1 / 43

Six Sigma

Dr. Ron Lembke SCM 462. Six Sigma. “It is the relentless and rigorous pursuit of the reduction of variation in all critical processes to achieve continuous and breakthrough improvements that impact the bottom line of the organization and increase customer satisfaction.” (p. 723) .

nanda
Download Presentation

Six Sigma

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Dr. Ron Lembke SCM 462 Six Sigma

  2. “It is the relentless and rigorous pursuit of the reduction of variation in all critical processes to achieve continuous and breakthrough improvements that impact the bottom line of the organization and increase customer satisfaction.” (p. 723) What is it?

  3. LTL UTL LTL UTL 6 3 Process Capability • A “capable” process has UTL and LTL 3 standard deviations away from the mean, or 3σ.

  4. 3 6 6  (6 sigma) 3 sigma: Probability outside range = (1 – 0.99865) * 2 = 0.0027 Defect rate = 2,699 defects per million opportunities 6 sigma: Probability part outside range = 0.00000000198024 Defect rate = 0.00197 dpm 1.97 defects per BILLION

  5. 3 sigma: 1/.0027 = 1 every 370 parts 6 sigma: 1/ 0.00000000198024 = 1 every 504.9 million parts If we make a million parts per year, we have: 3σ: 2,699 defectives 6σ: 0.0019732 defectives Defect Rates - 1

  6. 6 Motorola, GE, Allied Signal say mean can shift 1.5 σ during early stages of 6σ implementation A 6σ process then becomes 4.5σ. If this happens to a 3σ process, it becomes 1.5σ Shifts in mean 7.5 4.5

  7. With a 1.5σ shift, defect rates become: 3σ 66,807 dpm 6σ 3.4 dpm The commonly accepted definition of 6σ quality is having a defect rate <= 3.4 dpm Defects - 2

  8. 1986 began efforts • 1987 plan to get to 3.4 dpmo by 1992 • 1988 Malcolm Baldridge Quality Award • 1991 Black Belt (2nd generation) initiative • 1992 10x defect reduction every 2 years, cycle time every 4 • 1998 Corporate renewal • 1999 Rules of engagement, Performance Excellence, Balanced Scorecard • 2002 six sigma business improvement • 2003-05 Digital six sigma (3rd generation) History at Motorola

  9. Popularized by GE in 1996 major initiative by Jack Welch • Better focus on customers • Data-driven decisions • Improved design & mfg capabilities • Individual rewards for process improvements Six Sigma at GE

  10. Champions: Upper executives who will back up the proposals the black belts come up with • Responsible for financial & political well-being • Selects projects to be worked on • Understands discipline and tools of 6σ • Promotes the methodology throughout the organization • Serve as coach, mentor, supports teams • Owns the process – monitoring process and measuring the savings realized • Allocates resources • 20%-30% of time on 6 sigma Brought to you by:

  11. Coach or lead 6 sigma improvement teams Full-time work on defining, measuring, analyzing, improving, controlling processes Black Belts: Stars of the Show A “thoroughly trained agent of improvement” Avg project saves $175k? Works on 4-6 projects per year Make sure what gets improved stays improved

  12. Have in-depth statistical training, serve as Black Belts for more teams Help companies get started, choose team and projects Teacher, mentor, lead agent of change Skillfully facilitate change without taking over Pass certification exam, supervise two black belts on successful projects Master Black Belts

  13. Some 6 sigma training Work on projects part-time, in a specific area Solve chronic problems in their regular area Take part in teams, small solo work “Worker bees” critical to success Must pass an exam, and participate in at least one project Green Belts

  14. Financial return Impact on customers and organizational effectiveness Probability of success Impact on employees Fit to strategy and competitive advantage Selection Considerations

  15. Conformance Projects • Unstructured Performance Projects • Problems because system poorly specified • Efficiency Projects • Acceptable products, not meeting internal goals • Product Design • Not meeting customer CTQ • Process design Selecting Projects

  16. Define • Measure • Analyze • Improve • Control • (Alternate meaning: Dumb Managers Always Ignore Customers) DMAIC

  17. Charter / rationale for the project • Why this, not others, need for project, costs, benefits • Developing a project charter (statement of the project) • Scoping: • Improve motor reliability • Most problems from brush wear • Problem with brush hardness • Reduce variability of brush hardness Define

  18. Gather voice of the customer data to identify critical-to-quality (CTQ) characteristics important to customers Select performance metrics What are current levels Expected improvements What will need to be done, by whom Define

  19. SIPOC Understand the relationships between • Suppliers • Inputs • Process • Outputs • Customers Define

  20. Develop operational definitions for each CTQ characteristic • Figure out how to measure internal processes affecting each CTQ • Figure 10.3 • Figure out what data we need to collect • Easy to collect correctly • Interrupt process as little as possible • Collectors understand why collecting • “gage study” to determine the validity (repeatability and reproducibility) of the measurement procedure for each CTQ • Baseline data • Collect baseline capabilities for each CTQ • Determine the process capability for each CTQ Measure

  21. Understand why defects and variation occur • Find the root causes • 5W = 1H • Identify key causes • Experiments to verify impact • Formulate hypothesis, collect data Analyze

  22. Identify upstream variables (x’s) for each CTQ • Process mapping • Operationally define each x • Collect baseline data for each x • Perform studies to determine the validity (repeatability and reproducibility) of the measurement process for each x • Establish baseline capabilities for each x • Understand the effect of each x on each CTQ Analyze

  23. Brainstorm ideas of how to improve Determine optimal levels of critical x’s to optimize the spread, shape and center of the CTQ’s Action plans to implement the optimal level of the x’s Conduct pilot test of the revised process Improve

  24. Risk abatement planning and mistake-proofing to avoid potential problems with the revised settings of the x’s Standardize successful process revisions in training manuals Control revised settings of the critical x’s Turn revised process over to the process owner for continuous improvement using the PDSA cycle Control

  25. Tell everyone what you did, so they can learn from it Report Phase

  26. Black belt: 5 day sessions: 4 of them, with three weeks in-between • 1: Define &Measure • 2: Analyze • 3: Analyze & Improve • 4: Control & future steps • Green belt: 2 5-day sessions, three weeks in-between Six Sigma Training Programs

  27. Training Schedule Week 1 Overview Process improvement planning Process mapping Quality Function Deployment Failure mode and effects analysis Organizational effectiveness concepts Basic statistics Process capability Measurement systems analysis Week 2 Statistical thinking Hypothesis testing Correlation Simple regression Team assessment Week 3 Design of experiments Analysis of variance Multiple regression Facilitation tools Week 4 Control plans Statistical process control Mistake-proofing Team development

  28. Costs of Training Programs Training time costs Material costs Training manual development costs Administrative and operating costs for DMAIC projects Infrastructure costs such as the sots of constructing and using organizational metric tracking systems Monitoring DMAIC project costs Anecdotal evidence strongly indicates that he benefits of a Six Sigma process far outweigh the costs. This book suggests benefits of $250k per project

  29. Improved communication through six sigma terminology (for example, DPMO and process sigma) Enhanced knowledge and enhanced ability to manage knowledge Higher levels of customer and employee satisfaction Increased Productivity Reduced total defects Improved process flows Decreased work-in-progress (WIP), inventory, increased liquid capital Improved capacity and output Increased quality and reliability Decreased unit costs Increased price flexibility Decreased time to market, faster delivery time Benefits of Six Sigma

  30. Dilbert’s View

  31. 58 large companies have announced Six Sigma efforts 91% trailed S&P 500 since then, according to Qualpro, (which has its own competing system) July 11, 2006 Fortune Story

  32. Jack Welch’s Story • 1995 – Got Excited about Six Sigma • January 1996 – GE’s “most ambitious undertaking ever.” Put the “best and brightest to work on it.” • Operating margins went from 14.8% to 18.9% by 2000. Book Publicity Materials: “Jack Welch may be the most talked about and widely emulated manager in business history. He's used his own uncanny instincts and unique leadership strategies to run GE, the most complex organization in the world, increasing its market value by more than $400 billion over two decades.”

  33. GE under Welch 6σ

  34. GE Share – Welch & Six Sigma • S&P up 75%, GE up 210%. 6σ

  35. Immelt: GE vs S&P 500 • S&P up 30% • GE down 4% • So Immelt is lousy?

  36. Immelt Performance in Context Welch’s Affair public Welch’s perks revealed Immelt starts 8/7/01

  37. $86,000 /yr consultant “lifetime access to company facilities and services comparable to those which are currently made available to him by the company” “unconditional and irrevocable” $80,000 per month Manhattan apartment Court-side Knicks, Red Sox & Yankees box seats country club fees, security services and restaurant bills Corporate 737 - $3.5m/year Welch perks

  38. Jeff Immelt – CEO in 2001 • GE stock is down 4 percent • S&P 500 has gone up 30 percent. • Revenue and profits have risen at double-digit percentages in each of the past eight quarters. • 2006 Fortune survey voted GE the world's most admired company

  39. Qualpro’s “Six Problems with Six Sigma” • Six sigma novices get “low hanging fruit” “Without years of experience under the guidance of an expert, they will not develop the needed competence” • Green belts get advice from people who don’t have experience implementing it • Loosely organized methodology doesn’t guarantee results (and they do?) • Six Sigma uses simple math – not “Multivariable Testing” (MVT) • Six Sigma training for all is expensive, time-consuming • Pressure to “do something” – low value projects

  40. Narrow focus on improving existing processes Best and Brightest not focused on developing new products Fortune July 11, 2006 Can be overly bureaucratic Six Sigma

More Related