Development of Six Sigma

1. Development of Six Sigma • Motorola launched the Six Sigma program in the 1980s • General Electric initiated the implementation of Six Sigma in the mid-1990s • Organizations in all industries have applied Six Sigma in recent years • Six Sigma has replaced TQM and BPR as the key strategy for quality improvement

2. Definitions • s – Standard Deviation, a measure of variability • Six Sigma – A quality improvement philosophy that focuses on eliminating defects through reduction of variation in a process • Defect – A measurable outcome that is not within acceptable (specification) limits

3. TQM Versus Six Sigma

4. Key Success Factors forSix Sigma • Committed leadership from top management • Integration with existing initiatives, business strategy, and performance measurement • Process thinking • Disciplined customer and market intelligence gathering • A bottom-line orientation and continuous reinforcement and rewards • Training

5. Six-Sigma Metrics – Measuring Defect Rate • Defects per unit (DPU) = number of defects discovered  number of units produced • Defects per million opportunities (DPMO) = number of defects discovered  opportunities for error  1,000,000

6. Estimating Defect Rate – Process Capability Index (Cp) • USL/LSL : Upper & Lower Specification Limit • Cp = (USL –LSL) / (6s) • Example : Time to process a student loan application (Standard = 26 working days) • Specification Limits : 20 to 32 working days • s : 2working days • Cp = (32 – 20)/ (6*2) = 1.00 (Three Sigma)

7. Cp Index and DPMO

8. Estimating Process Capability Index from A Sample - Cpk Index • XBAR : average outcome from a sample • S : standard deviation from a sample • Cpk = min { (USL-XBAR) / (3S), (XBAR-LSL) / (3S) } • Example : XBAR = 25 days, S = 3 days • Cpk = min { (32-25)/(3*3), (25-20)/(3*3)} = min {0.77, 0.55} = 0.55

9. Six-Sigma Quality (Cp =2 with Mean Shifting from the Center) Ensuring that process variation is half the design tolerance (Cp = 2.0) while allowing the mean to shift as much as 1.5 standard deviations.

10. k-Sigma Quality Levels • Six sigma results in at most 3.4 defects per million opportunities

11. GE’s Six-Sigma Problem Solving Approach • Define • Measure • Analyze • Improve • Control DMAIC

12. DMAIC - Define • Identify customers and their priorities • Identify business objectives • Select a six sigma project team • Define the Critical-to-Quality (CTQ’s) characteristics that the customers consider to have the most impact on quality

13. DMAIC - Measure • Determine how to measure the processes • Identify key internal processes that influence CTQ’s • Measure the defect rates currently generated relative to those processes

14. DMAIC - Analyze • Determine the most likely causes of defects. • Identify key factors that are most likely to create process variation.

15. DMAIC - Improve • Identify means to remove causes of the defects. • Confirm the key variables and quantify the effects on CTQ’s • Identify maximum acceptable ranges for the key variables and a system to measure deviations of the variable • Modify the process to stay within the acceptable ranges

16. DMAIC - Control • Determine how to maintain the improvement • Put tools in place to ensure that the key variables remain within the maximum acceptable ranges under the modified process

17. Tools for Six-Sigma and Quality Improvement • Elementary and advanced statistics • Product design and reliability analysis • Measurement • Process control & Process improvement • Implementation and teamwork • Customer survey and feedback • Lean thinking

18. Organization for Six Sigma • Project Champions – project selection and management, knowledge sharing • Master Black Belts – instructors, coaches, technical leaders • Black Belts – project team leaders and team members • Green Belts – project team members, temporary team members