Six Sigma: Streamlining Operations and Improving Quality

1. Six Sigma Quality Engineering Week 1&2 Chapters 1,2 &3

2. Chapters 1,2 & 3 Outline • Values of Six Sigma • Development & Timeline of Six Sigma Management • Benefits of Six Sigma Management • Voice Of the Process (VOP) • Variation in a Process • Voice Of the Customer (VOC) • Roles and responsibilities in Six Sigma Management • Technical terminology of Six Sigma Management • Six Sigma Methodology (DMAIC) • Six Sigma Macro Model (Dashboards)

3. Values of Six Sigma Six Sigma is a process that enables companies to increase profits dramatically by streamlining operations, improving quality, and eliminating defects or mistakes in everything a company does, from raw materials to finish goods. A Six Sigma process generates a defect probability of 3.4 parts per million (PPM). • Key activities in Six Sigma are: • Understanding customer needs (in quantifiable terms) • Translating the needs into the measurable outcomes • Key objectives in Six Sigma are: • Understanding & measuring the process inputs • Looking at the root causes of variation

4. The Focus of Six Sigma Y= f (X) X . . . X Y • 1 N n Independent Dependent • n Input-Process Output • n Effect Cause • n Symptom • Problem n Monitor • Control n If we are so good at X, why do we constantly test and inspect Y?

5. Six Sigma Companies • Allied Signal • Boeing • Caterpillar • General Electric • John Deere & Co • Lockheed Martin • Motorola • Polaroid • Sony s PPM The sigma scale of measure is perfectly correlated to such characteristics as defects-per-unit, parts-per million defective, and the probability of a failure/error. 2 308,537 3 66,807 4 6,210 5 233 6 3.4 Process Capability Defects per Million Opportunities

6. Timeline of Six Sigma Management 1978 Poor Quality!!! Motorola sells it TV business. When asked why, VP states “QUALITY STINKS!” 1980 Corporate Quality Officer appointed 1981 Training Center established 1985 Began to measure total defects/unit 1987 Corporation adopts Six Sigma program, Six Sigma goal to be achieved by 1992 1988 Motorola wins Malcolm Baldridge Award at the corporate level 1990 Six Sigma Research Institute formed in Ill.

7. Timeline of Six Sigma Management 1992 Blackbelt infrastructure developed by SSRI implemented at Motorola, Kodak, TI, IBM, and Digital. 1993-5 Motorola hires 40,000 new employees and removes the 40 hour quality training program. Revenue growth averages 27% growth. 1994 Motorola owns 60% of the wireless phone market. Six Sigma Academy formed. 1998 Motorola owns 34% of the wireless phone market. Revenue growth is 5%. Shareholder value is 1%; it had averaged 54% in previous 3 years.

8. Motorola Problems • Did not co-operate across division • Ignored customer requirements • Diluted culture with new employees without training • Did not realize that Sigma had limitations • Was an internally focused program

9. Benefits of Six Sigma Management • Improve process flows • Reduce total defects • Reduce process cycle time • Enhance Customer and Employee satisfaction • Help reduce inventory • Help improve capacity and output • Help increase quality and reliability • Help decrease product costs • Help improve product delivery to custumer

10. Voice Of the Process (VOP) • A process is a collection of interacting components that transform inputs into outputs toward a common aim. Inputs Process Outputs Components Machines Operators Assembly Test Final Inspection Ship to Customer Customer receives product

11. Variation in a Process • What is Variation? • The enemy of certainty • The enemy of customer satisfaction • Drives the unknown • Adds to customer (and employee) disbelief • Adds to lack of confidence in the ability of processes • Increases risk that a result will not meet expectations • Variation is a driver of defects For any process,variationis the main reason for poor performance... Variation is the key focus of Six Sigma

12. Variation in a Process • Feedback Loops • A feedback loop relates information about outputs from any stage or stages back to another stage or stages to make an analysis of the process. Inputs Process Outputs Feedback Loop

13. Voice Of the Customer (VOC) • It is vital that we understand and are able to quantify what is critical to the customer's satisfaction. LSL USL No Good Loss Unhappy Customer No Good Loss Unhappy Customer Good No Loss Nominal Value

14. Voice Of the Customer (VOC) • Critical to Customer’s satisfactions: • High quality • Lowest possible price • Products deliver on time Therefore Producers should bring forth these products in a manner that minimizes cost and cycle time and maximizes profit

15. Voice Of the Customer (VOC) • We need to ask ourselves... • How easy it is for our customers to do business with us? • Are we making assumptions about what customers need? • How often do we ask our customers (internal and external) what they need? • Is this information properly communicated throughout our organization. We must place a value and emphasis on the customer, take measurements and measure inputs, not just outputs

16. Customer Satisfaction? Do you have dissatisfied customers? • Historically 1 in 25 unsatisfied customers express their dissatisfaction • 1 unsatisfied customer typically tells 7-16 others. • It cost about five times more to attract a new customer as it does to keep an old one.

17. Six Sigma Companies • Produce vastly superior, reliable, and customer-satisfying products… • Faster, better, cheaper, and more efficiently than their competitors… • While translating higher quality for their customers into lower costs for themselves .

18. Roles and responsibilities in Six Sigma Management • Senior Executive • Provides the impetus, direction & alignment necessary for Six Sigma ultimate success. Senior Executive should: • Study Six Sigma management • Link company’s objectives to Six Sigma projects • Champion Six Sigma projects • Constantly review Six Sigma projects progress • Executive Committee Member • They are the top management of an organization. Executive Committee Members should: • Deploy Six Sigma throughout the organization • Prioritize and manage Six Sigma portfolio • Assign champion, BB and GB to Six Sigma projects • Remove barriers to Six Sigma management • Provide resources for Six Sigma management

19. Roles and responsibilities in Six Sigma Management • Champion • Take a very active sponsorship and leadership role in conducting and implementing Six Sigma projects. Champions should: • Identify the project on the organizational dashboard • Provide an ongoing communication link between the project team and Executive committee • Keep the team focused on the project by providing direction and guidance • Assure that Six Sigma methods and tools are being used in the project • Master Black Belt • Takes a leadership role as keeper of the Six Sigma process and advisor to executives or business unit managers. Master Black Belt should: • Counsel senior executives and business unit managers on Six Sigma management • Continually improve and innovate the organization’s Six Sigma process • Apply Six Sigma across across both operations and transactions-based process • Mentor Green Belts and Black Belts

20. Roles and responsibilities in Six Sigma Management • Black Belt • Is a full time change agent and improvement leader. Black Belts should have the following characteristics: • Technical and managerial process improvement/innovation skills • Understand the psychology of individuals and teams • Not intimidated by upper management • Has a customer focus • The responsibilities of a Black Belt include: • Communicate with the champion and process owner about progress of the project • Help team members design and analyze experiments • Provide training in tools and team functions to project team members • Coach Green belts leading projects limited in scope

21. Roles and responsibilities in Six Sigma Management • Green Belt • Is an individual who works on projects part time, either as a team member for complex projects or as a project leader for simpler projects. Green Belts have the following responsibilities: • Define & review project objective with project’s champion • Facilitate the team through all phases of the project • Analyze data through all phases of the project • Train team members in the use of Six Sigma tools and methods through all phases of the project • Process Owner • Is the manager of a process. The process owner should be identified and involved in all Six Sigma projects relating to the process owner area. A process owner has the following responsibilities: • Empower employees to follow and improve best practice methods • Accept and manage the improved process after completion of the Six Sigma project • Understand how the process works, the capability of the process, and the relationship of the process to other processes in the organization

22. Technical terminology of Six Sigma Management • Critical-To-Quality (CTQ): Is a measure of what is important to a customer. • Defect: Is a nonconformance on one of many possible quality characteristics of a unit that causes customer dissatisfaction • Defects per Million opportunities (DPMO): A quality metric often used in the Six Sigma process. It is calculated by the number of defects observed divided by the number of opportunities for defects compared to 1 million units. • Yield: Is the proportion of units within specification divided by the total number of units. • Rolled Throughput Yield (RTY): Is the product of the yields from each step in a process.

23. Six Sigma Methodology (DMAIC)

24. Six Sigma Methodology (DMAIC)

25. Six Sigma Macro Model (Dashboards) • A dashboard is a tool used by management to clarify and assign accountability for the “critical few” key objectives, key indicators, and project tasks needed to steer an organization toward its mission statement. • There are four basic categories of dashboard key objectives: • Financial Key Objectives • Process Improvement Key Objectives • Innovation/Customer Satisfaction Key Objectives • Employee Growth and Development Key Objectives

26. Questions? Comments?