Six Sigma Quality Engineering

1. Six Sigma Quality Engineering Week 3 Chapters 4 (Define Phase)

2. Chapter 4 Outline • Six Sigma Project Team • Six Sigma Team Charter • Project Management • Structure of the Define Phase • Define Metrics • Problem Statement Exercise • SIOPC Analysis • Voice of the Customer Analysis • Class Exercise

3. Six Sigma Project Team • The team must: • Understand the organizational context for process improvement projects • Know the basic elements of the team charter and review any questions you have about the charter for your own project • Understand the basics of estimating the business impact of a project and be able to relate them to your own project • Be able to identify key players and stakeholders and incorporate them into the communication plan for your own project

4. Six Sigma Team Charter • A team charter is an agreement between management and the team about what is expected. • The charter: • A project charter is a form that has key information about your project. It is used to: • Better define your project • Define what is Critical to Quality (CTQ’s) to the Customer • Write a business case (links project to business goals) • Write a problem and goal statement • Scope a project • State the problem or opportunity • Establish the project goal(s) • Identify criteria for success • List assumptions, risks and obstacles • Communicate the above • Obtain management support

5. Six Sigma Project Charter Example • Process • Process in which opportunity exists • Project Description • Project’s purpose and scope • Project Scope • Define the part of the process that will be investigated • Objectives • Define the baseline, goal & target • Business Case • Define the improvement in business performance anticipated and when • Team Members • Who are the full time team members • Expected Customer Benefits • Who is the final customer? • What benefit will they see and what are their most critical requirements?

6. Six Sigma Project Charter Example • Schedule • Give the key milestones/dates • Define completion date • Measure completion date • Analyze completion date • Improve completion date • Control completion date • Support required • Support needed for any special capabilities

7. Project Management Problem Statement  Objectives  Measures Problem Statement • Should focus the team on a process deficiency • Communicate the significance to others • Objectives • Should address the problem statement • Quantify performance improvement • Measures • Primary Metric(s) • Used to measure success • Consistent with problem statement and objectives • Secondary Metric(s) • Tracks potential negative consequences

8. Project Management Project Problem Statement • A problem is the unsatisfactory result of a job or process • So what? What is the impact on the ‘customer’? • What problem or gap are you addressing? • What impact will closing the gap have on the customer? • How will you know things are better? • It should not include theories about solutions Remember 5W’s + H to help give more focus • What are the symptoms? What happens when the problem appears? • Where do symptoms appear? Where don’t they appear? • When do symptoms appear? Where don’t they appear? • Who is involved? Who isn’t?

9. Project Management Project Problem Statements • A poor problem statement • Product returns are too high and will be reduced by analyzing first and second level pareto charts • A better problem statement • Product returns are 5% of sales resulting in a business unit negative profit impact of $5M and reduced market share of 10%

10. Project Management Project Objectives • Should address the problem statement • Quantify performance improvement • Should also identify timing • Needs to be Measurable, Actionable and Realistic • Quality / Quantity / Time / Cost • A poor objective • Reduce product returns by implementing performance measures and objectives • A better objective • Reduce product returns of product line abc from 5% to 2.5% by the year end, to reduce overall returns by 1% and saving $1M

11. Project Management Measures • Should be consistent with the problem statement and objectives • Primary Metric(s) - used to measure success • Needs to include 3 series, plotted as a function of time: • Baseline performance (average over past 12 months) • Actual performance • Objective / target performance • Secondary Metric(s) - drives the right behaviour • Tracks potential negative consequences • More than one may be required

12. Structure of the Define Phase

13. Define Completion Checklist • By the end of Define, you should be able to describe for your Champion: • What key process is involved (including its Suppliers, Inputs, Outputs, and Customers) • What about the process output is important to customers • What customers currently think of the process and its output • Why this project is important to your organization and what business goals the project must achieve to be considered successful • Who the players are on the project (sponsors, advisors, team leader, team members) • What limitations (budget, time, resources) have been placed on this project

14. Six Sigma Problem Statements • A problem statement has the form: “WHAT is wrong WHERE it happened WHEN it occurred TO WHAT EXTENT and I KNOW THAT BECAUSE…” • A problem statement: • Does not include causes of the deficiency. • Does not include likely actions or solutions. • Is clear and concise and specific. A good problem statement is essential to a good start.

15. What is Wrong and Where Does it Happen? • A good problem statement will clearly define WHAT is wrong. Examples: • “Customers are not satisfied with my product…” • “Yields are suffering…” • “Reliability is insufficient…” • A good problem statement will clearly define WHERE the problem occurs. Examples: • “Customers in the Midwest Region are not satisfied with my ordering service…” • “Equipment availability for Urgent Care is poor…” • “Document correctness is insufficient in Billing…”

16. When Was This Seen? • A good problem statement will clearly explain WHEN the problem occurred. • “Customers in the Midwest Region are not satisfied with my ordering service. Starting in January…” • “Equipment availability for Urgent Care is poor. Since the consolidation of services…” • “Document correctness is insufficient in Billing after the introduction of flexi-forms”

17. How Widespread is the Problem? • A good problem statement will clearly explain the EXTENT of the problem. • “Customers in the Midwest Region are not satisfied with my ordering service. Starting in January, complaints have increased 15%…” • “Equipment availability for Urgent Care is poor. Since the consolidation of services, delays caused by lack of availability have increased by 40%…” • “Document correctness is insufficient in Billing after the introduction of flexi-forms. Errors have increased 28%…”

18. What is the Standard? • A good problem statement will clearly explain HOW I KNOW there is a problem. Examples: • “Customers in the Midwest Region are not satisfied with my ordering service. Starting in January, complaints have increased 15% at a time when complaint rates from other regions have remained static” • “Equipment availability for Urgent Care is poor. Since the consolidation of services, delays caused by lack of availability have increased by 40% when the patient traffic has increased by only 5%” • “Document correctness is insufficient in Billing after the introduction of flexi-forms. Errors have increased by 28% when the goal of the project was to reduce errors by 90%”

19. Primary Metric • Primary Metric (used to measure process performance) • The gage used to measure your success • It must be consistent with the problem statement. It is used to track progress towards your goals and objectives. • It is usually reported as a time series graph of: • Baseline data – averaged over a year, if available • Target performance – goal or objective • Actual (current) performance • Examples: • Rolled throughput yield (RTY) [versus FTY] • Process Sigma Level or Ppk • Defects per unit (DPU) [versus Proportion Defective] The Primary Metric is how the success of your project will be measured

20. Product Returns 7% 6% 5% 4% Return $ As % Sales $ 3% Baseline 2% Actual 1% Objective 0% Jul-00 Oct-99 Oct-00 Jan-00 Apr-00 Feb-00 Mar-00 Jun-00 Sep-99 Dec-99 Sep-00 Dec-00 Nov-99 Nov-00 Aug-99 May-00 Aug-00 Sample Primary Metric

21. Secondary Metrics • Secondary Metrics: • Measurements of key input/output features, cycle time, or process resource usage that may improve as a result of meeting objectives using the primary metric • Can be “Drivers” or “Riders” – i.e. Vital X’s impacting the project (Primary Metric) or “Good Consequential Metrics” • Examples: • Primary Metric : Cycle Time • Secondary Metric : Reduced backorders • Primary Metric : Defects per Unit • Secondary Metric : Available Floor Space

22. Pct of Orders Shipped within 24 hours 100% 99% 98% 97% 96% 95% 94% 93% 92% 91% 90% Jul-00 Oct-99 Oct-00 Jan-00 Apr-00 Feb-00 Mar-00 Jun-00 Sep-99 Dec-99 Sep-00 Dec-00 Nov-99 Nov-00 Aug-99 May-00 Aug-00 Sample Secondary Metric

23. Problem Statements – Exercise • Break out into your groups. Using the guidelines of this module, each group will rewrite these problems statements to make them better: • The complaint rate for our customer service group is too high, probably due to all of the new people in the department. • Food Services order errors are too high. They must be reduced. • Reduce measurement errors by cleaning the instruments more often. • Consumable use is increasing too fast. Reduce consumable cost. • Long term rolled throughput yield for Accounts Payable billing this year is 83% versus a past RTY of 95%. • Long wait time for phone service. It takes customers about 30 minutes to get an order completed.

24. S C U U P S P T Inputs Process Outputs L O I M E E R R S S What is a SIPOC? • A high-level map of your process that includes: • Approximately 4-7 process steps • Inputs that feed the process • The Suppliers (sources) of those Inputs • Outputs that result from the process • The Customers (recipients) of those Outputs • Keep it simple, and think carefully about the scope

25. Why Create a SIPOC Map? • SIPOC helps your team to: • Define process boundaries (starting and ending points) • Identify data collection opportunities • Clarify who are the true customers of the process • To avoid “scope creep.” • To identify likely sources of performance problems • To expose fundamental issues early in the project that could change the direction of the team

26. All work can and should be considered as a process Physical products Labor Documents Material Ideas Process Information Information Services Environment Decisions When to Create a SIPOC In the Early Stage of Any Project!

27. Questions to Help with SIPOC From the Output/Customer End: • Why does this process exist? • What products, services or outcomes does this process produce? • How does this process end? • Who uses the outputs or experiences the results from this process? • Who provides funding or staffing for the process activities, and who cares about the quality of outcome? From the Input/Supplier End: • What items or information gets worked on? • Where do the items or information come from? • What effect do the inputs have on the process and on the outcome? • How does this process start? From the Middle – Inside the Process: • What major steps happen to convert inputs into outputs? • What people or resources perform those steps?

28. SIPOC - Process Development Example

29. SIPOC Workshop • Instructions: • Prepare a SIPOC for the process of baking your cake. Use the guidelines on the following page. • Be prepared to share your work with the class. • 15 minutes to prepare + 2 presentations (5 minutes each)

30. How to Create a SIPOC Map • Name the process • Identify, name, and order the major process steps (approximately 4-7 steps) • Clarify the boundaries of the process – where it starts and where it stops • List key outputs and customers • List key inputs and suppliers

31. SIPOC– a Foundation for Next Steps • The list of Customers from your SIPOC are the starting point for the Voice of the Customer (step 3) • The major process steps (macro map) from your SIPOC are the overview for later detailed process mapping • The Inputs, Process Steps, and Outputs on your SIPOC generates ideas for what can and should be measured, which feeds the Data Collection Plan in the Measure phase • The SIPOC contains clues about potential root causes that drive performance.

32. Voice of Customer • Understand why the Voice of the Customer (VOC) is critical • Know how to create a plan for gathering VOC data • Know both reactive and proactive ways to gather VOC information • Know how to analyze data through the use of affinity diagrams and Kano diagrams • Be able to use a CTQ tree diagram to identify customer requirements and set specifications for them

33. What Is the Voice of the Customer? • The term Voice of the Customer (VOC) is used to describe customers’ needs in a process improvement effort and their perceptions of your product or service.

34. Why VOC Is Critical • VOC data helps an organization and a project to: • Decide what products and services to offer • Identify critical features and specifications for those products, process outputs and services • Decide where to focus improvement efforts • Get a baseline measure of customer satisfaction to measure improvement against • Identify key drivers of customer satisfaction

35. Why Collect VOC Data • Customer requirements change constantly • Specifications tend to focus on technical data only

36. VOC Process • Outcomes • A list of customers and customer segments • Identification of relevant reactive and proactive sources of data • Verbal or numerical data that identify customer needs • Defined Critical to Quality requirements (CTQ) • Specifications for each CTQ 1.Identifycustomers and determinewhat you needto know 2.Collect andanalyzereactivesystem datathen fill gapswith proactiveapproaches 3.Analyze datato generatea key list of customerneeds intheir language 4.Translatethe customerlanguageinto CTQs 5.Setspecificationsfor CTQs Based on Rath & Strong

37. VOC Step 1: Identify Customers & Determine What You Need to Know • Goal • Identify your customers • Decide what you need to know about their needs • Decide when and how you will get this information 1.Identifycustomers and determinewhat you needto know 2.Collect andanalyzereactivesystem datathen fill gapswith proactiveapproaches 3.Analyze datato generatea key list of customerneeds intheir language 4.Translatethe customerlanguageinto CTQs 5.Setspecificationsfor CTQs

38. S C U U P S P T Inputs Process Outputs L O I M AB-588.2 E E R R S S Who Are Your Customers? • What are the outputs of your process? Who are the customers of that output? • Are there particular groups of customers whose needs are especially important to your organization and project success?

39. Common Customer Segments • Customer status: Former Customers, Current Customers, Customers of Competitors, Substitute Customers • Where they are in the “customer chain” • Internal user  Distributor End user • Geography • Industry, Division or Department • Demographics

40. Do You Have Customer Segments? • If your customers seem to have similar needs across the board, you don’t necessarily have to divide them into segments • If you suspect that different groups will have significantly different needs, and that these differences will influence how you structure your process, product, or service, then it will be worthwhile to think in terms of segments

41. Deciding the What and Why • Revisit your charter—what is the purpose of your project? • How does your purpose relate to customer needs? • What do you need to know about the needs of the customers you’ve identified to make sure your project’s purpose stays on track?

42. Sample Questions For all customers, you should ask questions such as: 1. What is important to you about our process/product/service? (Ask them to rank each of these needs in order of importance.) 2. What do you think of as a defect? 3. How are we performing on the areas you consider important? 4. What do you like about our product/service? 5. What can we improve about our process/product/service? What can we do to make your job easier? 6. What specific recommendations would you make to us?

43. VOC Step 2: Collect and Analyze Reactive and Proactive Data 1.Identifycustomers and determinewhat you needto know 2.Collect andanalyzereactivesystem datathen fill gapswith proactiveapproaches 3.Analyze datato generatea key list of customerneeds intheir language 4.Translatethe customerlanguageinto CTQs 5.Setspecificationsfor CTQs • Reactive systems • Information comes to you whether you take action or not • Proactive systems • You need to put effort into gathering the information

44. Typical Reactive Systems • Customer complaints (phone or written) • Problem or service hot lines • Technical support calls • Customer service calls • Claims, credits, contested payments • Sales reporting • Product return information • Warranty claims • Web page activity • Reactive systems generally gather data on: • Current and former customer issues or problems • Current and former customers’ unmet needs • Current and former customers’ interest in particular products, process outputs or services

45. Proactive VOC Systems • Interviews • Focus groups • Surveys • Comment cards • Data gathering during sales visits or calls • Direct customer observation • Market research, market monitoring • Benchmarking • Quality scorecards

46. VOC Plan: Final Touches • The last step to finishing your data collection is to decide specifically how you will obtain the information, within what time frame the data gathering should take place, and how you will record the data

47. VOC Step 3: Analyzing Customer Data • Goal is to generate a list of key customer needs in their language. • It is helpful to summarize this information in a meaningful way. 1.Identifycustomers and determinewhat you needto know 2.Collect andanalyzereactivesystem datathen fill gapswith proactiveapproaches 3.Analyze datato generatea key list of customerneeds intheir language 4.Translatethe customerlanguageinto CTQs 5.Setspecificationsfor CTQs

48. Questions? Comments?