SIX SIGMA

1. MANAGEMENT OF PROFIT Dr. Ralph L. Harper Jr., CISM SIX SIGMA

2. What is Six Sigma? Six Sigma is the fastest growing business management system in industry today, credited with saving billions of dollars over the past decade. Six Sigma legacy increases management and engineering receptivity to opening doors for improving processes and products . Six Sigma emphasizes doing the right thing and doing it right. Six Sigma encourages a product �pull� rather than the �push� Six Sigma is built around cross-development teams The work product planning is promoted by brainstorming techniques.

3. What is Six Sigma?

4. What is Six Sigma? Business process that enables companies to increase profits Streamlining of operation Improving Quality Eliminates defects in every thing a company does A business philosophy to improve customer satisfaction A tool for eliminating process variation A metric of world class allowing process comparisons

5. What Six SigmaDoes Reduce Variation Concrete Concrete curing time Process Simplification Product or process optimization Optimize tolerance flow down Optimize specified operating limits

6. Why Emphasize Statistics? Statistics Describe the Real World Variation Probability Impact Risk Hidden Factors Hidden Factory Miss-Perceptions

7. WHY IMPLEMENT SIX SIGMA Top line growth To improve customer satisfaction Saving goes directly to bottom line Statistical unit of measure that reflects process capability Sigma Process Capability Defects Per Mil Opportunities 6 3.4 5 233 4 6,210 3 66,807 2 308,537

8. WHY IMPLEMENT SIX SIGMA A level of performance that reflects significantly reduced defects in our products A statistical measurement of our process capability, as well as a benchmark for comparison A set of statistical �tools� to help us measure, analyze, improve, and control our processes A commitment to our consumers to achieve an acceptable level of defects

9. HOW SIX SIGMA WORKS It provides specific methods to re-create the process itself so that defects are never produced in the first place Most companies operate at a three- to four-sigma level, where the cost of defects is roughly 20 to 30 percent of revenues or 6,200 - 67,000 defective parts transactions per million opportunities Six Sigma fewer than 3.4 defect per One million opportunities -- the cost of quality drops to less than 1 percent of sales

10. Six Sigma Programs Implemented World Wide Corporation Sony, Ford, Nokia, Texas Instruments, Polaroid, Raytheon, Allied Signal, General Electric, Motorola, BMW, Mercedes-Benz, Volvo Heavy Truck, Chase Manhattan Bank, U.S., AT&T, the U.S. Postal Service, the U.S. Department of Energy, Nuclear Electric, Westinghouse, Thermo King International Paper, Navistar, Gen. Corp�s, Raytheon Countries Australia, New Zealand, Singapore, Thailand and the People�s Republic of China, U.S., Europe

11. SIX SIGMA ROLLS Hands on Champion (project management). Black Belt (Six Sigma expert). Process owner, who can institute any required changes. Master Black Belt (Statistical and tool expert). Green Belts (Received at less 80 hours of Six Sigma training) Financial Analyst who validates the savings potential and realized savings

12. SIX SIGMA PROCESS

13. Six Sigma Results Radical net income improvements, most often financial results and shortly after implementation Improved customer satisfaction Reduced cycle times Increased productivity Improved capacity and output Reduction in total defects Increased product reliability Decreased work-in-progress (WIP) Improved process flow $230,000 average direct cost reduction per project per Expert, Black Belts

14. SIX SIGMA RESULTS GENERAL ELECTRIC Saved nearly $900 million on an investment of $580 million in just the first two years of Six Sigma implementation More than $70 million in productivity gains in 1997. Six Sigma, even at this early stage, delivered more than $300 million General Electric�s 1997 operating income. GE Capital Reduced cycle times for foreclosure actions and improved customer �workout� process by 50% at GE Capital Mortgage By applying the disciplines of Six Sigma, GenCorp�s Specialty Polymers plant reduced the level of residue from a particular latex by 70 percent in just six months, with an annual cost savings of almost $500,000

15. SIX SIGMAN RESULTS NAVISTAR Realized a 400 percent increase in stock prices just 14 months after initiating Six Sigma Quality methodologies in January 1997 U.S. POSTAL SERVICE Reduced medical screening process cycle time for new hires from 11.8 to 2.9 days, while slashing annual direct program costs by $8 million

16. SIX SIGMA RESULTS MOTOROLA Continuous improvement is an ongoing quest. Motorola was part of the consortium which conceived the Six Sigma concept over fourteen months ago. For more than a decade Motorola has implemented the Six Sigma process with dramatic results. Increased productivity an average of 12.3% per year Reduced the cost of poor quality by more than 84% Eliminated 99.7% of in-process defects Saved more than $11Billion in manufacturing costs Realized an average annual compounded growth rate of 17% in revenues, earnings, and stock price

17. Measure & Analyze  . Gather Historical Data or Sample (Size & Subgroup) Generates/Determines Review Internal, External & Opportunity Costs Analytical Tools Descriptive Statistics and Graphical Representations Confidence Intervals Process Capability Study Process Capability Indicators Performance and Entitlement Determine

18. Measure & Analyze Cost of Quality Estimate Potential Benefits Lost opportunities Financially justify improvements warrant Project Trends & Behaviors Relationships Measure and distributional effects

19. Analyze Phase - Generates/Determines Statistical Verification of effects; using the null Hypothesis as a test for Variable data For trending pairs of continuous Data Variables This completes the Characterize phaseIdentifying which input variables Move on to Optimize Settings or Procedures

20. Analyze Phase Difference in Means? One Variable (Factor) Standard Dev? From spec value Two or more populations If know X; Predict Y Strength & Direction Testing

21. Analyze Phase Variables Data Analysis keyed to Proper sample size To detect desired effect Proportion Defects Proportion Defectives Attribute

22. The Null Hypothesis Statistical Analysis H0 is that the sample comes from a population of mean �. Then we see if the sample data supports that hypothesis. � under H0 xIn At a 95% confidence, a P-value <.05 refutes the null hypothesis

23. Null Hypotheses Statement generally assumed to be true unless sufficient evidence is found to be contrary Often assumed to be the status quo, or the preferred outcome. However, it sometimes represents a state you strongly want to disprove or Approve. Designated as Ho Ho: Hypotheses presumed False Ho: Hypotheses rejected

24. Improve Phase The Role of Measurement Need repeatable and reproducible Measurement capability Limitations of attribute data Demonstrate measurement control When measurement systems are inadequate, so are the decisions we make using them. The process is optimized, we need to maintain the gain . Keep it in Control !

25. SIX SIGMA CAN IMPROVE YOUR GOLF SCORE If you played 100 rounds of golf per year, and played at: 2 sigma - you�d miss 6 putts per round 3 sigma - you�d miss 1 putt per round 6 sigma - you�d miss 1 putt every 163 years

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27. REFERENCE Goldstein, M. D. (2001, November). Six Sigma Program Success Factors. : Six Sigma Forum Magazine. Milwaukee, WI: ASQ Quality Press, vol. 1, number 1, November 2001 Leavitt, P. (2003). Lessons Learned in Six Sigma Implementation. : APQC (American Productivity & Quality Center). Retrieved March 31, 2003 from the World Wide Web: www.kmadvantage.com/docs/leadership_article/Lessons_Learned_in_6Sigma_implementation.pdf

28. REFERENCE Dr. Samuel J. Keene, Presentation on Six Sigma Process Improvement Opportunities at RAMS 2005. Charles Waxer http://www.isixsigma.com/library/content/c020729a.asp http://www.isixsigma.com/ Dick Smith and Jerry Blakeslee Strategic Six Sigma: Best Practices From the Executive Suite. John Wiley & Sons, 2002.

29. REFERENCE Geoff Tennant, Six Sigma: SPC and Manufacturing and Services. Ashgate Publishing, Limited November 2000. GE Investor Relations Annual Reports. General Electric Company. 22 July 2002 http://www.ge.com/company/investor/annreports.htm. Honeywell Annual Reports. Honeywell Inc. 22 July 2002 http://investor.honeywell.com/ireye/ir_site.zhtml?ticker=HON&script=700 Lucas, J. M. (2002, January). The Essential Six Sigma. Milwaukee, WI: Quality Progress. Retrieved March 30, 2003 from the World Wide Web: www.asq.org

30. Motorola Six Sigma Services. Motorola University. 22 July 2002 http://mu.motorola.com/sigmasplash.htm