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

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

2. Basic Concepts of Six Sigma • 20 years of Six Sigma – origins and history • What is Six Sigma: An Overview of Six Sigma methodology • Six Sigma tools and support products • The evolution of Six Sigma:

3. Origins of Six Sigma • Six Sigmabuilt on TQM • Deming • Taguchi • Juran • JIT • Continuous Improvement • Business Process Reengineering • Evolved into a management philosophy - value creation and improvement for customers and shareholders “If you can’t measure it, you can’t manage it.” --W. Edwards Deming (1900 - 1993)

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 process • Probability density function: • Gaussian (normal) distribution • (aka Bell Curve) • Long Term process shift: • 1.5  shift from mean  • Defects: • data points that fall outside upper and lower specification limits 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. An Overview of Six Sigma Methodology--Wajeeh Qazi • Six Sigma roles • Existing processes - DMAIC method • Design for Six Sigma – DMADOV method Six Sigma:

9. 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 responsible for consistent application of Six Sigma across departments • Black Belt - 100% dedicated application of 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

10. DMAIC method – existing processes • Define high-level project goals and the current process. • Measure key aspects of the current process and collect relevant data. • Analyze the data to verify cause-and-effect relationships. Determine what the relationships are, and attempt to ensure that all factors have been considered. • Improve or optimize the process based upon data analysis using techniques like Design of experiments. • Control to ensure that any deviations from target are corrected before they result in defects. Set up pilot runs to establish process capability, move on to production, set up control mechanisms and continuously monitor the process.

11. DMADOV method – new processes (DFSS ) • 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 tools--Otto Velasquez • Tools used in connection with Six Sigma • Six Sigma products and software

13. 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

14. Six Sigma 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

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

16. Six Sigma today • Developed and standardized • Methodologies (particularly with DMAIC) • Terminology (Green Belt, Black Belt etc) • Training curricula • A leadership approach (top down) • Solid foundation in data-based decision-making • Focus on the customer • Six Sigma “umbrella” has evolved from product focus (defect reduction) to project focus (cost reduction) to customer value (productivity) to enterprise performance (top line growth) • Manufacturing Services, Health Care, Gov’t, Military

17. Six Sigma Challenges Out of 400 companies surveyed single greatest challenge was: Culture Change

18. 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

20. 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. • Does not take into account the flaws that might be present in the system itself. • Only exposes flaws in the Execution 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”

21. The future of Six Sigma • Can anyone define what Six Sigma really is? • “Our company is still very much into the mode of building enthusiasm for six sigma, and sometimes it leads to a lot of confusion on just what it is.” • In a story of a lady who used six sigma to plan her wedding, what she means is that she planned for things that might go wrong or cost a lot of wasted money. • So now six sigma becomes the buzzword describing all brainstorming, analysis and statistics??

22. 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 & Medium Enterprises

23. The future of Six Sigma • Lean - Scope increases from product quality to • Capacity (work flow) • Efficiency (effort; cycle time) • Yield-related opportunities (innovation, development) • Financial improvements (cash conversion cycle) • Continuing evolution • Metric  Methodology  Management system

24. Q&A What is Six Sigma again? Is it a waste of time? Would you use or implement it? Would you seek its certification and become a “black belt”?