Six Sigma Quality

1. 6 Six Sigma Quality Presented by: ENRICO C. MINA

2. Objectives • At the end of this course, the participants will have: • Learned the basic principles and concepts • Appreciated the Six Sigma Road Map and its possible applicability to their own organization • Learned and applied the fundamentals of 6σ Measures and Scoring System

3. Six Sigma Quality Philosophy Six Sigma (6) is a specification-based philosophy. It sets a defects target.

4. Six Sigma Definitions • Highly technical method used by engineers and statisticians to fine-tune products and processes • A goal of near-perfection in meeting customer requirements (3.4 defects per million opportunities) • A sweeping “culture change” effort to position a company for greater customer satisfaction, profitability and competitiveness

5. 6 Target • Customer Satisfaction • Product Quality Perfection • 4 defects per million • 12- Span • Maximum Probability of Making a Good Product/Service • Zero Probability of Non-Conformance • A process design second to none

6. Review

7. 0.135% -3 -2 -1 0 1 2 3 The 3 Control (1) 0.135%

8. 3rd line UCL 2nd line 1st line Mean CL 1st line 2nd line 3rd line LCL Traditional SPC The 3- Control Chart

9. The 3 Control Chart • Known as 6 Process Capability • System Performance • Voice of the Process • Independent of the Customer Specifications • Used to hunt out of control situations

10. Process Capability (6) CL UCL LCL -3 -2 -1 0 1 2 3 6 

11. The 3 Control Even if the process is in the state of statistical control, there is still a chance that 2700 parts per million (ppm) observations or 0.27 lie outside of its sphere of control.

12. CONTROL LIMITS & TOLERANCE LIMITS • Control Limits – process or system normal limits of performance. Established as a function of averages. • Tolerance Limits – are customer specification limits referring to the highest & lowest individual values that can be considered acceptable.

13. Process Capability (6) & Tolerance Case I: 6 < U - L- Most desirable case Case II: 6 = U - L- This is good as long as the process is in a state of control Case III: 6 > U - L- Undesirable situation

14. Case III: 6 > U - L- Undesirable situation LTL UTL Tolerance Target Value Reject Reject 6 Process Capability LCL UCL

15. Case II: 6 = U - L - Good as long as the process is in a state of control LTL UTL Tolerance Rejects are due to random variations only = 0.135% Target Value 0.135% 6 Process Capability LCL UCL

16. Case I: 6 < U - L - Most desirable case LTL UTL Tolerance Target Value Rejects are still possible but the probability is very low 6 Process Capability LCL UCL

17. 0.135% -3 -2 -1 0 1 2 3 The 3 Control 0.135%

18. The 3 Control (3) Ex: With 3-, a product that contains 1000 parts can expect an average of 2.7 defects per product unit has probability of 0.99731000 or 6.7% that a product contains no defective parts can expect 7 units per hundred will go without defects!

19. The 3 Control (4) The 3- quality is not sufficient! Product or process must be designed to tolerance limits that are significantly more than + 3 from the mean.

20. Cost of Quality • Costs of rework • Cost of scrapped materials/products • Cost of inefficiency • Cost of delay • Cost of excess manpower • Cost of excess overhead • Cost due to unhappy or lost customers

21. Six Sigma Definition A comprehensive and flexible system for achieving, sustaining and maximizing business success. It is driven by : • close understanding of customer needs • disciplined use of facts • data and statistical analysis • diligent attention to managing, improving and reinventing business processes

22. 6 Control • Used to prevent losses attributable to common-cause variation • Used to find out whether your attempts to reduce common-cause variation are working

23. Benefits of Six Sigma "Customer satisfaction, top-line results, operating margins and cash flow are all improved by Six Sigma." - James W. Rogers, President and CEO, GE Industrial Control Systems • Cost Reduction • Productivity Improvement • Market-share growth • Higher Profitability • Customer retention • Cycle-time reduction • Defect reduction • Culture change • Product/service development

24. Motorola • Early 80s - Top leaders conceded that the quality of its products was awful • 1987 - Six Sigma concept was introduced • 1988 - honored with the Malcolm Baldrige National Quality Award • 1988-97 - Five-fold growth in sales, $14 billion savings due to 6 sigma, stock price of 21.3% increase annually

25. Process capability index (Cp) and product outside specification limits Total product outside two-sided specification limits* Process capability index (Cp) 0.5 0.67 1.00 1.33 1.63 2.00 13.36% 4.55% 0.3% 64 ppm 1 ppm 0 *Assuming the process is centered midway between the specification limits.

26. Customer Expectations have changed "In the past, customers were happy if 99.5 percent of the parts you gave them worked with no problem. Now world-class companies want only 200 rejects for every million parts and, ultimately, they want zero." - John Bertrand, President, A.O. Smith Electrical Products Company

27. Du Pont "Six Sigma implementation continues to gain momentum. At the end of the year 2000, there were about 1,100 trained Black Belts and over 3,400 active projects. The potential pretax benefit from active projects was $700 million." - DuPont Fourth Quarter and Full Year 2000 Earnings Report

28. General Electric "The Six Sigma initiative is in its fifth year — its fifth trip through the operating system. From a standing start in 1996, with no financial benefit to the Company, it has flourished to the point where it produced more than $2 billion in benefits in 1999, with much more to come this decade." - GE 1999 Annual Report

29. Honeywell "We achieved $600 million in Six Sigma cost savings in 1999, but cost savings are only one part of the story. Delighting customers and accelerating growth completes the picture. When we are more efficient and improve work flow throughout every function in the company, we provide tremendous added value to our customers – through higher quality solutions that are more competitively priced, delivered on time and invoiced correctly. That makes us a more desirable business partner." - Honeywell 1999 Annual Report

30. Toshiba Corp. "Toshiba Corp. expects to cut operational costs by Y130 Billion in the current fiscal year ending March 2001 by using Six Sigma, a company spokesman confirmed." - Wall Street Journal November 5, 2000

31. Six Sigma Principles 1. Customer focus 2. Data driven control 3. Process improvement 4. Proactive management 5. Boundaryless teamwork 6. Continuous quest for perfection

32. The Business Process Model 1 Y Inputs Y Y Products $

33. Workshop # 1 - First Production Run

34. The Business Process Model 2 Y Inputs X X X X Y Y Products $ X Y = f(x)

35. CTQ • “Critical to quality” characteristics • Key results • “Ys” of the process • Upstream variable • Dependent variable

36. Yield Percentage of products or items without defects

37. Defect Any instance or event in which the product or process fails to meet a customer requirement or anything outside of customer specifications. It goes without saying therefore, that in order to recognize a defect, the point of success must have been specified as a prior customer requirement.

38. Six Sigma Opportunity The total quantity of chances for a defect. In other words, a six sigma opportunity are all the things that can go wrong in a product or service that can cause dissatisfaction to the customer.

39. DPMO • Defects per million opportunities • The number of errors that would show up if an activity is repeated a million times.

40. Six Sigma Score Simplified Sigma Conversion Table: % Yield DPMO Sigma Score 30.9 690,000 1.0 69.2 308,000 2.0 93.3 66,800 3.0 99.4 6,210 4.0 99.98 230 5.0 99.9997 3.4 6.0

41. Six Sigma Measure • Clearly define what customer requirements are • Provide a consistent metric • Link to an ambitious goal of 99.99966% yield.

42. S C Six Sigma Strategies Process Improvement Process Design/Redesign S C Process Management S C

43. Process Improvement • Find problems • Analyze problems • Find root causes • Develop focused solutions • Implement and evaluate solutions • Continuously improve the process

44. Process Design/Redesign • What is the value that the customer wants? • What is the current way of delivering this value? • What is the best, fastest, simplest, safest and cheapest way of doing it? Is there anyone who has successfully done it? How? • What is the gap between the current way and the ideal way? • What must change to eliminate the gap?

45. Process Management (1) • Processes are documented & managed end-to-end • Responsibilities have been assigned to ensure success • Customer requirements are clearly defined & regularly updated • Measures of outputs, process activities & inputs are thorough & meaningful

46. Process Management (2) • Managers & process owners use the measures to assess performance in real time • Actions are taken to address problems & opportunities • Six Sigma tools are used to raise the company performance

47. ? 1. Define 5. Control 2. Measure 3. Analyze 4. Improve The DMAIC Model

48. Process Improvement  Identify the problem  Define requirements  Set Goal Process Design/Redesign  Identify specific or broad problems  Define goal/change vision  Clarify scope & customer requirements ? Define 1

49. Process Improvement  Validate problem/process  Redefine problem/goal  Measure key steps/inputs Process Design/Redesign  Measure performance to requirements  Gather process efficiency data 2 Measure

50. Process Improvement  Develop causal hypothesis  Identify “vital few” root causes  Validate hypothesis Process Design/Redesign  Identify “best practices”  Assess process design - value/non-value adding - bottlenecks/disconnects - alternate paths  Refine requirements Analyze 3