Six Sigma

1. Six Sigma Evolving Process to Achieve Better Quality

2. Discussion Topics • What is Six Sigma • 99.9997%?!?!? • Elements of Six Sigma • Six Sigma Lingo • Six Sigma Strategy • DMAIC • Case Study: PB

3. What is Six Sigma? • A metric, methodology and philosophy. • 3.4 defects per million opportunities or being 99.9997% defect free in process and product. • Measure how many "defects" are in a process then systematically figure out how to eliminate them and get as close to "zero defects" as possible. • Should be in in everything we do and in every product we design.

4. 99.9997%?!?!? • 3.4 million defects per opportunity • What’s the difference between 99% and 99.9997% • 7 lost mail per hour instead 20000 per hour. • Unsafe drinking water for 2 minutes per year instead of 15 minutes per day. • 1 plane crash every 5 years instead 2 plane crashes annually.

5. Elements of Six Sigma • The Customer • The Process • The Employee

6. The Customer • Customers are the center of any company’s universe: they define quality. They expect performance, reliability, competitive prices, on-time delivery, service, clear and correct transaction processing and more. Our customers’ satisfaction is priority number 1. If we don't keep them happy, someone else will.

7. The Process • Outside-In Thinking • By understanding the transaction lifecycle from the customer's needs and processes, we can discover what they are seeing and feeling. With this knowledge, we can identify areas where we can add significant value or improvement from their perspective

8. The Employee • Employees must focus their talents and energies on satisfying customers. • Employees are trained in the strategy, statistical tools and techniques of Six Sigma quality. Training courses are offered at various levels: • Quality Overview Seminars: basic Six Sigma awareness. • Team Training: basic tool introduction to equip employees to participate on Six Sigma teams. • Master Black Belt, Black Belt and Green Belt Training: in-depth quality training that includes high-level statistical tools, basic quality control tools, Change Acceleration Process and Flow technology tools. • Design for Six Sigma (DFSS) Training: prepares teams for the use of statistical tools to design it right the first time.

9. Six Sigma Lingo • Black Belt - Someone who has undergone intensive Six Sigma training, passed a certification exam, becomes a full-time Six Sigma project leader and successfully implements Six Sigma projects with defined business results within a certain time period. People who are taken out of their current roles, participate in intense training, take the certification exam and lead two to four Six Sigma projects each year. At the end of a two-year rotation, Black Belts will return to their business unit and continue to use their skills in new assignments. • Champion - Business leaders and senior managers who identify Six Sigma projects and work with Black Belts to promote successful implementation of Six Sigma methodology in their respective areas of responsibility. • DMAIC - A Six Sigma methodology that involves five phases: Define, Measure, Analyze, Improve and Control. Black Belts use DMAIC to improve processes, products and programs.  • Green Belt - Unlike Black Belts, they do not leave their current work assignments or spend 100% of their time on Six Sigma initiatives. Instead, they are trained in Six Sigma and then incorporate it into the way work gets done in their current area of responsibility. • Master Black Belt - Someone who works with senior leaders to define Six Sigma projects, objectives, goals and plans. Then, he/she works with Black Belts to track progress, continue training and coordinate efforts. • Root Cause - The fundamental cause of errors, which, if eliminated, would prevent recurrence of errors. Six Sigma methodology strives to identify root causes of quality problems and implement plans to permanently correct them. • Yellow Belt - Someone who typically has a basic knowledge of Six Sigma, but does not lead projects on their own, like a Black Belt or Green Belt. A Yellow Belt often supports different phases of a Black Belt’s or Green Belt’s project plan.

10. Six Sigma Strategy • To achieve Six Sigma quality, a process must produce no more than 3.4 defects per million opportunities. • Critical to Quality (CTQ):Attributes most important to the customer • Defect:Failing to deliver what the customer wants • Process Capability:What your process can deliver • Variation:What the customer sees and feels • Stable Operations:Ensuring consistent, predictable processes to improve what the customer sees and feels • Design for Six Sigma:Designing to meet customer needs and process capability • Customers don't judge us on averages, they feel the variance in each transaction, each product we ship. Six Sigma focuses first on reducing process variation and then on improving the process capability. • Customers value consistent, predictable business processes that deliver world-class levels of quality.

11. DMAIC • Define • Measure • Analyze • Improve • Control

12. Define • Define the Customer, their Critical to Quality (CTQ) issues, and the Core Business Process involved. • Define who customers are, what their requirements are for products and services, and what their expectations are • Define project boundaries (scope) ­ the stop and start of the process • Define the process to be improved by mapping the process flow

13. Measure • Measure the performance of the Core Business Process involved. • Develop a data collection plan for the process • Collect data from many sources to determine types of defects and metrics • Compare to customer survey results to determine shortfall

14. Analyze • Analyze the data collected and process map to determine root causes of defects and opportunities for improvement. • Identify gaps between current performance and goal performance • Prioritize opportunities to improve • Identify sources of variation

15. Improve • Improve the target process by designing creative solutions to fix and prevent problems. • Create innovate solutions using technology and discipline • Develop and deploy implementation plan

16. Control • Control the improvements to keep the process on the new course. • Prevent reverting back to the "old way" • Require the development, documentation and implementation of an ongoing monitoring plan • Institutionalize the improvements through the modification of systems and structures (staffing, training, incentives)

17. Case Study: PB • Why customers place calls to our customer care centers? The company found that over 12,000 calls related to an inquiry or dispute about sales and property taxes. Another audit revealed that the same issue was costing the company more than $500,000 annually in uncollected taxes, interest and fines. A cross-enterprise team was assembled to resolve the problem, using a Six Sigma methodology (DMAIC). • The team included: Bob Rosenblum, who championed the project, Janet Garner, Sandy Pfannkuch and Charlie Elms, who owned the processes related to the project, Alan Daniels, the project’s Six Sigma Black Belt, Alan Carlo and Bill Gowrie, the project’s Six Sigma Green Belts, (Yellow Belts) Pat Nissley and Dianne Askew, from our call center operations, Lynne Vidal and John McKenna from Voyager, Dawn Hallaman, Kirti Bhardwaj and Mike Wilk from IT/Systems, Alesia Pratcher and Kathy Cracas from Tax • ***Define The team defined the problem and scope of the project: inaccurate sales and tax exemption records resulted in over $500,000 in uncollected taxes, interest and fines paid by Pitney Bowes in 2002. To resolve the issue, the team would look at the corporate, GMS and IBS sales tax exemption processes and recommend changes/solutions that would permanently address the issue. • ***Measure The team collected one month of data from the daily processes performed at the corporate and IBS tax departments. They also took a random sampling of 200 customers who were coded as “tax exempt” in our databases to check if we had valid certificates that proved their status. The team also looked at how many times we approved or rejected customers’ requests for tax exempt status. • ***Analyze· 83% of exemption requests rejected because no certificate was received • · When certificates are received, 78% of accepted result in a billing adjustment for taxes that billed on the first invoice • · 71% of IBS customers that require a certificate had one on file • · 24% of other customers that required a certificate had one on file • · No process existed to identify expired certificates and request new certificates from customers • The team also analyzed what actions were critical to ensure a new process would permanently resolve the problem. They identified items like timely submission and delivery of certificates, prompt reviews of customers’ requests, closed loop communications with customers and PB departments and more. • ***Improve After all of this analysis, the team implemented a simpler, more disciplined process for managing tax exempt requests. Now, the direct sales force and customers fax a tax exempt certificate directly to the Tax Department for review and imaging, rather than sending it inter-office mail -- which caused a tremendous time and control delay. As a result, the process for handling tax exempt requests takes just two days – that’s compared to 25 days under the old process. • ***Control To ensure the improvements would work and be maintained, the team assigned clear accountabilities for each part of the process, implemented metrics to measure results and identified what the company should do to keep the process in check, should certain issues arise. • The Results: The number of customer calls related to tax exempt issues has decreased. The number of billing adjustments that have to be made as a result of the tax departments not receiving certificates has decreased. The number of customer complaint letters about this issue has decreased. And the new process is expected to save the company over $500,000 in 2004 and beyond.

18. Reference • http://www.ge.com/sixsigma/ • http://eng-ed.ucsd.edu/six-sigma.html

19. Questions?