Basic Concepts of Six Sigma July 2, 2009 Group 4: Jeff Crosbie, Wajeeh Qazi, Chris Roan, Otto Velasquez

1. Basic Concepts of Six Sigma July 2, 2009 Group 4: Jeff Crosbie, Wajeeh Qazi, Chris Roan, Otto Velasquez

2. Basic Concepts of Six Sigma • 20 years of Six Sigma – origins and history • An overview of Six Sigma methodology • Six Sigma tools and support products • The future: Six Sigma challenges and next steps

3. Origins of Six Sigma • Six Sigmabuilt on TQM • Deming • Taguchi • Juran • Continuous Improvement • “If you can’t measure it, you can’t manage it.” • --W. Edwards Deming (1900 - 1993) • Evolved into a management philosophy – value creation and improvement for customers and shareholders • Six Sigma = TQM (or CQI) + Stronger Customer Focus + Additional Data Analysis Tools + Project Management + Financial Results

4. History of Six Sigma • Motorola “Invented” Six Sigma in 1985 / 1986 • Developed by engineers Bill Smith and Mikel Harry as a metric used to describe expected level of design margin and measure product quality • 1st recipient of Baldrige National Quality Award 1988 • AlliedSignal (Honeywell) – Larry Bossidy (early 90’s) • Credited Six Sigma with company turnaround (1994 -1998) • GE – Jack Welch (1995 Presentation by Larry Bossidy) • Operating margin improved from 14.8% (1996) to 18.9% (2000) • After Welch adopted Six Sigma more than a quarter of FORTUNE 200 followed suit “We have tended to use all our energy and Six Sigma science to move the mean [delivery time] to… 12 days. The problem is ‘the mean never happens,’ and the customer is still seeing variances… a heroic 4-day delivery time on one order, with an awful 20-day delay on another, and no real consistency… variation is evil.” – Jack Welch, former GE CEO

5. Companies using 6 Sigma Quest Diagnostics, Inc Raytheon Samsung Group SGL Group Shinhan Bank Shinhan Card Siemens AG SKF Vodafone Starwood Hotels & Resorts Sterlite Optical Technologies Teradyne Trane Textron The McGraw-Hill Companies TSYS (Total System Services) United States Air Force United States Army United States Marine Corps United States Navy UnitedHealth Group Wipro EMC Flextronics Ford Motor Company General Dynamics Genpact HSBC Group Ingram Micro Korea Telecom Kraton Polymers KTF LG Group Littlewoods Shop Direct Group Lockheed Martin Mando Corporation McKesson Corporation] Merrill Lynch Microflex, Inc. Mumbai's Dabbawala National Australia Group Europe Network Rail Nortel Networks Northrop Grumman Patheon 3M Advanced Micro Devices Agilent Technologies Air Canada Amazon.com AXA Bank of America Bechtel Corporation Boeing Canada Post Caterpillar Inc. CIGNA Cognizant Technology Solutions Computer Sciences Corporation Cummins Inc. Deere & Company Dell DHL Dominion Resources DSB Bank DuPont Precision Castparts Corp. http://en.wikipedia.org/wiki/List_of_Six_Sigma_companies

6. Origin of Six Sigma processes • Probability density function: • Gaussian (normal) distribution • (aka Bell Curve) • Defects: • data points that fall outside upper and lower specification limits • Long Term process shift: • 1.5  shift from mean  Results: 1  = 690,000 DPMO = 31% efficiency 2  = 308,000 DPMO = 69.2% efficiency 3  = 66,800 DPMO = 93.32% efficiency 4  = 6,210 DPMO = 99.379% efficiency 5  = 230 DPMO = 99.977% efficiency 6  = 3.4 DPMO = 99.9997% efficiency http://www.sixsigmaspc.com

7. Why Six Sigma processes?

8. Six Sigma Methodology--Wajeeh Qazi • Six Sigma core methodologies • Existing processes – DMAIC method • Design for Six Sigma – DFSS • Six Sigma organizational roles • Keys to success in implementing Six Sigma

9. Six Sigma methodology

10. DMAIC method – existing processes • Define requirements and customer expectations; current process by mapping the business flow • Measure key aspects of the current process; develop a data collection plan and collect relevant data • Analyze the data to verify cause-and-effect relationships and sources of variation • Improve the process based upon data analysis using techniques like design of experiments; develop creative alternatives and implement enhanced plan • Control to ensure that any deviations from target are corrected before they result in defects; set up control mechanisms and continuously monitor process

11. DFSS – new processes (DMADOV method) • Define design goals that are consistent with customer demands and the enterprise strategy. • Measure and identify CTQs (characteristics that are Critical To Quality), product capabilities, production process capability, and risks. • Analyze to develop and design alternatives, create a high-level design and evaluate design capability to select the best design. • Design details and plan for design verification. This phase may require simulations. • Optimize the design and plan for error proofing. This phase may require additional simulations. • Verifythe design, set up pilot runs, implement the production process and hand it over to the process owners.

12. Six Sigma roles • Executive - CEO and other top management establish vision for Six Sigma implementation • Champion - responsible for Six Sigma implementation across the organization and provide mentoring to Black Belts • Master Black Belt - 100% dedicated to Six Sigma, mentoring other black belts and green belts, and responsiblefor consistent application of Six Sigma acrossdepartments • Black Belt - 100% dedicated applicationof Six Sigma to their project portfolio • Green Belt - employees using Six Sigma methodology as part of job responsibilities under guidance of Black Belts • Others (Brown/Yellow/Gold) – company specific designations

13. Keys to Six Sigma implementation • Management commitment and involvement • Understanding of six sigma methodology, tools, and techniques • Linking six sigma to business strategy • Linking six sigma to customers • Project selection, reviews and tracking • Organizational infrastructure • Cultural change • Project management skills • Linking six sigma to suppliers • Training • Linking six sigma to human resources Antony, J., Banuelas, R., 2002. Key ingredients for the effective implementation of six sigma program. Measuring Business Excellence 6 (4), 20–27.

14. Six Sigma tools--Otto Velasquez • Tools used in connection with Six Sigma • Six Sigma products and software • SPC Wizard sigma calculator

15. Six Sigma tools • Brainstorming - encourages open thinking and allows team members to build on each other's ideas • Flow Charts and Process Maps - allows a team to identify the order of events in providing a product or service, uncover problems, and compare the "ideal" work flow to what actually happens in the workplace • Pareto Charts - which identify the critical few issues that impact cost and/or customer satisfaction • Root Cause Analysis - a method to help determine the true cause of problems (fishbone diagram) • Failure Mode and Effects Analysis (FMEA) - analysis of potential failure modes and determination of the consequence of failures • Control Charts - method to observe and improve process performance

16. DMAIC Phase - Define

17. DMAIC Phase - Measure

18. DMAIC Phase - Analyze

19. DMAIC Phase - Improve

20. DMAIC Phase - Control

21. Six Sigma support products • Software AG webMethodsBPM Suite • Statgraphics • STATISTICA • Telelogic System Architect • Actuate • The Unscrambler • Select Architect Business Process Modeling • DMAIC/Lean Online Collaboration Tools • GrouputerSigmaSense • iGrafx Process for Six Sigma • EngineRoom by MoreSteam • IBM WebSphere Business Modeler • JMP • Microsoft Visio • Minitab • QPR ProcessGuide by QPR Software • Quality Companion by Minitab • SigmaXL • SigmaFlow

22. Six Sigma calculator

23. Evolution of Six Sigma--Chris Roan • Six Sigma today • Challenges – and challengers– of Six Sigma • The future of Six Sigma

24. So what exactly is Six Sigma? • Target metric – 3.4 defects per million opportunities • Continuous improvement – the path • Process variance – the enemy • Data driven – emphasis on metrics, measurement, data collection and analysis • Institutional– successful implementation requires buy-in across organization, top down driven, extensive “belt” training • Innovative Methodologies– focus on Voice of Customer, DMAIC, DFSS • Adaptive – sees itself as “umbrella” incorporating best practices, e.g. Lean Six Sigma • Profitability focused – financial results-driven system

25. Six Sigma challenges

26. Six Sigma challenges Only 58 out of Fortune 500 have adopted Derails Innovation (3M case study) More dependent on human and org changes Manufacturing focused on reducing the number of defects Service Industries focused on reducing transactional errors Exposes flaws in the execution, but ignores flaws within process itself Many small / medium companies have not implemented Assumption that it is only for larger enterprises Certification has became a “cottage industry”

27. Six Sigma challenges Out of 400 companies surveyed single greatest challenge was: Culture Change

28. Six Sigma challenges • Continuing disconnect – Not Manufacturing but Transactional • Transactional – “What to measure” • Manufacturing – “How to measure more accurately” • Transactional Six Sigma – Far more effective • Based on arbitrary standards • Standardized approach will not work • Monitor process different • Incomplete Tool Set • Different skill set • Process is inherent in manufacturing • Transactional is about “tasks” • Independently performed • Decisions rely on the human element • Criteria less precise

29. The future of Six Sigma • Continuing shift from TQM • May appear similar, in reality quite different • Quality improvement process to next level • Potential to outlast quality management programs • Scope broader • Can be applied to every business process • Growing awareness • Small &MediumEnterprises • Lean Six Sigma

30. Q&A