Process, Management and Improvement The ultimate aim of any business is - "profit maximization" and for this key factor is, customer satisfaction. So whenever you are launching new product before that, the step is to measure present performance and improve efficiency, reduce the variation between actual and targeted performance. As you are able to satisfy the customer by providing quality goods and services, sale increase and ultimately profit increases. Six Sigma exactly focuses on the process as the key means, to meet customer requirement. The important factor of Six Sigma is, it always promotes leadership. Six Sigma team first identify core business process on which customer satisfaction stands or fall and accordingly steps are taken to improve core business process.

(4) Proactive Management Proactive means looking ahead of events. In the world of business being proactive means setting ambitious goals, vision, mission, establishing clear priorities accepting new technologies and change instead of blindly defending the old ways. Six Sigma provides methods, tools and practices to replace reactive with proactive management.

10

The Six Sigma System

(5) Team Work

Instead of thinking in conservative manner, i.e., only related to one department, Six Sigma promotes the people for increased collaboration, as people learn about their role in the big process and their relationship to external customers. In Six Sigma, the customer is at the center of the business focus, Six Sigma demands on attitude of using processes which benefits to each and not restricted to anyone department. Thus, Six Sigma promotes team work for overall growth of business. (6) Drive for Perfection, Tolerate Failure

The goal of Six Sigma is to reduce defect, i.e., it places great emphasis on driving for perfection and getting good results within the required time frame. Many times, Six Sigma team facing the challenges like, "can we try new methods". The risk involved is, if the new method fail, then whatever time money spend to collect the data is waste. But the other side is, "more risk more profit" which results in better, more effective decisions. Six Sigma always promote risk management for getting good results.

1.6 A POWERFUL STRATEGY The impact of Six Sigma is having on some leading companies, following are some results, we also review the history that brought Six Sigma ahead. Example, (1) Pella Transformation

1992 $300 million annual sales It begins lean Six Sigma 2003 $1.1 billion annual sales Sales up to 250% Net profit from 5% to 14% More profitable than biggest competitor Pella has been deeply committed to lean for more than a decade. Considerable progress has been made wit~ little investment in systems. Continued transformation and value capture must be enabled through systems. 11

Chapter 1

Six Sigma

"Pella drives Lean Six Sigma throughout the Enterprise." Reduced purchase order entry by 50% to 86% Reduced cost per purchase order by 50% Cut voucher processing by 27% Eliminated 14 legacy financial systems HR reduced time to hire an employee and process benefits by 156.5 Pella Transformation Dramatic Internal Improvement Productivity

i

20-30%

Defects

J,

70-90%

Lead time

J,

70-90%

Inventory

J,

70-90%

Floor space

J,

30-50%

General Electric (GE) -

$5 billion in total savings

GE has achieved many individual successes through six sigma initiative. For example, • GE Lighting Unit has problem with its top customer - Wal Mart in its billing. Six Sigma team successfully cutting invoice defects and disputes by 98%, speeding payment and creating better productivity. A Six Sigma team leader is successful in reducing complaints from the customer, speed up in completion of deals, i.e., provide more responsive service to customers and ultimately results un annual saving of $1 million. • GE Power Systems group addresses a major issue related to its customer. They improve customer service by better understanding of customer requirement and also improve the documentation provided with new power equipment. The result is, utilities can respond more effectively to their regulatory agencies and both utilities and GE have saved hundreds of dollars a year. • A Medical System Business - GEMS used Six Sigma design technique and create medical scanning technology by which full body scan is

12

The Six Sigma System

possible only in half a minute. The benefit is it increases the usage of equipment and achieves lower cost per scan. Motorola' • Only two years after launching Six Sigma, Motorola was honoured with Malcolm Baldrige National Quality Award . • The company's total employment has risen from 71,000 employees in 1980 to over 1,30,000 today. Also, Five-fold growth in sales with profits climbing 20% per year. MotoroJa stock price gains compounded to an annual rate of 21.3%. Cumulative savings based on Six Sigma are at $14 billion. -

Motorola applied Six Sigma as a way to transform the business a way driven by communication, training, team work, leadership, measurement and focus on customer's requirement.

As Larson notes "Six Sigma is really a cultural thing -

a way of behavior."

The six sigma strategy is a powerful quality methodology that brings significant benefits to the organization. It is "the only way to continue growth and retain a hold on shifting markets by constantly innovating and remarking the organization. Six Sigma creates the skills and culture for constant revival. With Six Sigma, company will be able to, (1) Generate sustained success.

(2) Set performance goal for customers. (3) Enhance value for customers. (4) Accelerate rated of improvement. (5) Promote learning. (6) Execute strategic change.

1.7 WHY SIX SIGMA SUCCEEDING WHERE TQM FAILED? Six Sigma is a relatively new concept as compared to TQM. However, when it was conceptualized, it was not intended to be a replacement for TQM. Both Six Sigma and TQM have many similarities and are compatible in varied business environment including manufacturing and service industries. While TQM has helped many companies in improving the quality of manufactured 13

Chapter 1

Six Sigma

goods or services rendered. Six Sigma has the potential of delivering even sharper results.

TQM TQM is often associated with the development, deployment and maintenance of organizational systems that are required for various business processes. It is based on strategic approach that focuses on maintaining existing quality standards as well as making incremental quality improvements. It is also described as cultural initiative as the focus is on establishing a culture of collaboration among various functional departments within an organization for improving overall quality.

Comparison to Six Sigma Comparatively Six Sigma is more than just a process improvement program as it is based on concepts that focus on continuous quality improvements for achieving near perfection by restricting the number of possible defects to less than 3.4 defects per million. It is complementary to Statistical Process Control (SPC), which uses statistical methods for monitoring and controlling business processes. Though both SPC and TQM help in improving quality, they often reach a stage after which no further quality improvements can be made. Six Sigma, on other hand, is different as it focuses on taking quality improvement processes to next level. The basic difference between Six Sigma and TQM is the approach. TQM views quality as conformance to internal requirements, Six Sigma focuses on improving quality by reducing number of defects. Six Sigma helps organizations in reducing operational costs by focusing on defect reduction, cycle time reduction and cost savings. It focuses on identifying and eliminating costs that provide no value to customers such as cost incurred due to waste. TQM focus on improving individual operations within business process whereas Six Sigma focus on improving all the operations within single business process. In all, Six Sigma is fact based, data driven, result oriented, providing quantifiable and measurable bottom-line results, linked to strategy and related to customer requirement. It is applicable to all common business processes such as administration, sales, marketing and R&D (Reseach and Development.) It is predicted that Six Sigma will outlast TQM as it has the potential of achieving more than TQM. 14

The Six Sigma System

• Six Sigma extends the use of the improvement tools to cost, cycle time, and other business issues. • Six Sigma discards the majority of the quality toolkit. It keeps a subset of tools that range from the basic to the advanced. Six Sigma discards esoteric statistical tools and completely ignores such staples of the quality professional as ISO 9000 and the Malcolm Baldrige criteria. Training focuses on using the tools to achieve tangible business results, not on theory. • Six Sigma integrates the goals of the organization as a whole into the improvement effort. Sure, quality is good. But not independent of other business goals. Six Sigma creates top-level oversight to assure that the interests of the entire organization are considered. • Six Sigma strives for world-class performance. is 3.4 PPM failures per million opportunities. at errors. The best of the Six Sigma firms try customer's expectations 999,996.6 times encounters.

The Six Sigma standard It goes beyond looking to meet or exceed their out of every million

• Six Sigma creates an infrastructure of change agents who are not employed in the quality department. These people work full and parttime on projects in their areas or in other areas. Six Sigma Black Belts do not make careers in Six Sigma. Instead, they focus on Six Sigma for two years and then continue their careers elsewhere. Green Belts work on Six Sigma projects while holding down other jobs. These subject matter experts are provided with training to give the skills they need to improve processes. Six Sigma "belts" are not certified unless they can demonstrate that they have effectively used the approach to benefit customers, shareholders, and employees. For Motorola, the originator of Six Sigma, the answer to the question "Why Six Sigma?" was simple: survival. Motorola came to Six Sigma because it was being consistently beaten in the competitive marketplace by foreign firms that were able to produce higher quality products at a lower cost. When a Japanese firm took over a Motorola factory that manufactured Quasar television sets in the United States in the 1970s, they promptly set about making drastic changes in the way the factory operated. Under Japanese management, the factory was soon producing TV sets with 1I20th the number of defects they had produced under Motorola management. They did this using the same workforce, technology, and designs, making it clear that the problem was Motorola's management. Eventually, even Motorola's own executives had to admit "our quality stinks". 15

Chapter 1

Six Sigma

Finally, in the mid 1980s, Motorola decided to take quality seriously. Motorola's CEO at the time, Bob Galvin, started the company on the quality path known as Six Sigma and became a business icon largely as a result of what he accomplished in quality at Motorola. Today, Motorola is known worldwide as a quality leader. After Motorola won the Malcolm Baldrige National Quality Award in 1988, the secret of their success became public knowledge and the Six Sigma revolution was born. Today, Six Sigma hotter than ever. It would be a mistake to think that Six Sigma is about quality in the traditional sense. Quality, defined traditionally as conformance to internal requirements, has little to do with Six Sigma. Six Sigma is about helping the organization make more money. To link this objective of Six Sigma with quality requires a new definition of quality. For Six Sigma purposes, I define quality as the value added by a productive endeavor. Quality comes in two flavors: potential quality and actual quality. Potential quality is the known maximum possible value added per unit of input. Actual quality is the current value added per unit of input. The difference between potential and actual quality is waste. Six Sigma focuses on improving quality (Le., reduce waste) by helping organizations produce products and services better, faster and cheaper. Six Sigma focuses on improving customer loyalty, reducing errors, improving cycle times, and reducing costs by eliminating non-value added activities. Unlike mindless cost-cutting programs which reduce value and quality as well as costs, Six Sigma identifies and eliminates costs which provide no value to customers, waste costs. For non-Six Sigma companies, these costs are often extremely high and usually unknown. Companies operating at three or four sigma typically spend between 25 and 40 per cent of their revenues fixing problems. This is known as the cost of quality, or more accurately the cost of poor quality. Companies operating at Six Sigma typically spend less than 5 percent of their revenues fixing problems (Figure 1). The dollar cost of this gap can be huge. General Electric estimates that the gap between three or four sigma and Six Sigma was costing them between $8 billion and $12 billion per year.

16

The Six Sigma System

Cost of Poor Quality (% of Revenues) 25% 20% 15% 10% 5% 0%

4

5 Sigma Level

6

7

Figure 1: Cost of Poor Quality versus Sigma Level

What is Six Sigma and How Does It Work? Six Sigma is a rigorous, focused and highly effective implementation of proven quality principles and techniques. Incorporating elements from the work of many quality pioneers, Six Sigma aims for virtually error free business performance. Sigma, 6, is a letter in the Greek alphabet used by statisticians to measure the variability in a data set. In Six Sigma, these data sets normally consist or process performance metrics. A company's performance is measured by the sigma level of their business processes. Traditionally, companies accept three or four sigma performance levels as the norm, despite the fact that these processes create between 6,200 and 67,000 problems per million opportunities! The Six Sigma standard of 3.4 problems per million opportunities is a response to the increasing expectations of customers and the increased complexity of modem products and processes. If you're looking for new techniques, you won't find them. Six Sigma's magic isn't in statistical or high-tech razzle-dazzle. Six Sigma relies on tried and true methods that have been around for decades. In fact, Six Sigma discards a great deal of the complexity that characterized its predecessor, Total Quality Management (TQM). By one expert's count, there were over 400 TQM tools and techniques. Six Sigma takes a handful of proven methods and trains a small cadre of in-house technical leaders, known as Six Sigma Black Belts and Six Sigma Green Belts, to a high level of proficiency in the application of these techniques. To be sure, some of the methods used by Six Sigma Black Belts are highly advanced, including the use of up-to-date computer technology and 17

Chapter 1

' Six Sigma

software. But the tools are applied within a simple performance improvement ,model known as DMAIC, or Define-Measure-Analyze-Improve-Control.

1.8 SUMMARY Six Sigma as a System of Management Six Sigma include every level of management i.e., top level, middle level and low level of management. Ideas come from senior leaders. Middle management is exactly participated and the ideas, solutions, process discoveries, improvements that arise from Six Sigma take place at the front lines of the organisation. Six Sigma companies put more responsibility to those people who work directly with cus,tomers. If we consider the example of General Electric (GE), thousands of teams were trained in large sessions. As a result, senior executives having annual bonus, out of which 40% of annual bonus would be based on their involvement and success in implementing Six Sigma. A management system involves accountability for results and ongoing reviews to ensure results. With both aceoun tablity and regular reviews, manager can begin to use Six Sigma as a guide to leading their business. In short, Six Sigma is a system that combines strong leadership i.e., top management and grassroots energy and involvement i.e., lower management. Also, the benefits of Six Sigma are not only financial, but the people at all levels of Six Sigma company find better understanding of customers, clearer processes, meaningful measures and powerful improvement tools make their work more effective and often more rewarding.

1.9 SELF ASSESSMENT QUESTIONS (1) What is Six Sigma? Explain key concepts of Six Sigma.

(2) How Six Sigma is proven as a "Powerful strategy?" Explain with .. Example. (3) How Globalization and Competition has increase the importance of Six Sigma. (4) Why Six Sigma succeeding where TQM failed?

18

Chapter

Objectives After going through this chapter you will be able to understand: • Learn strategies to improv, create and manage processes. Structures: 2.1 Process Improvement 2.2 Process Design/Redesign 2.3 Process Management 2.4 Summary 2.5 Self Assessment Questions There are different startegies to imptove, create and manage process, of the organization. Three parts or three ways to Six Sigma are (a) Process Improvement (b) Process Design/Redesign (c) Process Management

Six Sigma

Chapter 2

2.1 PROCESS IMPROVEMENT Process improvement means improving the existing process to get maximum profit. It include finding out a strategy to eliminate defect in the process. Process improvement efforts seek to fix problems by eliminating the causes of variation in the process. In Six Sigma, for process improvement, first they find the root causes that create unwanted defects in the process. In Process Improvement, there are five steps. (1) Define the problem, i.e., customer requirement.

(2) Measure the defects and process operation. (3) Analyze the data and find root causes of the problem (4) Improve the process to remove causes of defects. (5) Control the process to make sure defec

Stage 1 • Define What's the problem, why is it important, who's going to solve it? All of these questions need answered up front, using a host of tools and templates such as "project charters" and "critical to quality" diagrams. The more work done defining the problem, the more likely the problem will be successfully resolved. Stage 2 • Measure If you don't know the process or how you know you've fixed it? The measure quantifying the current reality, by using collecting and validating data. If it moves,

it's currently performing, how will phase is about understanding and tools such as process mapping, measure it!

Stage 3 • Analyze Now we get serious about flushing out the root cause of the problem. All sorts of statistical tests are done to determine which is the rotten apple spoiling the barrel. This is the point at which a highly trained Six Sigma "Black Belt" gets busy, as they perform the complicated number crunching. Mere mortals on the project team get involved in identifying non-value adding steps in the process and making sure analysis paralysis does not creep in.

Stage 4 • Improve You've found the rotten apples, now it's time to throw them out. The improve phase is about eliminating the root cause of the problem and/or implementing a solution that will flag early if the process is on a slippery slope to defect land. 20

Ways to Six Sigma

Stage 5 - Control The control phase is about getting the process back to business as usual. The project team hands over responsibility to the people in charge of the everyday process, with the added benefit of having prevented the problem from occurring again, or giving them the tools to monitor the process and nip problems in the bud before they grow. The project charter is reviewed, to ensure all project charter objectives have been met, such as cost reductions and quality improvements. And then it's time to party, and let the business know about the successful project. There are many manufacturing companies successfully using Six Sigma process improvement methodology, such as General Electric and Motorola, and some service industries such as American Express. The process, tools and techniques are similar, so regardless of industry, you now know a bit more than before about Six Sigma process improvement. Six Sigma Process Improvement When a business is not able to complete the customer requirements, it gives rise to defects, complaints and cost. As the number of defects increased, cost of correcting them also increased, on other hand, the risk of losing the customers also increased. So to gain profit, the company try to avoid the defects and result in money saving and customer satisfaction. If your business have lots of customers, possibly some defects remain. But the problem arise when this small percentage of defect result into high number of unhappy customers or every month or year 2,50,000 machine part per month and operated are 99.38% accuracy (Six Sigma), you would have about 1,550 unhappy. customers every month.

Levels of Sigma Performance Sigma level 6 5 4 3 2 1

Defects

Per million

Opportunities

3.4 233 6,210 66, 807 3,08,537 6, 90, 000

Again accuracy is only one criteria delivery time and other key factors many affect the performance level. If suppose delivery time is more, then it may be next defect as it create unhappy customer. 21

Chapter 2

Six Sigma

Six Sigma process improvement is nothing but six standard deviations of your process output which fit within the customer specification limits i.e., 99.99966% yield or 3.4 defects per million opportunities. Six sigma tends to reduce variation. The goal of six sigma is to help people and processes aim high in aspiring to deliver defect-free products and services. Six sigma recognizes that there is always some potential for defects even in best processes. But at 99.9997 percent performance, ~ix sigma sets a performance target where defects in many processes and products are almost non-existent.

Customer Retention Keeping customers happy is good and profitable for the business. A 5percent increase in customer retention has been shown to increase profits more than 25 percent. If is estimated that companies lose 15 percent to 20 percent of revenues each year due to inefficient processes although some might suggest that it's even higher. Six sigma provides a goal that applies to both product and service activities and that sets attainable short term god is while striving for long range business objectives. Nowadays many business try to perform, close to six sigma. But getting 3.4 defects per million is very challenging goal. So next objective will be getting or 3 sigma, that means reducing defects from more than 3,00,000 per million to fewer than 70, 000 so by reducing defects from product process and making customer happy. • A dissatisfied customer will tell other people about his experience with the company about the product defect. • Research suggests that, if a problem is handled by the company satisfactory then customer will only tell five to six people. • On other hand, man people ignore the problem, considering it is very time consuming and "too much trouble". • At last, many few customers out of dissatisfied customers are interested to continue for business with project. At the end, defects can lead to lost customers and turned of customers tell others about their experiences, making it more difficult to recover from defects. As customers becomes more demanding, more defects put a company in serious risk.

22

Ways to Six Sigma

So six sigma focus on "Customer Retention" because (a) For any business, acquiring a new customer costs more than retaining an existing customer. (b) It takes number of year to build a loyal customer, while takes minute to loose a customer. Company can measure their success in customer retention by asking them the questions like, "How do you measure Success?" "How will you measure our success?" It helps business to understand their customers, their expectation about business and it also gives basis for process improvement. Process Improvement can be achieved by reducing variation. For each process, there is "Upper Control Limit" and "Lower Control Limit" i.e., UCL and LCL. The points above Upper Control Limit and below Lower Control Limit are called as "Out of Control Points". The points outside the Control limits require investigation. • VVhat happened? • How can bad results be prevented? • How can good results be duplicated? There are two types of variation (1) Random Variation

(2) Non Random/Special Cause Variation The Truth You see variation and demand an explanation

Your Reaction

A Special Cause Exists Investigate the cause and eliminate it or minimize its impact

Variation is Random TAMPERING a waste of energy

You see variation and believe it is only Random

MISSED OPPORTUNITY for Improvement

Rational Management

Business

Six Sigma Process Improvement • Six standard deviations of your process output fit within the customer specification limits; 99.99966% yield 23

Six Sigma

Chapter 2

I I

• Or 3.4 defects per million opportunities; • Reduce variation; • Sustainable improvements based on facts. Six Sigma Methodology

24

• Define

Gather facts regarding the exact question to be answered

• Measure

Establish our baseline performance and collect meaningful data relevant to the problem

• Analyze

All about finding the real root cause(s) and the key to solving our problem

• Improve

Evaluate possible solutions based on their impact on performance

• Control

Quantify the change in performance and make sure the improvement is sustained

Ways to Six Sigma

Customers First Customer Requirements

Employee Involvement

Process Improvement

Process Design/Redesigns

2.2 PROCESS DESIGNIREDESIGNS In today's booming service economy, providing customers with highquality services has been widely recognized as an essential means of achieving business excellence, to attain a higher quality level of service than the competitor in the market. Design for six sigma has been developed as a breakthrough strategy for service process design and/or redesign which is fundamental to the delivery of service quality to the customer.

When Any Business Go for Process Redesign? Process design/redesign is the technique used when all or part of process is being replaced or added. For example, deploying this technique would be very useful in implementing an upgrade with new feature/functions that would improve workflow. Process design or redesign can be useful in adjusting a product or service to match customer requirements; example, the organizations senior leadership realization, that transcription will not be needed with the movement to an Ambulatory Electronic Health record or the move from a paper based order entry system to an electronic order entry system to an electronic order entry system. Both of these are profound changes in how the organization operates and have a wealth or opportunity for improvement. In all, --..

• When a business chooses to replace rather than repair one or more core processes. 25

Six Sigma

Chapter 2

• When a leadership or six sigma team discovers that simply improving an existing process will never deliver the level of quality customers are demanding . • When the business identifies an opportunity to offer an entirely new product or service. In these cases business needs to redesign core process. Process design/redesign is more risky in term of failure as compare to process improvement. In process improvement we just improve the existing process, no drastic changes occur while process design/redesign involves the creation and implementation of a brand new product or process.

REDESIGN FOR FUTURE Example, today all businesses are focused upon how to remain cost competitive, how to deliver excellent services and how to grow revenue. Cap Gemini's enterprise-wide, process-based approaches and methods quickly identify how organizations can improve business performance through their business processes. Whether you require process improvement to support business strategy, have an ambition to identify and remove process inefficiency or are facing "clean sheet" design challenges, Six sigma can support you in the change required while ensuring precise alignment of business processes and technology. Six sigma team can quickly diagnose how far your organization is from operating leading edge processes and the changes needed to realize tangible business benefits. Some questions regarding process redesign are, What process design approach do I adopt that best suits my business? What are the best standards and tools to use? How can I get my own team to deliver this over time? How can I ensure that my design stays up to date, that my requirements reflect this design, and that these are not compromised during build?

Benefits of Process

Red~sign

Process Redesign can be used to deliver cradle-to-grave solutions when creating new parts of a business, continuous improvement initiatives, changes to the operating model and, not least, to improve the effectiveness and efficiency of customer-facing services to support the bottom line and win or retain market share.

26

Ways to Six Sigma

The benefits of Process Redesign include enabling organizations to: • Understand where and why existing processes are failing • Identify opportunities to deliver existing processes more efficiently and effectively • Transform through the full redesign of end-to-end processes • Design and implement new processes to support new product and services development.

• Test: At this stage, we test the fully integrated system through each business process cycle and ensure that the solution meets the defined requirements. • Transition: The goal of the Transition phase is to complete user acceptances testing, prepare client personnel and achieve final cutover to the new system. • Support: The final phase provides continued project team support In the immediate post go-live period and ensures a smooth handover to the support operations team. Improvements to process design are made and introduced for better ways of working. • Tools and Techniques: Capgemini's enterprise Process Redesign capability is built upon a suite of tools based on Lean, Six Sigma and delivery experience to methodologies and approaches required. Capgemini's Capability Capgemini's enterprise process design capability focuses not only on the understanding, performance and change a process could go through, but also: • Understanding and redesigning the organization interaction that supports the process • Defining the role technology plays to enable the process • Determining the value the new state would bring to our clients and their customers Capgernini works with clients to unravel the complex blend of how to get the best our process and technology relationships to design, deliver and review effective transformation and change. Capgemini people have experiences across the process design spectrum, from short analysis and design projects through to large ERP implementations. We work with our clients to up-skill and support them through the design. 27

Chapter 2

Six Sigma

Our people have the skills and experiences the industry methods (Example, Lean, Six Sigma) and have developed their own approaches to suit client needs and remain flexible to the requirements of the customer. Optimize existing processes as a critical pre-requisite to a technology enabled transformation Develop in-house expertise to continue to deliver process excellence in the long-term Capgemini's Approach There are a number of approaches that Capgeminin uses to tackle Process Redesign. Focused Process Improvement Framework Capgemini's 'Focused Process Improvement' framework (FPI) for Analysis and Design generates a pragmatic plan for capturing requirements and implementing effective business improvement change with minimal risk. FPI encourages our clients to deal only with real issues and their root causes, and not with theory. It focuses on the issues that will make a difference to bottomline performance and will provide the client with the capabilities to identify the processes that actually add value and turn ideas generated about how the client should operate into practice. It also allocates ownership of all initiatives and merges strategic. Technological and operational perspectives to transform complex plans into measurable and agreed activities. . Large scale Business Process, Reengineering/Systems, Integration implementations Large scale process change' can take a number of different shapes and address a huge variety of complex problems. However, they all typically follow 6 phases: • Mobilise: The goal of this phase is to create the conditions necessary for a successful implementation. These include and common understanding of the scope and objectives of the processes, a confirmed process design team structure and a clear project plan. • Design: This phase determines the high-level business processes necessary to meet a set of defines business objectives and to use these requirements to finalise the process design and operating model. • Build: At the Build phase we work with the client to formulate the detailed process solution based on client requirements. It will 28

Ways to Six Sigma

incorporate joined up working with the technology and organization workstreams to build an integrated solution. • This client required the design and delivery of a new operating model for their complex organization involving a large number of internal and external stakeholders. Capgernini was successful in implementing a rapid design factory to deliver over 800 process re-designs, producing an end-to-end business architecture including the articulation of how the organization and data designs integrated with the technical architecture and industrialized requirements tracking to demonstrate how the solutions for all 2,500 requirements. • This large government agency engaged Capgemini to deliver a continuous improvement lean culture across 115000 employees to support ministerial performances and reform targets. Through an initial proof of concept, Capgernini worked with the client to realize a 40% improvement in performance and to train 5000 employees. Subsequently, Capgemini helped the client transition to a self-sustaining model with 33% of all staff training in Lean techniques. • This public sector client was delivering a transformation programme that was misaligned and suffering large delays. In addition, the IT components were not create detailed models to stimulate IT delivery proposals to inform the client when deciding the best rollout schedule and how to re-build the transformation programme. This led to the accelerated delivery of the programme and the successful management of programme dependencies. 2.3 PROCESS MANAGEMENT It is structured set of tools and techniques designed to help managers and teams to contineously address their customer expectation. It is the most dynamic and evolutionary part, as it changes not only the management but also the culture throughoot the organization. Process management focus on managing process across the organisation replaces managing individual functions by different internal departments. Process Management is the most challenging task as it requires a fundamental change in original structure and management of the organisation Process Management includes: • Defining processes key customer requirements and process "Owners". • Measuring performance to customer requirements a key process indicators.

29

Chapter 2

S;xS;gma

• Analyzing data to enhance measures and refine the process management mechanism • Controlling performance through ongoing monitoring quickly to problems and process variations. In Process Management, the focus is on the entire process and not only on a specific problem or design challenge. Process Management is work that business leaders do to improve their processes for managing the business. Process Management tends to evolve as business expands its Six Sigma effort and increase its knowledge of its processes people and customers.

2.3 SUMMARY It's usually easiest and most effective to improve what exists (Process Improvement) before trying to invent a new way of doing business (Process Redesign) starting with specific projects also helps an organisation gradually using new approaches (Process Management) Process Improvement, Process Design or redesign and Process management are three engines of Six sigma. The linkage of three parts together is one of the most important innovations that Six Sigma offers.

2.4 SELF ASSESSMENT QUESTIONS (1) Explain

(a) Process Improvement (b) Process Design/Redesign (c) Process Management (2) Why Process design/redesign is important fro future of the organisation·

30

Chapter

Objectives After going through this chapter you will be able to understand: • The objective of this chapter is to review the roles of people in the evolving Six Sigma organization . • Understand the functions and roles of Six Sigma team.

Structures: 3.1 Key Players Executive Leaders 3.2 Project Sponsors and Champions 3.3 The Implementation Leader 3.4 The Six Sigma Coach (Master Black Belt) 3.5 The TeamlProject Leader (Black Belt) 3 .6 Team Managers 3.7 The Process Owners 3 .8 Summary 3.9 Self Assessment Questions

Six Sigma

Chapter 3

USL

LSL

N(O, I) ~=O

cr=1

-6

-5

-4

-3

-2

-I ~-cr

° ~

2

3

4

5

6

~+cr

Graph of the normal distribution, which underlies the statistical assumptions of the Six Sigma model. The Greek letter cr (sigma) marks the distance on the horizontal axis between the mean, fl, and the curve's inflection point. The greater this distance, the greater is the spread of values encountered. For the curve shown above, fl = 0 and cr = 1. The upper and lower specification limits (USL, LSL) are at a distance of 60" from the mean. Due to the properties of the normal distribution, values lying that far away from the mean are extremely unlikely. Even if the mean were to move right or left by 1.5 cr at some point in the future (1.5 sigma shift), there is still a good safety cushion. This is why Six Sigma aims to have processes where the mean is at least 6 cr away from the nearest specification limit. The term "six sigma process" comes from the notion that if one has six standard deviations between the process mean and the nearest specification limit, as shown in the graph, practically no items will fail to meet specifications. this IS based on the calculation method employed in process capability studies. Capability studies measure the number of standard deviations between the process mean and the nearest specification limit in sigma units. As process standard deviation goes up, or the mean of the process moves away from the center of the tolerance, fewer standard deviations will fit between the mean and the nearest specification limit, decreasing the sigma number and increasing the likelihood of items outside specification. Six Sigma Approach The six sigma approach for projects is DMAIC (define, measure, analyze, improve and control) 32

Organizing Six Sigma

Many companies have adopted the DMAIC model for six sigma improvement projects. Many of various models used in different organizations can serve as well as guides to six sigma improvement efforts. Six sigma is a highly disciplined approach used to reduce the process variation to the extent that the level of defects are drastically reduced to less than 3.4 per million process product or service opportunities. The approach relies heavily on advanced statistical tools. Different models used in different organization can serve as guide to six sigma improvement efforts. Many times existing model seen to be effective rather than introducing new DMAIC model' as it may take a time to teach as new model. So in this situation the organization may adopt process improvements and process redesign stages and adopt six sigma approach. Six Sigma is not restricted to anyone department of the organization. It is not only defect identification and calculation in the process or product. Six sigma is not restricted to the people work in teams but for overall organization. If you want to improve the performance of organization, only the team alone can't change corporate structures.

3.1 KEY PLAYERS EXECUTIVE LEADERSILEADERSHIP GROUP Leadership group consists of senior managers. Executive leaders is one who decide to do six sigma and implement it throughout the organization. The leader must determine the basic goal, objective get the training, understand the savings, perpetuate the use of matrices, mark key milestones and keep the overall initiative on track. Executive leaders within the company must take the decision to implement Six Sigma and must publicly endorse it throughout the company. This is high level support. Leaders must reinforce the comprehensive scope of six sigma at every tum. This critical engagement of widespread participation throughout the company is critical for traditional six sigma. Traditional practitioners say that it's important for six sigma to be a company-wide initiatives. Leadership group must develop a strong rationale plan and actively participate in the implementation then create a vision, mission, clearly set the objective and set accountability, measure the results, communicate results with all and take effective action.

33

Chapter 3

Six Sigma

3.2 PROJECT SPONSORS AND CHAMPIONS In many organizations a sponsor or champion is a senior manager who overseas a six sigma project and accountable to the Leadership Council for the success of that project. The champion's role is to provide clear guidelines to improvement team Champions are advocates who fight for the cause and remove barriers, financial, personal or otherwise. So that black belts can do their work. Champions responsibility include: • Setting a rationale and goal for improvement projects that align with business priorities • Being open to changes in the project definition and scope, as team gathers data and more deep analysis of the process. • Coaching and approving changes whenever required • Searching Team efforts • Working with other department managers for "smooth working and support". The champions must ready to delegate projects to teams and then let the team must handle it separately. The champions should learn about six sigma by direct steady involvement with the team. One of the main reasons for having six sigma teams is to help champions to learn a better way to manage the business. Champions and others executive leader who are looking across projects and departments and who can have the biggest impact on using six sigma tools and methods to strengthen the business. According to Greg Brue the author of 'Six sigma for managers', champions acts as an advocate and defender as mentor and coach and is ultimately responsible for project success. They must have through understanding of strategy and discipline of six sigma and able to educate other on the topic.

3.3 THE IMPLEMENTATION LEADER Depending on the scale of the operation, one implementation leader or six sigma director or need a staff to handle this task. It includes: (1) Support the leadership group in communication plans, help in various communicating plans, help in various project selections and project tracking. 34

Organizing Six Sigma

(2) Identify and recruit other key players including outside consulting assistance. (3) Provide support/assistance in the selection and development of training

materials. (4) Proper planning and execution of training programs.

(5) Give support to champions and team sponsors. (6) Proper documentation including progress report inform leadership team

of progress and problems. (7) Execute internal marketing plans for training and tracking teams.

3.4 THE SIX SIGMA COACH (MASTER BLACK BELT) Master Black Belt is an expert in all areas of Six Sigma. Within the company the Master Black Belt as an official teacher for champions and Black Belts. This role is often fulfilled initially by a member of implementation team. The Master Black Belt serve as trainer, mentor and guide. He/she helps you to select right people, assists in screening and selecting projects. The MBB should be skilled at facilitation problem solving without taking over a project. MBBs are often assigned to a specific area or function within the company. It may be a functional area, such as human resources or legal or a process-specific area such as billing. MBBs work with the owners of the process to ensure that quality objectives and targets are set plans are determined, progress is tracked and education is provided. In other words, six sigma champions and MBBs work very closely and share information daily. MBB focus 100% of their efforts on process improvement. Master Black Belt/Six Sigma Coach should be able to provide guidance on. (1) Communicating with

project champions and leadership council.

(2) Establishing and sticking to a firm schedule for projects (3) Dealing with resistance for implementing six sigma (4) Estimating, measuring and validating other savings attributed to improvement projects. (5) Helping in solving team and other conflicts (6) Gathering and analyzing data about team activities (7) Helping for team promotion and success 35

Chapter 3

Six Sigma

3.5 THE TEAMIPROJECT LEADER (BLACK BELT) Black belts are dedicated to assigned projects and work full time to drive the project success. They lead the project team. Black belt is the person who accepts primary responsibility for the routine work and results of six sigma, project. The duties are similar as MBB/six sigma coach but specific to one team only. The Black belt role is the backbone of six sigma culture. Black Belt sort out the colIected data, analyze the data, separate out the opinion from actual fact and present the important elements which are causing productivity and profitability problems in measurable/quantifiable terms.

Responsibilities of Black Belt Include Reviewing/Revising/Clarifying the project rationale with both project champion. Helping champions to understand how six sigma techniques can be apply for everyday operations • Working with team members. • Pursue the project objective. • Identify and finding resources and data for the team. • Understand the causes and effects of defects. • Develop necessary steps to eliminate the defect permanently. • Maintaining team's project schedule. Black Belt projects are Central to Six Sigma with important responsibilities as technical experts, team leaders and project heads.

Qualities of Black Belt • Leadership Ability. • Technical Skills. • Some statistical Knowledge. • Ability to communicate clearly. • Eagerness to learn new ideas. • Desire to drive change. • Team player. • Respect in the organization. • Concerned about current processes, results.

36

Organizing Six Sigma

Black Belts are the technical leaders and change agents, the key players who implement six sigma principles, techniques and tools. As objective of any organization is to maximize the profit, i.e., maXllll1Ze rate of return on investment, it is very essential to choose the right people for Black Belt roles which are central to six sigma.

3.6 TEAM MANAGERS Team members are those who are familiar or good knowledge of process, product and customer. Team members collect and analyze data which is necessary to improve the overall process. Improvement problem solving and process design teams are the most visible and active component of six sigma effort. These teams are created to solve organizational problems and capitalize an opportunities, led by a Black Belt or a Green belt. The team usually have three to ten members representing different parts of the process being worked on. Members frequently come from different departments, backgrounds, job level, skills and seniority. For this diverse term it is necessary to have a common process or model that all members can share to get their work done and the process in DMAIC process, i.e., Define, Measure, Analyze, Improve and Control. By following this process, a flexible but powerful set of five steps"for making improvement and the team works from a statement of the problem to implementation of solution with lots of activities in between. In DMAIC process the team interacting with different large organization, interviewing customers, gathering data and taking reaction from the people whose work will be actually affected by the teams solution recommendations. The team member must ask different questions and participate actively in the teams work. Member should collect different data require and analyze the same. He should acquire different management skills like planning, organizing, decision making, making reports, etc. He should review the efforts of the team itself· and improve the making process.

3.7 THE PROCESS OWNERS Process Owner is the manager of a part of a particular function. The managers who actually get the solution by an improvement team and become the "Owner" responsible for managing the improved process. The process owner are those people who manage a process across the organization.

37

Chapter 3

Six Sigma

3.8 NEW ROLES FOR MANAGERS AND EMPLOYEES Black Belt The Black Belt is full time person dedicated to tackling critical change opportunities and driving them to achieve results. The black belt leads, inspires, manages, delegates, coaches and becomes almost expert in tools for assessing problems and fixing or designing processes and products. He/She primarily responsible for getting the team started, building their confidence, observing and participating in training, managing team dynamics and keeping the project moving to successful results. Black Belt must possess many skills including strong problem solving, ability to collect and analyze data, leadership and coaching experience and good administrative sense. Black Belt usually get several weeks training in process analysis and team meeting skill. In technical and manufacturing settings, this training includes statistical tools like sampling, multivariate analysis and design of experiments. For service industries , it include mapping and analysis of processes, use of such tools as cause and effect diagrams, histograms, etc. Master Black Belt In most organizations, Master Black Belt (MBB) serves as a coach and mentor or consultant to Black Belts working on a variety of projects. For instance, the MBB is a real expert in Six Sigma analytical tools, often with a background in engineering or science or an advanced degree in business, MBB usually receives in depth training on statistical tools and process improvement. MBB also serve as change agent consultants to the Leadership Council and other managers. As a coach, the MBB's job is to ensure that the Black Belt and his/her team stay on track, complete their work properly and pass key tasks for each step of Six Sigma improvement process. Often MBB provide advice and also helps in data collection, doing statistical analyses, designing experiments and communicating with key managers. Green Belt A green belt is someone trained in Six Sigma skills often to the same level as Black Belt. Green Belts are usually employees who have received enough Six Sigma training to participate in a team or in some companies, to work individually on a small-scale project directly related to their own job.

38

Organizing Six Sigma

Some companies, for, example, General Electric (GE) have required large segments of their population to be trained as Green Belts. The role of Green Belt is to bring the new concepts and tools of Six Sigma for day-to-day activities of the business. 3.9 SUMMARY Black Belt, Green Belt, Master Black Belt, everyone is committed to using new tools to learn new things in order to create new kind of organisation which help it to grow. 3.10 SLEF ASSESSMENT QUESTIONS (1) What are the different responsibility of Champions? (2) Who are the Key Players in Six Sigma project? (3) Explain New roles for managers and employees.

39

Chapter

Objectives

After going through this chapter you will be able to understand: • Understanding Six Sigma tools/methods i.e., DMAIC and DMADU • Understanding

How DMAICIDMADV is problem solving model.

Structures:

4.1 DMAIC -

Problem Solving Model

4.2 DMAIC versus DMADV 4.3 Summary 4.4 Self Assessment Questions After knowing about roles and responsibilities of Six Sigma, steps of doing Six Sigma, you get an idea that is, "a small deviation can create a measurable loss in term of money." Even a small variation in a process can have a big consequence. Deviation, variation, defects or waste whatever, the end result is loss, in monetary terms. If you implement Six Sigma, you have tools to identify, correct and control the critical element which are important to reduce the cost of poor quality.

Methods of Six Sigma

4.1 DMAIC -

PROBLEM SOLVING MODEL

DMAIC is one of the method which involves necessary steps in a sequence which are very important to get desired output. All the five phases must be followed in proper sequence to get required output. Each and every step must be followed in proper order. Though Six Sigma involves a lot of statistics and equations, but it is not merely a statistics program. It helps you to about, how to use statistics for taking important and measurable decisions about your business processes.

DMAIC PROCESS (Define, Measure, Analyze, Improve and Control) DEFINE PHASE Objectives of Define Phase During the Define phase of a Six Sigma DMAIC (Define, Measure, Analyze, Improve, Control) project, the project leaders are responsible for clarifying the purpose and scope of the project. For getting a basic understanding of the process to be improved, and for determining the customer's perceptions and expectations for quality. Also important are establishing realistic estimates for timeline and costs. All these things will ensure that the stakeholders are all on the same page regarding what is going to be done and how to evaluate the project's progress and ultimate success. In some companies, a great deal of work is done prior to chartering a new DMAIC project, so that everyone involved is already aware of the need for the project and is sure that the project warrants the DMAIC treatment. In other environments, however, confirming that a project is suited for this model is also part of the Define phase. Some things to watch for when assessing a project's suitability for DMAIC: • Is data available or easy to obtain? • Does leadership support exist for improving this process? • Is DMAIC really needed or is this a "just do it": a problem with a known solution that should just be implemented? • Is the team trying to boil the ocean or is the scope reasonable for chartering as a DMAIC project? • Is the process directly related to a key outcome such as profitability, customer satisfaction, or employee satisfaction? Roles and resources also need to be clarified upfront to avoid misunderstanding. The Process Owner, Project Leader (usually a Black Belt or 41

Chapter 4

Six Sigma

Green Belt), and the Sponsor/Champion need to be clear on what is expected from them, how they will communicate, and how decisions will be made. Team members and their supervisors will need a realistic estimate of how long their participation will be needed and how many hours per week they are expected to spend on project work. The key tool for Define is the Six Sigma project charter. It should contain the standard information for a project management charter, such as purpose, scope, roles, budget, and expected outcomes. In addition, it is common practice with DMAIC projects to estimate the timeline for each phase, and to provide basic statistics that are already available and relevant to the project. The data may include the baseline cycle time or satisfaction rate, or even the baseline process sigma if it is already known.

Understanding the Process A core tenet of the Six Sigma philosophy is that it is usually the process that needs reworking when performance standards are not being met, rather than the people. Once we understand the process, we will have insight into the causes of in~fficiency and frustration so that improvements can be made. Later in the project the process will be examined and mapped in great detail. At this point what is needed is a high-level understanding of the process. The team needs to be clear on what the process was established to accomplish, and what the outputs are. Also important is clarity on the start and stop points of the process, understanding of who the suppliers to the process and customers of the process are, and a description of the main steps in the process. A tool called a SIPOC is often used for this purpose. The name of the tool stands simply for Suppliers, Inputs, Process, Outputs and Customers, and is a visual representation of each of these things. It may be tempting to assume, that everyone already knows what the processes is and what is involved, but don't let assumptions play a role in your improvement project.

Understanding Customers and Quality The origins of Six Sigma reflect a focus on quality as defined by the customer. Before initiating an improvement initiative or implement process changes, it is crucial that the customers' expectations for quality and current level of satisfaction are known. Too often business leaders think that they know what customers want and act accordingly, and the intended results do not manifest. In DMAIC, we always let the customers of a process tell us how satisfied they are with the process and its results, we do not take someone else's word for it. The tools for gathering this information are many: existing complaint and 42

Methods of Six Sigma

contact data, focus groups, interviews, and surveys are common. You may find that data already exists that provides a good picture of customer satisfaction and expectations, but more often it is necessary to take proactive measures to gather additional data. Once data is obtained, it is compiled and valuated using a variety of techniques. The goal is to establish at least one Critical To Quality measure (CTQ): a customer requirement that is truly critical to the customer, that can be measured, and which can have a specification set that must be met. The process sigma will later be calculated based on the extent to which the process currently meets the specification. The Pareto chart is often used to categorize complaints or reported problems by category, so that the most frequent types can be identified. Market segmentation may be used to take into account major differences in the needs and expectations of different groups such as wholesale customers and retail customers. An affinity diagram can help the project team group customer comments into categories in a variety of ways to explore how customers view the process and to assess where improvement resources should be directed. And fitting the data to a Kano model can make clear which of the customers' needs are in most critical need of improvement.

Wrapping Up the Define Phase At the end of the Define phase, the team should have a completed project charter, a high-level process map, and one or more CTQs that will allow data to be gathered in the Measure phase. And in terms of mind set, all team members should have a good understanding of why the project is needed, how it will impact stakeholders, and how the project will proceed. DMAIC include Define Measure Analyze Improve Control (1)

D - Define

The first step in Six Sigma is to clearly define the problem statement. In this step, the team define the problem statement, its goal, identify the customers 43

Chapter 4

Six Sigma

served by the process, defines customer requirements and writes the plan of how to complete the project. By asking the questions like • What are we working on? • Why are we working on this particular problem? • Who is the customer? • What are the customer's requirements? • How is the work currently being done? • What are the benefits of making process improvement? By asking such kind of question, the process of business rethinking starts. First, you must define the "big" issues in your department or organization. It often help to map the whole processes, in order to better understand them and locate the problems. Once the questions are answered - the DMAIC charter can be developed. Charters vary from company to company, but typically it includes

(a) A Business Case It provides a brief introduction or broad definition of the issue assigned to the Black Belt or team, as well as the reason for why this particular project or opportunity being chosen or given a business propriety.

(b) Problem/Opportunity and Goal Statement It is one-two sentence description of the specific problem to be addressed. It is same as business case, but problem statement is more specific and focused than Business Case. Example: • A Business Case might read "A profit of the company have fallen from last year's levels" • A problem statement would then focus on key element, i.e., "A profit of the company have fallen by 10% from last year level which affect the rate of return" Problem statements usually answer following questions like: • What's wrong? • Where is the origin of problem? 44

Methods of Six Sigma

• Which are key issues in problem? • What should be the impact of the problem on the business? At starting point, may the team is not in the position to understand how big the problem is? But as they proceed, collect related data they get initial idea and create the baseline.

(c) Constraints/Assumptions What are the limitations or assumption of the specific project? • Constraints usually refer to limits placed on resources to be devoted to the project. A common constraint is the time that team members will devote to the project. • Assumptions might include the champion expectation about team leader and team, e.g., how he/she support the team, freedom given to the team for implementing solution without approval of the champion. These assumptions are nothing but Champion's expectations as one of the customers of the team. For example: A Champion's assumption might be like "The team will take all key decisions about how to implement the solution?" Other assumptions might include the time needed to complete the project, role of Champion, etc.

(d) Scope The champion normally outlines the scope of the project - usually defined in process terms along with constraints and assumptions. It include, how much of the process and/or range of issues is "in bounds"?

(e) Players and Roles The project charter should list the name of champion responsible for outcome of the project. The team leader, team members and Master Black Belt, Green belt or other people assigned to help the team. Team members should represent all of the parts of the processes under analysis.

(0 Preliminary Process Plan • When will each phase, i.e., D, M, A, I and C be completed? • Listing weekly or monthly progress or target will help the team to maintain a sense of urgency, and prevent completion dated from slipping behind. 45

Chapter 4

Six Sigma

• Prepare summary of the plan for communicating with champion and others. • Prepare Preliminary Process Plan which helps the team to manage its workflow. After this, we get clearcut idea about the problem, it define and narrow the project's focus, clarify the results, confirm value to the business, establish constraint and limitation of project, resource availability and also help the team to communicate its; goals and plans. So, in define stage • Identify the important problems of the business. • Define parameters and constraints of the project. • Determine vital few factors to be measured, analyzed, improved and controlled. • Identify most important players in any process. To sum up, In the Define phase, the Six Sigma project team identifies a project for improvement based on business objectives and the needs and requirements of the customers. Six Sigma is about "solving a problem with an unknown solution". For getting solution; the problem needs to _be first defined in concrete measurable terms. The term identifies Critical To Quality (CTQ) characteristics that have the most impact on quality - separating the "vital few" from the "trivial many". With the CTQs identified the team can create a map of the process to be improves with defined and measurable, deliverables and goals.

MEASURE PHASE Objectives of Measure Phase The goal of the Measure phase of a Six Sigma DMAIC project is to get as much information as possible on the current process so as to fully understand both how it works and how well it works. This entails three key tasks: creating a detailed process map, gathering baseline data and summarizing and analyzing the data. In some cases, the process mapping is created first so that information gleaned from it can guide the data collection process. In other cases, the general data needs are already known and the two pieces can be worked on simultaneously.

46

Methods of Six Sigma

Process Mapping Depending on the type of process, a Six Sigma process map may be created using direct input from the individuals who participate in the process, by an observer who monitors and records information about the process, or a combination of the two. The most important aspect of this task it that the goal is to create a map of the existing process, good, bad or ugly. This is not the time to incorporate ideas for what can be done differently. Remember that the start and stop points of the process under study should have been determined as part of the Define phase, so the process mapping effort during Measure should have those same delimiters. For many processes, tracking cycle time provides valuable information, especially when the problem being addressed is related to delays and process duration. If it is relatively simple to obtain basic data on the process time for key steps, that can be helpful at this stage. Also important is capturing any variation in the way the process is performed, for instance at different times, by different groups, or in special situations. Do not assume that the process is always performed exactly the same way. Typically, an activity flowchart is used to create a visual depiction of the process. Individual steps are shown in order, with decision pqints and feedback loops as needed, to describe what occurs. AlsQ, of benefit for many projects is a deployment flowchart, which specifically illustrates who is performing each step. An opportunity flowchart can be used to highlight steps that are truly necessary and add value to the outcome, and to separate them from steps that represent waste and inefficiency. Once the process map has been compiled, the project team will review it to glean information about potential contributors to problems and inefficiencies. The team should watch for evidence of missing steps, extra steps, delays and bottlenecks, variation in how certain steps are performed, and anything else that could lead to defects, inefficiency and problems.

Data Collection As with other aspects of a Six Sigma DMAIC project, it may be tempting to just jump in and start collecting data, under the assumption that the way to do it is obvious. As with the other steps in the process, the only way to ensure success is to do it systematically; with careful planning. For this reason, a data collection plan is usually the first step in the data collection process. The focus of data collection should be in gathering data that helps to describe the problem, as well as uncovering any factors that provide clues about 47

Chapter 4

Six Sigma

how, when, where, or in what circumstances the problem occurs or worsened. During planning, the team must not only determine what data to collect, but also ensure that the collection process is valid. In some cases this can be accomplish by establishing clear operational definitions for the measures being tracked; in others a more sophisticated technique such as a Gage R&R analysis is necessary. Remember that during Define, the project team established one or more CTQs representing the customer expectation for quality. The CTQs measures and specifications will be used to calculate a process sigma score for the baseline process, so gathering data on those specific measures is a primary focus at this point in the DMAIC project. Projects may require tracking of primary measures such as conversion rate, customer satisfaction rate or cycle time (process duration) or a plethora of other metrics. Typical related measures include the group performing the process (if multiple teams or groups are involved), the time period when the process is performed or the type of product being created or processed. In most cases, it is also important to. obtain information on process performance over time. Often technology makes this an easy task, with data automatically being stored on an ongoing basis. In other cases, it may take additional work, such as compiling historical reports. Data analysis during the DMAIC Measure phase involves creating graphs and charts that provide a visual representation of the data, including trends over time. The type of data will determine the type of visual tool that is used. A first step often involves graphing the data over time, by using a time series plot or control chart. The role of a time plot is to provide visual information about changes in a process over time, including trends and overall amount of variation. If a grouping factor such as department or product was tracked, it is also beneficial to create a stratified time plot, to see if the overall pattern over time differs for the different groups. A control chart is one of the hallmark tools of Six Sigma. It is both a visual representation and a statistical tool, allowing a determination of which components of variation are inherent in the process (common cause) and which are due to external or specific factors (special cause). For categorical data such as complaints or types of product defect, a Pareto chart can be used to visually display the distribution of data across categories and to determine whether the 80120 rule applies. Frequency plots and stratified frequency plots also provide insights into the distribution of data and thus the process performance. 48

Methods of Six Sigma

Calculating Process Sigma The Six Sigma methodology gets its name from the fact that, at a process sigma (a measure of process variation) of 6.0, only 3.4 defects occur per million opportunities (3.4 DPMO). Another way of looking at it is that 99.9997% of the output would meet customer specifications. Most DMAIC projects do not strive for this level of quality, due to the extensive costs and other tradeoffs involved, especially outside the' manufacturing arena. However process sigma is a standard that allows comparison of process performance for different processes. It provides a means of gauging the baseline performance and, ultimately, the improvement that is accomplished through the project. The percentage of process output that meets the. customer specification is calculated (directly, or in some cases indirectly, based on normal theory) and used to look up the process sigma in a process sigma table. Wrapping Up the Measure Phase At the end of the Measure phase, the project team should have a detailed process map, detailed baseline data and a calculation of baseline process sigma. Team members should have a clear understanding of how the process is currently done and of the specific problems with the process that may be related to the CTQs. (2) M -

Measure

Measure is logical follow up to Define and is a bridge to the next step: Analyze. . Measurement is a key transitional step on the Six Sigma, one that helps the team to redefine the problem and start to search for root causes, which will be the objective of next step, i.e., Analyze. The Measure step has the following objectives like: (i) Data collection to validate and to quantify the problem.

(ii) Begin with facts and numbers which gives clues about the root causes

of the problem. Six Sigma team set priorities for taking good decisions about the measures needed for solving the problem. The process has three main categories of measures. (1) Input: Things coming into the process for change into outputs. Bad inputs create bad outputs. Input help to identify possible causes of a problem. 49

Chapter 4

Six Sigma

(2) Process: Things that can be identified and measured. These items usually help the team to identify main causes of problem. (3) Output: The end results of the process. Output measures focus on immediate results, for e.g., defects, complaints and outcomes on longer terms impacts like satisfaction, image, profit, etc. The DMAIC team gives first propriety to output measures which best quantify the current problems. Select few input measures which are targeted to get data on potential causes. Once it is decided what to measure, the DMAIC team forms a "data collection plan". Deciding what measures to take is often difficult especially for teams working on their first Six Sigma project. Data collection can be difficult and time consuming. Initially, you may be confused about what and how to collect data, what should be the sample size and how often to count it. Getting co-operation from customers, colleagues and suppliers, it is usually critical. A common milestone in the Measure step is to develop an initial "Sigma measure" for the process being fixed. Sigma Measure is useful for comparing the performance of different processes and relating them to customer requirements. To sum up, in Measure phase, the term begins with proper metrics. Critical measures that are necessary to evaluate the success of the project are identified and determined. The initial capability and stability of the project is determined in order to establish a measurement baseline. Valid and reliable metrics to monitor the progress of the project are established during the Measure phase, inpput, process and ouput indicators are identified. Once the project has a clear definition with a clear measurable set of indicators, the process is studied to determine the key Process Steps and an operational plan defined to measure the indicators. Potential impacts on CTQ's from each input are considered with respect to the defects currently generated in the process key Inputs are given priorities to establish a short list to study in more, detail and to determine the potential ways the process could go wrong. Once the reasons for Input failure are determined Preventative action plans are created. The measutement phase is all about mapping the process, evaluting the measurement system using your metrics and estimating the process baseline capability. It's truly complete when your black belts can identify the vital few factors, demonstrate the capability of the process and establish a valid measurment system and measure is the act of defininig collecting data and presenting a conclusion for a quatified evaluation of any given characteristies andl or level of operation based on the observed data collected. 50

Methods of Six Sigma

ANALYZE PHASE Objectives of Analyze Phase The goal of the DMAIC Analyze phase is to identify potential root causes for the process problem being addressed and then confirm actual root causes with data .. Having completed the Measure phase, the project team should have already established a clear problem statement which specifies what the problem is and under what circumstances it occurs. They should have already gathered and analyzed data to establish the baseline performance of the process, relative to the Critical to Quality measures (CTQs) established based on customer input. The question that the Analyze phase seeks to answer is, "Why is this problem occurring?" Another way to ask it is, "What is the cause of the problem?" It is not possible to make improvements to the process until the causal factors are identified. Potential Root Causes In many cases, clues to the factors affecting performance are already available based on the work that was done in Define and Measure. Perhaps the team demonstrated that the problem is isolated to one group, and they know that group is using older equipment. Or analysis of the process map may have revealed some fairly obvious sources of inefficiency and delay in the process. However, this is not sufficient to confirm what is causing the problem for two reasons. One is that, as in all phases of DMAIC, suspicions and hypotheses must be confirmed with data. Not only must the team confirm that these factors are present, they must also confirm that changes in these factors substantially impact the outcome. The other is that the goal of Analyze is to determine root causes, which requires digging deeper than what is apparent on the surface. Several techniques are employed by Six Sigma project teams to identify potential root causes. One is brainstorming, which is used by team members and, ideally, people involved in performing the process under study, to create a large list of factors which could reasonably affect performance. This list will of course include any factors that were revealed based on the process mapping exercise and the data analysis conducted during Measure. Another popular exercise is the 5 Whys, which involves repeatedly asking "Why?" until it no longer makes sense to do so. The point is to get past the surface-level answers that are likely to be put forth initially, and to uncover the real underlying issues. 51

Chapter 4

Six Sigma

Cause and Effect Diagrams Once a list of potential root causes has been compiled, the next step is to organize them in a way that makes it easier to prioritize and assess them. Several tools can be used to accomplish this. The most popular is a fishbone diagram or Ishikawa diagram, which uses a display resembling the bones of a fish to categorize potential causes and illustrate the levels of causation. The main bones are used to reflect high-level categories, such as People, Processes, Technology, and Policies. Another option is a tree diagram which can be used to organize the same information. It is preferable if the amount of information is large and hard to organize in a fishbone, or if the project team wants to create it more quickly and does not have access to a tool for creating a fishbone automatically. And some people just prefer the more straightforward presentation. Once the diagram has been created, the project team reviews it to determine which seem to be the most likely potential root causes, and to identify any that seem to have consequences in more than one area. These are good candidates for the validation process. Confirming Root Causes In' some cases, sufficient data is available from the Measure phase to conduct cause-effect analyses during Analyze. Often, however, it is necessary to collect new data so that the relationship between the suspected root causes and the effect under study can be evaluated. As in the Measure phase, the methods used to analyze the data depend on the type of data collected. Graphical techniques include scatterplots and frequency plots, while statistical techniques included Analysis Of Variance (AN OVA), correlation analysis, and chi-square testing. In Six Sigma, ANOV A is often used when the output measure is continuous (time and money are typical examples) and the input measures or suspected causes are discrete (categorical). Correlation analysis is used when both measures are continuous, chi-square when both are discrete. Wrapping Up the Analyze Phase At the end of the Analyze phase, the project team should have at least one confirmed hypothesis regarding the root causes of the problem the project aims to resolve. Once the root cause is known, action can be taken in the Improve phase to counter it.

52

Methods of Six Sigma

(3) A - Analyze In analyze step, team find out the, "root cause behind the problem". At this stage, you try to know, why defects are generated and what are the different reasons behind them. In other words, find out inputs which are affecting the outputs. Analyze is the action where a processes, procedure or service details are examined for process improvement opportunities. Here, Data is examined and confirmed to demonstrate suspected root or Common cause and verify a problem statement and the process analysis should include and non coasted actions. In analyze phase the team can determine the causes of the problem that needs improvement and how to eliminate the gap between the existing performance and the desired level of performance. This involvrs discovering why defects are generated by identifying the key variables that are most likely to create process variation. As six sigma team moves through the Analyse stage and subsequent improve stage of the process, they will discover various process improvement scenarious and determine which has the best net benefit impact to the company. Six sigma analysis techniques are valuable tools to uncover more difficult solutions. Black Belt teams will ask which inputs are actually affecting the outputs. In mapping and measuring your process and identifying input variables which affect critical to quality attributes, you ay come up with some assumptions regarding relationships between your business metric and the inputs that would affect it. So for this, you have to formulate hypotheses and then testing to determine which factors are critical to the outcome. For this, (a) Develop hypothesis (b) Analyze process/data analysis (c) If hypothesis is correct, add cause to list of vital few. If hypothesis is incorrect, redefine it and go to step (b) or reject it and go to step (a). Hypothesis testing is nothing but detail analysis of whatever factors identified, whether they have important impact on the critical to Quality outcomes. Once factors are identified, next logical step is to reach to statistical conclusions for getting practical solutions, then finally develop plans foe taking corrective action. In analyze step, there is continuous brainstorming for identifying the factors affecting the process. DMAIC teams nurrow their search for causes by what we call the Analyze Cycle. The Cycle begins by combining experience, datal measures and a review of the process and then forming an initial guess or 53

Chapter 4

Six Sigma

hypothesis of the cause. The team then looks for more data and other evidence to see whether it fits with the suspected cause. The cycle of the analysis continues with the hypothesis being refined or rejected until the true root cause is identified and verified with data. One of the big challenges in the Analyze step is to use the right tools. Sometimes, by using simple tools, we can get real cause behind the defect. But, when the causes are complicated or when the relationship between the problem and other factors is complex and hidden, more advanced statistical techniques may be required to identify and to verify the cause.

IMPROVE PHASE Objectives of Improve Phase The goal of the DMAIC Improve Phase is to identify a solution to the problem that the project aims to address. This involves brainstorming potential solutions, selection solutions to test and evaluating the results of the implemented solutions. Often a pilot implementation is conducted prior to a full-scale rollout of improvements.

Identifying Potential Solutions In the first stage of Improve, it is important to include the people who are involved in performing the process. Their input regarding potential improvements is critical, and this step should not be completed by the project team alone. In fact, it is wise to maintain communication with those who work on the process throughout any Six Sigma quality improvement project. A variety of techniques are used to brainstorm potential solutions to counter the root cause(s) identified in Analyze, Encouraging participants to challenge rules and assumptions, ban excuses and think like small children can be very effective. For those who prefer a more structured brainstorming exercising, specific techniques are available, but often participants are more than able to produce a substantial list of ideas on their own. It is important during this stage that ideas not be judged nor eliminated. Even an outlandish idea that couldn't possibly be implemented as first suggested may lead to a related idea that is an ideal solution. Similar to other aspects of a Six Sigma project, assumptions about what can or cannot be accomplished should not be accepted without confirmation.

Selecting Solutions to Implement As in the prior step, it is a good idea to involve the people who work on the process that is being improved, be included in the decisions regarding which 54

Methods of Six Sigma

potential improvements to implement. With their help, the project team establishes criteria for evaluating the proposed improvements in an objective manner. Criteria usually include timeline for implementation, financial cost, the extent to which root causes are likely to be countered and the overall ease of implementation. Some teams consider other factors such is the amount of buyin that already exists for each possible change. Not all criteria are created equal, so the team may want to assign weights to each criterion prior to evaluating the proposed solutions against each one. Tools to assist with the evaluation include a priority matrix and a Pugh matrix, both of which use basic calculations and ratings to compare the solutions against each other or against a standard. Occasionally, a computer model or other simulation can be beneficial in the evaluation process. The goal of this step is to determine the appropriate solutions to implement using objective means, rather than making a decision based on assumptions or preferences. This is a common theme throughout the Six Sigma methodology. Implementing Improvements Planning the implementation is largely a matter of basic project management. The team needs to plan the budget and timeline of the implementation, determine roles and responsibilities, and assign and track tasks. Tools for planning include Gantt charts, planning grids and flowcharts. A deployment flowchart can be treated for the implementation process itself, as well as for the new process that will be followed as a result of the improvements being implemented. A data collection plan should be created similar to the one used during Measure, and the same data should be collected. After the data is collected, the team will compare the before and the after data to determine if the key metrics show improvement. It is often beneficial to use Failure Modes and Effects Analysis (FMEA) before implementing improvements to identify and address potential problems that may arise using the improves process. With this tool, the team lists risks and potential issues, and estimates the likelihood and severity of each one. Then the most critical are identifies and the team establishes a plan for minimizing each risk. One aspect of implementing improvements that is often overlooked is the impact of change on the people that are involved in and affected by the process. Basic change management procedure should be followed to smooth the way: communication, seeking input, and ensuring the necessary level of commitment from key players. 55

Chapter 4

Six Sigma

During the implementation itself, the team should be monitoring the process and act to address any issues that arise. In addition, the data should be reviewed periodically to ensure that appropriate data collection procedures are being followed. Evaluating Improvements For some DMAIC projects, it is app!'Opriate to pilot the improvements before proceeding to a full rollout. The most common piloting options include either making changes only in one group or department or making changes for a limited time period. The benefit of a pilot test is that the project team can ensure the changes result in the desired improvements before a full rollout. In addition, the team can gain insights to allow a more effective implementation during the full rollout. Whether evaluating the pilot results or the full rollout results, a variety of techniques are important for assessing the extent of improvement. Perhaps, the most important is recalculating the process sigma, so that it can be compared to the baseline processes sigma established earlier. Also common are frequency plots or Pareto charts to show before and after data. And th~ hallmark tool of DMAIC improvement projects, the control chart, is often employed to show the reduction in variation and improvement in performance. Both before and after data are plotted on the same chart, and the control limits are calculated and depicted separately for the twos stages. In all cases, statistical tests are typically used in addition to graphs and charts. The same tests that were used in Analyze can be used in Improve; ANOVA, regression and chi-square testing are common. Wrapping Up the Improve Phase By the end of the Improve phase, the project team has demonstrated that the solutions implemented do in fact counter the identified root causes and thus result in substantial improvement in the CTQ metrics. The new process is in place and the team is ready to' create a plan to maintain the gains and close out the project. (4) I -

Improve

Improve phase is about eliminating the causes of the problem or defect. After measuring and analyzing the situation, now you actually test your theory to find an equation to find an equation to solve the problem. For example, if you have found the rotten apples, now it's time for implementing a solution that will flag early, if the process is on a slippery slope to defect land. 56

Methods of Six Sigma

The Improve phase is where the process transItIOns into the solutions. Critical inputs have been verified and optimized toward the problem causes. Once problem causes are determined in the Analyze phase, the team finds, evaluates through testing and selects creative new improvement solutions. The team identifies and quantifies what will happen if needed improvements are not made and what will happen if the improvements take too long. This develops a cost-benefit analysis. At improve stage, the team develops an implementation plan with a change management approach that will .......... in implementing and adapting to the solutions and the changes that will result from them. In the Improve phase, you of these variables on Critical To the maximum acceptable range system can actually measure that and achieving results.

confirm key variables and quantify the effects Quality outcomes, i.e., you are able to identify of each variable to ensure the measurement variation. Improve is the step for final planning

•

Improve phase involves establishing a means of countering the root causes. Techniques involve brainstorming, FMEAC Failure Modes and Effect Analysis and piloting the improvement plan before rolling it out in full. Data analysis and charting techniques are used to confirm that performance has in fact improved sufficiently to meet project versus goals. CONTROL PHASE Objectives of Control Phase The primary objective of the DMAIC Control phase is to ensure that the gains obtained during Improve are maintained long after the project has ended. To that end, it is necessary to standardize and document procedures, make sure all employees are trained and communicate the project's results. In addition, the project team needs to create a plan for ongoing monitoring of the process and for reacting to any problems that arise. Standardizing and Documenting the Improvements The first step of the Control phase is to document and standardize the improvements that were rolled out during Improve. This takes several forms. The process map of the new process that was created during Improve should be reviewed and updated as necessary to reflect any modifications that may have occurred during rollout. It will be used for training and reference so that the new process will be clear. If many individuals or groups are involved in the process, a deployment flowchart should also be developed to clarify roles and tasks. 57

Chapter 4

Six Sigma

While a process map is a key component of the documentation of the new process, it is usually also beneficial to have a user guide which spells out the steps of the process and provides rationale. This is particularly important if mUltiple improvements were made and if the new process is substantially different from the original. Finally, the project team will ensure that everyone involved in the process receives proper training and that effective communication occurs. Training may involve actual classroom learning or may consist simply of distributing' the process documentation. This is a great opportunity to confirm that the process map and user guides are effective.

Creating a Process Monitoring Plan Perhaps the most critical aspect of Control is establishing a plan to monitor the new process and act when results are not up to spec, so that the project gains will be maintained. It is this component of Six Sigma projects that tends to distinguish them from basic project mana~ement methodology, whereby the project is closed out once the improvement is confirmed. The monitoring plan clarifies how the process performance will be continuously monitored, who will be notified if there is a problem and how that will happen and what response is required. The first part of the monitoring plan specifies the metrics that will be tracked to summarize process performance, as well as specifying how and how often they will be tracked. Also be sure to clarify who is responsible for doing it; usually it falls to the process owner. Typically the metrics used during Measure and Improve and established as Critical To Quality (CTQ) measures during Define are appropriate. The monitoring plan also indicates what constitutes satisfactory performance and what should be considered a red flag indicating possible problems. The team should brainstorm potential issues and appropriate responses for each. Again be sure to specify not only what needs to be done but who is responsible for making it happen. A control chart should be continuously updated so that the process owner can watch for process shifts or other signs that there may be a problem with process performance. If the process owner is not well versed in interpreting control charts, the project team should create a reference sheet indicating what the process owner should be looking for. If possible, use an automated process to flag the process owner when performance becomes questionable. Finally, since further change in the process environment is inevitable, the project team should develop a process for updating the new procedures when 58

Methods of Six Sigma

required. The update process Will include updating the process map and user guides, communicating the changes to all involved, and modifying the monitoring plan if necessary to reflect the changes. Common changes that the team should plan for include shifts in employee roles, changes in customer specs and replacements for existing technology.

4.2 DMAIC VERSUS DMADV We know that everything in business is a process, right? Sales people have a list of companies and contacts that they work in a certain fashion to produce a sale, production receives an order and schedules the manufacturing, the product is built, packaged, shipped and invoiced. When the packing department has a problem with their process, though, should they fix it with a DMAIC or DMADV (also referred to as DFSS) type project?

The Similarities of DMAIC and DMAOV Let's first look at the DMAIC and DMADV methodologies and talk about how they're alike. DMAIC and DMADV are both: • Six Sigma methodologies used to drive defects to less than 3.4 per million opportunities. • Data intensive solution approaches. Intuition has no place in Six Sigma - only cold, hard facts. • Implemented by Green Belts, Black Belts and Master Black Belts. • Ways to help meet the business/financial bottom-line numbers. • Implemented with the support of a champion and process owner.

The Differences of DMAIC and DMAOV DMAIC and DMADV sound very similar, don't they? The acronyms even share the first three letters. But that's about where the similarities stop.

DMAIC Define

• Define the project goals and customer (internal and external) deliverables

Measure

• Measure the process to determine current performance

Analyze

• Analyze and determine the root cause(s) of the defects

Improve

•

Control

• Control future process performance

Improve the process by eliminating defects

59

Six Sigma

Chapter 4

When to Use DMAIC The DMAIC methodology, instead of the DMADV methodology, should be used when a product or process is in existence at your company but is not meeting customer specification or is not performing adequately. DMADV Define

• Define the project goals and customer (internal and external) deliverabies

Measure

• Measure and determine customer needs and specifications

Analyze

• Analyze the process options to meet the customer needs

Design

• Design (detailed) the process to meet the customer needs

Verify

• Verify the design performance and ability to meet customer

When to Use DMADV The DMADV methodology, instead of the DMAIC methodology, should be used when: • A product or process is not in existence at your company and one needs to be developed • The existing product or process exists and has been optimized (using either DMAIC or not) and still doesn't meet the level of customer specification or six sigma level Occasionally a project is scoped as a DMAIC for incremental process improvement who it really required a DMADV methodology improvement. And it was a month into the project that you realized this! Don't be discouraged about the work you put into the DMAIC because (1) it's happened to more businesses than just yours, (2) you understand the process at a much greater detail than you did initially, and (3) you were able to practice not just DMAIC skills bpt also DMADV. DMAIC and DMADV and two different methodologies of the Six Sigma approach. Both methods are used to drive defects to less than 3.4 million instances. DMAIC and DMADV both are data intensive solution approaches that are implemented through Green Belts, Black Belts, and Master Black Belts. The 60

Methods of Six Sigma

process owner or champion is in charge of implementing the method in order to meet the businesslfinancial bottom-line numbers. While both methods sound similar, they are quite different. The DMAIC methodology should be used when a process or product is in existence but is not meeting customer specifications or performing adequately. DMADV on the other hand should be used when a product or process is not in existence and needs to be developed. The other reason for implementing DMADV will be if your existing product or process has been optimized (using DMAIC) and is still is not meeting customer specifications. In order to gain a better understanding of the processes, we will look at each one individually.

The DMADV Methodology The DMADV methodology is geared towards creating new products and business practices. Many steps are taken within the process to meet the customers' needs. There are five steps involved in the DMADV methodology. D

• Define.

Define the project foals and customer deliverables.

M • Measure. Measure and determine customer needs and specifications. A

• Analyze.

Analyze the process options to meet the customer's needs.

D

• Design.

Design the process to meet the customer's needs.

V - Verify.

Verify the design performance and ability to meet the customer's needs.

The entire process of DMADV will rely on the company's ability to understand the customer's needs and to determine which needs are not met. Most companies do not know where to begin when they are determining what their customer's needs are and do not know which needs would be unmet. Many manufacturing organizations will implement the Six Sigma method to help them design and develop new products, services and processes. You will begin by drawing up a business strategy that will include the improvement of products and systems and will ultimately result in overall customer satisfaction. DMADV differs slightly from the overall Six Sigma approach because it starts at the beginning of the design phase of a new product, service or process. DMADV is about new, not fixing what is already completed. 61

Six Sigma

Chapter 4

Each of the steps in the DMADV process represents something completely different. Starting with the Define step, you spell out the purpose of the project, the importance, scope, deadlines, and available resources. This may seem tedious as you will have numerous meetings to discuss planning for future products and services. During the Measure process you learn to understand the voice of the customer. This includes customer research, benchmarking, and technical research to arrive at CTQs (Critical To Quality Characteristics). Data collection, planning, and translating customer requests into designs are essential. The Analyze step will look back on the CTQs from step 2 and use them as your cornerstone for new ideas and design. Each idea or concept is evaluated and the best concept or design will be chosen. During the evaluation it is important to have customer feedback and input. During this phase there will be a lot of creativity, prototyping and support from the design team. The actual Design phase includes several people and teams. Development, testing, building, budgeting and many others will be included. During this time you will be involved in reviewing simulations process modeling. risk analysis, and process charts. Finally, you have reached the Verify stage. This last step helps all teams involved transition the product, process, or service to the customer.

The DMAIC Methodology The DMAIC methodology is about solving a problem with an unknown solution. This method is typically used when a product or process is not meeting customer specifications or performing accurately.

Similar to DMADV, there are 5 steps that define DMAIC: D

- Define.

M

- Measure. Measure the process to determine current performance.

A

- Analyze.

I

- Improve. Improve the process by eliminating defects.

C

- Control.

Define the project goals and customer deliverables.

Analyze and determine the root cause of the defects.

Control future process performance.

When you implement the DMAIC method; you must create a Six Sigma team. Your goal is to come as close to perfection as possible. Staring with the define phase, your team must come together to define your business objectives and the customer of the process as well as their needs and requirements. Six Sigma uses CTQs (critical to quality characteristics). The CTQs impact quality and create the roadmap for you to review the process and improve it. When 62

Methods of Six Sigma

you reach the measure phase, you will start with proper metrics. The success of the project will be identified and determined in order to establish a measurement baseline. During this phase 3 different metrics are established; input, process and output indicators. The process is then studied and a plan is defined to measure the indicators. After you have the measure phase in place. you will analyze your current processes to determine what causes problems and what need improvement. This phase focuses on finding solutions to eliminate the gap between existing performances and the desired performances. The improvement phase is often the most difficult for many people. During the improvement phase you will take the results from the analysis phase and find ways to improve them. Determine what improvements are needed and what will happen to your manufacturing organization if it takes too long to .find ways to improve them. During the improvement phase, you will begin implementing your findings and then measuring the results after they have been implemented. All the tools will be put into place during the control phase. Your key variables must remain the same within a given amount of time to ensure the process improvement gains are properly maintained. To end the process, your Six Sigma team will identify what the future steps can be to continually improve the process. DMAIC has one additional tool that you should add to your process, it is synergize. This step basically helps to ensure the gains the team has shared and has made. This will help your manufacturing organization keep clear communication. The overall Six Sigma process is a team effort, not individual. In order to implement the DMAIC method, you must have several roles laid out for success.

Implementation Roles Six Sigma identifies several key roles for its successful implementation. • Executive Leadership includes the CEO and other members of top management. They are responsible for setting up a vision for Six Sigma implementation. They also empower the other role holders with the freedom and resources to explore new ideas for [weasel words] breakthrough improvements. • Champions take responsibility for Six Sigma implementation across the organization in an integrated manner. The Executive Leadership draws them from upper management. Champions also act as mentors to Black Belts. 63

Chapter 4

Six Sigma

• Master Black Belts, identified by champions, act as in-house coaches on Six Sigma. They devote 100% of their time to Six Sigma. They assist champions and guide Black Belts and Green Belts. Apart from statistical tasks, they spend their time on ensuring consistent application of Six Sigma across various functions and departments. • Black Belts operate under Master Black Belts to apply Six Sigma methodology to specific projects. They devote 100% of their time to Six Sigma. They primarily focus on Six Sigma project execution, whereas Champions and Master Black Belts focus on identifying projects/functions for Six Sigma. • Green Belts, the employees who take up Six Sigma implementation along with their other job responsibilities, operate under the guidance of Black Belts. • Yellow Belts, trained in the basic application of Six Sigma management tools, work with the Black Belt throughout the project stages and are often the closest to the work.

Six Sigma methodologies have been implemented with several different organizations such as'; health care, call centers, industrial, software firms, manufacturing companies and many other fields. Six Sigma proponents claim that its benefits include up to 50% process cost reduction, cycle--time improvement, less waste of materials, a better understanding of customer requirements, increased customer satisfaction, and more reliable products and services. DMAIC, DMADV or any other method of Six Sigma will yield results if implemented as required Six Sigma and the DMAIC and DMADV methods go hand in hand in improving the way your business runs. Motorola developed the Six Sigma methodology. Motorola defines Six Sigma as a "management philosophy that emphasizes setting extremely high objectives, collecting data, and analyzing results to a fine degree as a way to reduce. defects in products and services."

Motorola developed Six Sigma for the following reasons: • To address major performance flaws in requirements and architecture • To improve on-time delivery and reduce defects • To improve robust design and performance benchmarking • To employ metric-based decision making for product development • To utilize templates and criteria to support rigorous gate reviews 64

Methods of Six Sigma

• To enable leadership to realistically set high expectations and demand evidence • To provide tools, tasks and deliverables that clarify and support meeting those high expectations Motorola believes in employing Six Sigma, an organization can be saved by cutting out waste and repetition, improving efficiency and saving money. The first step to improve quality in the organization is to identify the quality issues you may have. You should always look for defects and question areas that you think need improvement. You should also look for flaws in the process and measure and collect data you actually use. All other data is a waste of time and money. The only way to obtain results from DMAIC and DMADV or any other Six Sigma approach is to define the right data to measure. If you select the wrong data, you can wind up with inadequate results that will not help your company get as close to perfection as possible. Discuss your defects and narrow those down to individual processes and then you can start to find ways to achieve performance. 4.3 SUMMARY The DMAIC is problem solving process. DMAIC is powerful set of five steps for improvements. It's also interactive process, as it involves customers, data collection on, etc. 4.4 SELF ASSESSMENT QUESTIONS (1) Explain various steps of DMAIC.

(2) What is the difference between DMAIC and DMADU?

65

Chapter

Objectives After going through this chapter you will be able to understand: • Understand the process for implementing Six Sigma. • Understanding different tools and technique for Six Sigma implementation.

Structures: 5.1 Six Sigma Toolkit 5.2 Tools for Data Gatwering 5.3 Tools for Process and Data Analysis 5.4 Tools for Statistical Analysis 5.5 Summary 5.6 Self Assessment Questions

5.1 IMPLEMENTING SIX SIGMA 1. Keep Focus on Results Be very clear about the vision in term of decreasing costs, increasing sale, customer satisfaction, increasing profit. By using project tracking system,

Implementing Six Sigma

monitor results. Ask some question to know the root. Causes like "What is cause behind this"," What is its function?" You must work on vital few factors and not the trivial many.

2. Define Customer Requirement Business growth depends on, how you will understand and meet the customer expectations. Always be in touch with customer in terms of price, quality and delivery. For Defining Customer requirement, (a) Identify output or service situation (b) Identify Customer or customer segment (c) Review available data on customer needs, expectations, comments, complaints, etc. (d) Draft the requirement statement (e) Validate the requirement (f) Refine and finalize the requirement statement

3. Plan for Success Proper planning ensures that whatever decided, how it should be achived. It gives you the milestones and progress reports which indicate how well and fast you reach towards goal.

4. Communicate the Commitment Throughout Organization Company leaders, managers activity show their commitment for six sigma success. All environment sigma success. All environment should be free enough. So that employee should work free. Mentors champions should help employee and break down barriers to support the project.

S. Empower Key Human Resources Choose right people to lead Six Sigma project teams. Empower those key people. Within Six Sigma phases of Define, Measure, Analyze, Improve and Control, make sure that black belts and team members have essential quality tools for particular project.

6. Provide An-site Mentoring for Black Belts You must assure Black belts that, they will be full supported by you for their project. Their access to information or data, from within the company or from outside must be unrestricted. As you, implementation partner, members are available on site to guide and support them, they will provide the return on investment, i.e., profit. 67

Chapter 5

Six Sigma

7. Implementation Partner Who will Actively Assist in Screening and Selecting Six Sigma Projects Implementation partner are outside expert who engaged in introducing, training and supporting Six Sigma initiative and also to select right project and right people to tum it.

8. Be Patient at the Inception of Your Six Sigma Initiave. Six Sigma projects require the whole commitment in term of time, training and resources to deliver the end results. You and your employee must learn how to select projects, develop metrics, assign key roles and that takes time. Proper planning gives profitable outcomes.

9. Celebrate Success and Motivate Employee It's important to communicate and celebrate each milestone of success. This helps to keep your team's enthusiasm high and demonstrates, how six sigma is working. Tell employees, upper management, customers and vendors about the success of project.

10. Establish Benchmark Benchmark is a key step. By proper benchmarking for internal and external performance standards, you can conduct the right gap analysis to know where you are and where you should be.

11. Establish Project Baselines and Goals Project baselines means, you must know current defect level, your defect reduction targets and how much money you want to save and then accordingly you establish project baseline and goals to measure the progress of the project.

12. Get Advance Buy-in From Your Controller It's very important, when you are working with company money, you must work in line with company controller. You need to be operating from the same monetary baseline. You both same to agree on how you calculate real savings. If you work together your results can be verified by controller which further validates all six sigma work.

5.2 SIX SIGMA TOOLKIT There are some key tools in planning and executing six sigma projects. By understanding these tools, you get a clear perspective on how six sigma works. 68

Implementing Six Sigma

Tools for Generating Ideas and Organizing Information A. Brainstorming A brainstorming session is a tool for generating as many ideas or solutions as possible to a problem or issue. Many Six Sigma methods have brainstorming or idea generation as a starting point. The basic purpose of brainstorming is to come up with number of options for a task or a solution. Generally we get a long list of new ideas but some options are not practically possible. So skipping that we can shorten the list. The basic intension behind brainstorming is to get innovative ideas which helps in six sigma project.

B. Affinity Diagram Affinity diagram is a business tool used to organize ideas and data. It is one of the management and planning tool. The tool is commonly used within project management and allows large numbers of ideas to be sorted into groups for review and analysis. An affinity diagram is a grouping of ideas or options onto categories. An affinity diagram organizes a large number of ideas into their natural relationships. This method taps a team's creativity and imitation. It was created in the 1960's by Japanese anthropologist Jiro Kawakita. Its's common follow up to brainstorming and helps to synthesize and evaluate ideas.

C. Multivoting A tool used in six sigma to arrange and order by importance a list of ideas, problems, common causes and the like. The list may typically consist of a controllable few items usually 3-5 items. It is group effort where each and every member of the group is allowed to give a number of importance to each item. Those items receiving the highest rankings from the group should get further attention/consideration first. It's often used as a follow up to brainstorming. . Multivoting narrows a large list of possibilities to a smaller list of top priorities or to a final selection.

D. Structure Tree A structure tree is used to show the links or hierarchy of the ideas brainstormed. You may also use this .approach to tie major customer needs such as good value to more specific requirements such as low installation cost low maintenance cost and so on.

E. High Level Process Map (SIPOC Diag.) SIPOC is the tool used in the six sigma methodology, SIPOC diagram includes a high level map of the process that "maps out" its basic steps. Through the process, the supplies (S) Provide input (I) to the process. The process (P), 69

Six Sigma

Chapter 5

your team is improving adds value, resulting in output (0) that meets or exceeds the customer (C) expectations The SIPOC diagram is used to show major activities or sub processes in a business process, along with the framework of the processes, represented by the suppliers, Inputs, Outputs and customers. A SIPOC diagram us used to help for defining the boundaries and critical elements of a process.

F. Flow Chart (process Map) A flowchart represents an algorithm or process showing the steps or details of a process, including tasks and procedures, alternative paths, decision points and rework loops. Flowchart are used in analyzing, designing documenting or managing a process or program in various field. A flow chart can be map showing how it currently works or as "should be" map showing how it ought to work.

G. Cause and Effect Diagram This is very popular technique also called as fishbone diagram or Ishikawa diagram. When utilizing a team approach to problem solving there are often many opinions as to the problems root cause. One way to capture these different ideas and stimulate the teams brainstorming on root causes is the cause and effect diagram, commonly called cause and effect diagram or a fishbone diagram. The fishbone will help to usually display many potential causes for a specific problem. It is particularly useful in a group setting and for situations in which little quantitative data is available for analysis Procedur~s

Policies

Cause

Effecty

Plant 70

People

Implementing Six Sigma

Cause and effect diagrams do not tell you the right cause, rather they help you to develop educated guesses or hypothese about where to focus measurement and further root-cause analysis

5.3 TOOLS FOR DATA GATWERING (a)

Sampli~

Sampling is the process of selecting units (eg. People, products, organizations) from a population of interest so that by, studying the sample we may fairly generalize our results. Counting everything that goes on in a process can be very expensive time consuming. So you can count a relatively few items and draw conclusions for all sampling which can save money and time but still gives excellent data to measure or analyze a problem. (b) Operational Definitions An operational definition when applied to data collection is a clear concise detail definition of a measure. The need for operational definition is fundamental when collecting all types of data. It is particularly important when a decision is being made about whether something is correct or incorrect ego Measurement is meaningless if people don't count or categorize things the same way. An operational definition is a clear, detailed and understandable description of how to interpret data or events in your process Voice of the Customer (VOC) Methods As Customer is the centre point of all Six Sigma activity, it is important for the organization to have techniques which helps an organization to collect the data of external customer assess and prioritize requirement and provide on goving feedback to organization, 'vocinclude surveys market research requirment' analysis newer techniques like data mining, warehousing, etc. Check Sheets and Spreadsheets Check sheets are forms used to collect and to organize data. Basically check sheets are designed by Black Belt and/or team with 2 objectives. 1. To ensure whatever data collected should include all necessary facts. 2. To make data collection as simple check sheets include tables surveys diagrams which are used to indicate where errors or damage occurred. Spreadsheets are the place where check sheet data is collected and organized. 71

Six Sigma

Chapter 5

5.4 TOOLS FOR PROCESS AND DATA ANALYSIS Process Flow Analysis The objectives of Process Flow analysis include, Determining the complexity, structure and defect ratings by program sub-system and system. Summarizing data for use in planning maintenance and or redevelopment projects. By using flowchart you can start to scrutinize the process for redundancies un-necessary decision point etc. If you add data about the process other problem like defects delays, bottlenecks and rework can also emerge. Process analysis is one of the way to find root causes of problem. Value and Non-Value Added Analysis In value and non-value added analysis a detail process map is assessed, whether it gives real benefit to external customers. As business process grows, the added task like inspections, extra features analysis, reports. Whethere these activities have really added value or benefits to the customer who pays for it. It's never possible to eliminate all non value added activities. But upto some extent, we can eliminate the dumb things, which are unnecessary in a process and drain on resources. Charts and Graphs Charts and Graphs are visual representation of data. Many times peoples are more comfortable with pie chart or line graph instade of reading tables of numbers. There are various types of graphs and Charts. (a) Pareto Chart A Pareto Chart is a special type of bar chart where the values being plotted are arranged in descending order. The graph is accompanied by a line graph which shows the cumulative total of each category, left to right. It is specialized bar chart that breaks down a group by categories and compares them from largest to and compares them from largest to smallest. It's used to look for the biggest pieces of a problem or contributors to a cause. 72

Implementing Six Sigma

Pareto chart often represents the most common sources of defect, · the highest occurring type of defect or the most frequent reasons for customer complaints. It figure out which of the few issues or problems have the most impact, so you can focus your project and solution on those few, most powerful issues. 100%

168.4 117.6 100.8

60%

84

50%

67.2

40%

50.4

boo-""'7'~"'"

30%

33.6

20%

16.8

10%

o Care Transport there slept

Simple Ex. of Pareto chart using Hypothetical Data showing the relative frequency of reasons for arriving late. (b) Histogram

Histogram is graphical display of tabulated frequencies shown as bars. It shows what proportion of causes fall into each of several categories. Histogram shows the distribution or variation of data over a range: size, cost, age, length of time, weight, etc. 14

12 8 6 4 2

o

73

Six Sigma

Chapter 5

An example Of Histogram of the height of 31 Black Cherry Trees. Correlation A scatter plot gives direct relationship between two factors in a process, usually to see wheather they are correlated ie change in one is linked with other. If two measures show relationship, one may be causing the other. But it is not always true. If increase in one factor shows increase in other then it is positive correlation and if increase in one shows decrease in other, then it is negative correlation. Run chart or Trend Chart Pareto charts and histograms don't variation over time. Run charts (often known as line graphs outside the quality management field) display process performance over time. Upward and downward trends, cycles, and large aberrations may be spotted and investigated further. In a run chart, events, shown on the y axis, are graphed against a time period on the x axis. For example, a run chart in a hospital might plot the number of patient transfer delays against the time of day or day of the week. The results might show that there are more delays at noon than at 3 p.m. investigating this phenomenon could unearth potential for improvement. Run charts can also be used to track improvements that have been put into place, checking to determine their success. Also, an average line can be added to a run chart to clarify movement of the data away from the average Run Charts

\

\

--~-

;m Infection Rata %

74

~\j\

--------------~---

•

Infection Rate % Run Alert

Mean oflnfectioo Rate %

Implementing Six Sigma

5.5 TOOLS FOR STATISTICAL ANALYSIS The statistical part of the tool kit contains many different tools and formulas. Some of the methods are.

Test of Statistical Significance: These tools look for differences in groups of data to see weather they are meaningful. These test include Ch-square, t-test and analysis of variance (ANOVA)

Correlation and Regression: This is more complex include regression coefficient, simple regression mUltiple regression. Surface response test and so on. These tools test for strength, presence and nature of links among variables in a process or a product, such as how tire pressure, speed affect gas mileage.

Design of Experiments: (DOE) It is collection of methods for developing and conducting controlled assessments of how a process or a product performs, usually testing two or more characteristics under different conditions. In addition, DOE can be essential to get maximum benefit out of solutions.

5.6 SUMMARY The chapter explain different tools used for six sigma implementation.

5.7 SELF ASSESSMENT QUESTIONS (1) Explain the process of six sigma implementation?

(2) What are different tools for generating ideas? (3) Explain tools of data gathering and data analysis? (4) What are different tools for statistical analysis?

75

Chapter

Objectives After going through this chapter you will be able to understand: • To understand, what is overall six sigma and how it helps the manager to develop. • This chapter gives guidelines to manager about six sigma.

Structures: 6.1 List of Six Sigma Companies 6.2 Summary

• -Six Sigma is the optimum level of quality for organizations averaging 3.4 defects per million opportunities. It can be applied to manufacturing as well as service industry. • Six Sigma is not just theoretical program, but it include statistics and training program. Though, it is based on quality circle. TQM, it is not just a quality program. • Six Sigma include statistical tools which eliminate variation, defects and waste from all business processes which gives significant financial results. • In every business process, product or service, hidden defects are actually costing the company. Six Sigma find out those defects and

Six Sigma and Managers

eliminate it, so that you can reach quality standards expected by the customer. • Customer is focal point of Six Sigma. So efforts are made to know what exactly required by customer? What are their CTQ (Critical TO Quality) Criteria? • Study each and every aspect of the process, separate value added activities and non value added activities to isolate hidden waste streams. • Benchmark the processes and determine where and why the performance differ. • Six Sigma success depends on teamwork. It requires committed work. It requires leaders to take initiative, support the team and implement the six sigma throughout the organization. • Six Sigma point out direct relationship between quality, Cost and Customer satisfaction. By improving the business process, we are able to reduce waste and eliminate the defects which can decreases overall cost. • To get six sigma to be implemented in the organization, first take Intiative, for implementing it. Regularly communicate with executives for implementation of Six Sigma project ensure everyone in the organization is committed for Six Sigma project. • Before starting actual project first know how much you and your people actually know about six sigma tools, guage the extent and depth of training. Plan for successful six sigma implementation. • Managers must understand and define key operational roles, responsibilities. Involve executive managers for promoting it throughout the organization; select Champions, Black Belt, Master Black Belt Candidates Carefully, which exactly implement Six Sigma throughout organization. • Six Sigma is based on DMAICIDMADV method which is five phase process ie Define, measure, analyze, improve, control/design, verify. • As Six Sigma project succeed the leadership roles will be critical. Leader must be aware about project stages and ready to understand each data. • Six Sigma uses many statistical and scientific tools. Manager must know each tool, its relevance and interpret results. Managerial leadership must be active, Flexible and Supportive. • Manager plays key role in sustaining six sigma. Manager must sustain and expand the initial enthusiasm, commitment and training. Manager 77

Chapter 6

Six Sigma

must establish and maintain a good communication with everybody. Manager should keep awareness through meetings, newsletters, e-mail, etc. • Manger should support continuous training programs in the whole organization. Manager promote to increase the number of champions and master Black Belts.

6.1 LIST OF SIX SIGMA COMPANIES The following companies claim to have successfully implemented Six Sigma in some form or another: • • • •

3M Acme Markets Advanced Micro Devices Agilent Technologies

• Air Canada • ALCAN • Amazon.com • AXA • Bank of America • Bechtel Corporation • • • •

Boeing CAE Aviation Training Canada Post Caterpillar Inc.

• CIGNA • Cognizant Technology Solutions • Computer Sciences Corporation • Cummins Inc. • Deere and Company • Dell • Delphi Corporation • Denso 78

• DHL • Dominion Resources • Dow Chemical Company • DSB Bank • DuPont • Eastman Kodak Company • • • • •

EMC Flextronics Ford Motor Company General Electric General Dynamics

• Genpact • GlaxoSmithKline • • • • • • •

Heinz Co. Honeywell Hertel HSBC Group Mando Corporation McKesson Corporation McKesson Corporation

• • • •

Merrill Lynch Methodia Microflex Inc. Mototrola

Six Sigma and Managers

• Mumbai NMTBSA • National Europe

Dabbawala Australia

or

Group

• Network Rail • Nortel Networks • Northrop Grumman • Organo Corporation • Owens-Illinois

• The McGraw-Hill Companies • Toshiba Matsushita Display Technology • TRW • TSYS (Total System Services) • Ueki Corporation • United States Air Force • United Army • United States Marine Corps

• Path eon • Precision Castparts Corp.

• Idearc Media

• Quest Diagnostics

• Intrawest ULC

• Raytheon • Samsung Group

• Inventec

• SGL Group • Shinhan Bank • Shinhan Card • Shop Direct Group • Siemens AG • SKF • Starwood Hotels and Resorts Worldwide • Staples Inc. • Sterlite Optical Technologies • Teradyne • Trane • Textron

• Ingram Micro

• JEA • Korea Telecom • Kraton Polymers • • • •

KTF LG Group Lockheed Martin United States Navy

• United Health Group • Vodafone • Volt Information Sciences • Whirlpool • Wipro • Xerox

6.2 SUMMARY This chapter helps to understand six sigma and how manager should support to implement six SIGMA in organization.

79

Chapter

Structures: 7.1 Basic Statistics 7.2 Graphical Analysis 7.3 Process Mapping 7.4 The XY Matrix 7.5 Measurement System Analysis 7.6 Process Capability Tool 7.7 Pareto Chart 7.8 Multivariate Study 7.9 Case Study 7.9.1 How to Conduct a Hypothesis Testing 7.10 Summary 7.11 Self Assessment Questions Six sigma methodology require some statistical tools for implementation. These tools are very focuseds specific and sequencial. They give some information which help to improve the performance by reducing error. Six sigma implementation require proper planning to improve the process. For the success

Quick Overview of Six Sigma Tools

of six sigma, whatever tools require, they are critical and complicated in nature, so it requires proper planning to get expected result.

7.1 BASIC STATISTICS Mean, Mode and Median Mean: Mean is sum of all the values divided by no. of values. It is also called as "arithmetic mean" or "average" it is a measure of central tendency. It is rigidly defined, easy to understand and calculate. Take an example like, you track the times for 20 employees each handle 5 jobs. That gives 100 data points. The times vary widely: 30 minutes. 15 minutes, 18,17 you add all 100 data points and divide the total by 100 to determine average. Suppose that the average time is 15 minutes and then decide your response time objective and find the ways to achive that objective. Mode: It is the value which occurs most frequently in the given data, Thus, it is the value which occurs with highest frequency ie the most typical value of the distribution, for example, suppose in 200 data points, the mode is 15 minutes, so it is possible to set an objective that job should be completed to 15 minutes. But mode could be anywhere along the spectrum for example, we could find that 5 jobs took only 20 minutes, but may 4 jobs takes 30 minutes, 3 jobs takes 23 minutes. So mode may not tell us much about the data. Median: Next statistical tool is median. Median refers to the value of the middle item of distribution when the data is arranged in an ascending or descending order. We just line up our 100 times from lowest to highest and final the value midway between the lowest and the highest. Ideally mean and median should be same. But too long or too short time for job completion could make median lower or higher than the mean. 7.2 GRAPHICAL ANALYSIS We can represent data graphically so we can analyze patterns and interrelation ships. Tools for graphical analysis.

(1) Histogram Histogram is graphical display of tabulated frequencies. Histogram is a group of vertical bar graphs that shows the distribution of one variable in a group of data. It shows what proportion of causes fall into each of several categories. Histogram shows the distribution or variation of data over a range. Histogram reveals patterns in performance. Histogram is the measure of central tendency. 81

Chapter 7

Six Sigma

Here's now we use histogram to represent 100 data points. You make a two axis graph. Along with horizontal axis you plot your job times in bins, like under 7 minute, between seven to ten, ten to thirteen and so on. Histogram visually represents the distribution of all 100 data points - how many 6 minute jobs, how many 5 minute, 14 minute jobs. It also reveals patterns. For example, there might be a lot of jobs completed between seven to fourteen minutes, may be very few between fifteen to twenty. Or the jobs completed may show bell shaped curve with highest point in the middle and symmetrical sloping away from the center. Histogram also shows the distribution of element in the process. But all distributions are not normal. Sometimes curve on one side is longer distribution IS said to be skewed sometimes curve have two peaks. After knowing mean mode and median, next thing is dispersion. Dispersion is the degree to which values for a variable' differ from each other. We use different measurement for dispersion and we came across variation. Variation affect the customer for e.g, suppose machine operator take 6 minutes to complete one jobs if a job takes longer than 6 minutes say 8 minutes your customer is going to feel the effects of spread of the data which is variation. So by using mean, mode and median we measure central tendency of data. Now to measure the dispersion of data, we can calculate range variance and standard deviation. Now to measure the dispersion of data, we can calculate range variance and standard deviation. (a) Range: It is the difference between largest value (L) and the smallest value (s) in the given distribution. If we consider our example ie suppose lowest time to complete a particular jobs is 5 minute and highest time to complete the job is 25 minutes then the range will be 20 minutes. The figure shows a lot of spread and it doesn't tell enough. So we use other ways of measure of dispersion ie variance and standard deviation. They provide more specific, meaningful information about the dispersion of data points. (b) Variance: Variance is the amount by which a value differs from the mean. Calculated as the average squared deviation of each number from its mean. So to calculate variance of given data, First up all we have to calculate the mean of data, then measure the amount by which each point deviates from the mean and then square that deviation. If variance is more specific than range, then by using statistical software, you move forward. 82

Quick Overview of Six Sigma Tools

(c) Standard Deviation: Standard Deviation is the most commonly used measure of dispersion. It is defined as the positive square root of the arithmetic mean of the squares of the deviations of all the observations from their arithmetic mean In simple terms, the average distance from the mean (d) Run Chart: Run chart known as line graphs and display process performance over time, Run chart is a graph that plots performance data over time for a process representing the data usually as a line chart, It presents and compares numeric data, indicating changes over time with a line connecting data points. Now we move towards key tools that will be essential to track defects and quantify them. 7.3 PROCESS MAPPING Process map is nothing but description of how a particular process works. It is nothing but flowcharts of the steps in a process ie. Operations decision points, delays, movements, handoffs, rework, controls and inspections. Process Mapping is used during Measure phase of DMAICIMAIC Managing and % improving processes is the core of six sigma. And in order to truly understand a process, identify challenges and make improvements, the details of the process must be clarified. Often business leaders believe that they know, how a process is performed when in fact there can be great deal of details and variation. Only by creating a detailed process map based on input, from those who perform and reaching agreement that it does in fact reflect reality rather than expectation, can leaders and project managers gain a full understanding of an existing process. Fundamentally process mapping is to develop an accurate, comprehensive picture of the entire process system. But along with, now a process is working, they have key role in layout detail that how a process should be performed. This is beneficial whether a new process is being introduced, or an existing process is being modified or new employees are receiving training on conducting process. Creating a process map leads to increased awareness of inefficiencies and related problems. Simply talking through various steps, decision points and causes of variation among employees or situations can addressed in order to improve performance.

83

Chapter 7

Six Sigma

The standard tool is flowchart. A standard activity flowchart will provide information about potential bottlenecks, delays and other common sources of inefficiency and error. Process Maps and flow charts are the most commonly used methods for designing and analysing processes and are the most widely used as problem solving tools. By graphically representing the logical steps of a process, promote a greater and shared understanding of "how the work is done" and this presents opportunities for identification of problems and non value adding steps, which can lead to process improvements. Manager can use process mapping to serve as check and balance system for reaching the desired outcome Process mapping is also known as Process charting or flow charting. It is one of the oldest, simplest and most valuable technique for steam lining work. It is also subtle and requires experienced facilitators for best results. A process map visually depicts the sequence of events to build a product or produce an outcome. It may include additional information such as cycle time, inventory and equipment information. The Next figure shows a Process Map example and instruction for construction

84

Quick Overview of Six Sigma Tools

Followoll product