SIX SIGMA OVERVIEW

Six Sigma is a disciplined process which systematically reduces defects which are most

important to the customer.

It provides qualitative statistical and instructional methods and devices for observing and managing

critical process variables as well as the relationship between them.

The Many Facets of Six Sigma

• Sigma is a letter in the Greek alphabet.

• The term “sigma” is used to designate the distribution or spread about the mean (average) of any process or procedure.

• For a business or manufacturing process, the sigma value is a metric that indicates how well that process is performing. The higher the sigma value, the better. Sigma measures the capability of the process to perform defect-free work. A defect is anything that results in customer dissatisfaction.

• With Six Sigma, the common measurement index is “defects-per-unit,” where a unit can be virtually anything -- a component, piece of material, line of code, administrative form, time frame, distance, etc.

• The sigma value indicates how often defects are likely to occur. The higher the sigma value, the less likely a process will produce defects. As sigma increases, costs go down, cycle time goes down, and customer satisfaction goes up.

What is a Sigma?

• A sigma value is a metric commonly used to relate the ability of a process to perform defect-free work.

• The higher the sigma value the better the process is performing and the lower the probability that a defect will occur.

• As the sigma value of a process increases, Costs decrease Defects decrease Cycle time decreases

Measurement of Quality

2 308,5373 66,807

4 6,210

5 233

6 3.4

Processcapability

Defects per million

PPM

Variation is the enemy; it must be controlled

Measurement of Quality

The Traditional Standard (+/- 3

93.3193% Probability

3 = 66,807 Defects per Million Opportunities

What Is Six Sigma?

Six Sigma = 3.4 Defects Per Million Opportunities

What is Practical Meaning?

99% Good (3.8 Sigma)

• 20,000 lost articles of mail per hour

• Unsafe drinking water for almost 15 minutes each day

• 5,000 incorrect surgical operations per week

• Two short or long landings at most major airports each day

• 200,000 wrong drug prescriptions each year

• No electricity for almost seven hours each month

• Seven articles lost per hour

• One unsafe minute every seven months

• 1.7 incorrect operations per week

• One short or long landing every five years

• 68 wrong prescriptions per year

• One hour without electricity every 34 years

99.99966% Good (6 Sigma)

The Goals of Six Sigma

DEFECT REDUCTION

PROCESS YIELD IMPROVEMENT

IMPROVED CUSTOMER DELIGHT

BUSINESS SUCCESS

Six Sigma Comparison

Focus on preventionLow cost/high throughputPoka yoke control strategiesStable/predictable processesProactiveLow failure ratesFocus on long termEfficientManage by metrics and analysis

Focus on firefightingHigh cost/low throughputReliance on test and inspectionProcesses based on random probabilityReactiveLow failure ratesFocus on short termEfficientManage by seat of the pants

Six SigmaTraditional

Six Sigma takes us from fixing products so they are excellent, to fixing processes so they produce excellent products.

Dr. George Sarney, President, Invensys Intelligent Automation Division

Six Sigma Values

• The Customer Defines Quality… so, delight the customer. Meet their future needs today.

• Customer Focus and Service ExcellenceA vision for becoming a world- class business, defect reduction.

• Service and Process ExcellenceBe the best we can be today … process stability (step 0) then make continuous improvement … MAIC 12 steps.

• Eliminate VariabilityThis improves quality and reduces cost. Variability is the enemy.

• Knowledge Empowers Us to ImproveActing on fact means doing the right things.

Vision and communication make us a team.

• Have Fun, While Making MoneyWork smarter, not harder, enjoy your success.

Quality is Needed in Both Product and Service

• Executive champions and process leaders provide focus, leadership and commitment

• Dedicated resource of highly skilled and focused individuals (Master Black Belts and Black Belts) lead and perform improvement efforts

• Customer focused based on “critical to quality (CTQ)” definitions

• Process of selecting key improvement projects, tracking and quantification of results

• Focused on solutions and captured gains

• Dedicated resources deploy and support their functional organizations

Six Sigma: How Does it Work?

Systematic Method of Step Function Improvements Across all Business Functions

Improvement Road Map

• Define the problem and verify the primary and secondary measurement systems.

• Identify the few factors which are directly influencing the problem.

• Determine values for the few contributing factors which resolve the problem.

• Determine long-term control measures which will ensure that the contributing factors remain controlled.

Objective

It’s Not Over Until It’s Under Control

In Pursuit of Six Sigma1985-1992 1993-1994 1994-1996 1996-1997 1997-1999

TI ABB Allied Signal Bombardier Lockheed Martin

Motorola General Electric General Electric Korea Heavy Industries

Nokia Mobile Phones Sony

Crane

Polaroid Corporation

Avery Dennison

Shimaro

McKesson

Dow

DuPont

Seagate Technology

American Express

BBA Group PLC

Toshiba

Period of Design Period ofRefinement Period of Results

Period ofCompetitiveAwareness

Period of“New Technology”

Breakthrough Strategy is Becoming the Competitive Tool of Industry

Driving Success

Six Sigma will be the biggest, the most personallyrewarding and, in the end, the most profitable

undertaking in our history.

Jack Welch, Chairman and Chief Executive Officer, GE

Leadership Drives Performance

Six Sigma only works when leadership is passionate about excellence and willing to change.

• Fundamentals of leadership Challenge the process Inspire a shared vision Enable others to act Model the way Encourage the heart

• Six Sigma is a catalyst for leaders

Everyone has the will to win, few have the will to work to win.Bobby Knight

Why are Most Companies 3-4 Sigma?

3 sigma 4 sigma 5 sigma 6 sigma

BARRIER

MostCompanies

• Past success has bred arrogance

• Dependence on inspection and rework

• Reliance on trial and error (also called one-factor-at-a-time (OFAT) analysis)

• Reward firefighting behavior

• Little focus on quality measurements

• Functional silos inhibit collaboration

Leap Toward Operation Excellence

• Conviction in the opportunity

• Belief in the methodology

• Openness to challenge status quo

• New skills, tools, and information

• New behaviors for management

3 sigma 4 sigma 5 sigma 6 sigma

BARRIER

MostCompanies

What’s needed to make the leap?

The “customer problem”

Hypothesis:

Customers will not repurchase a company’s product if they are not satisfied with the performance of a current version of that company’s product.

Corollary:

The stronger the degree of satisfaction with a company’s current product, the greater the likelihood that a customer will repurchase similar products from that company in the future.

What is Critical to Customer Enthusiasm?

Delivery &

Service

Process Throughput

Zero Defect Quality

Customer ValueDrive out constraints!

Respond Faster! Better!

Drive down cycle times and lead times!

Drive out variation! Flawless reliability!

Maximizing Customer Alignment

Supplier strives for performance on cycle time, cost and defects to meet customers’ increasing expectations on

delivery, price and quality

Getting it Right the First Time

We have passed the point where brute force and intimidation will solve the problems.

Frustrated line supervisor

Classic Factory Quality

• Quality through inspection

• Measure yield at final inspection

• Maximize yield through re-work

• Scrap rejected parts

• Low customer returns defines good quality

No Longer Good Enough...

Redefining Quality - Not Just Meeting Specs

Reduce waste in entire value streamScrap and reworkIn-service failuresExcess inventory

OvertimeCustomer/supplier inefficiency

Increase customer satisfactionDesign

PriceReliabilityDelivery

Meet Customer Requirements and

Expectations

Absence of Waste Over Product Life Cycle

Highest Quality Producer Has Lowest Cost

Data Driven

• Communicate in an objective manner

• Collect quantifiable facts about an object or process

• Establish baseline information regarding a problem, part or process

• Facilitate cost-benefit analysis of proposed solutions and improvements

• Quantify the lasting impact of a solution through comparison

• Allow an extension of a specific solution across many areas

Data allows us to establish a common language throughout the organization:

The Role of Statistics in Six Sigma

• We don’t know what we don’t know If we don’t have data, we don’t know If we don’t know, we cannot act If we cannot act, the risk is high If we do know and act, the risk is managed If we do know and do not act, we deserve the loss.

• To get data, we must measure

• Data must be converted to information

• Information is derived from data through statistics

Dr. Mikel J. Harry

Establish Meaningful Metrics

Quality = Performance = CustomerPerformance Metric

(First-pass-yield) x (Up-time) x (Efficiency)

First-pass-yield Up-time Efficiency

• Quality issues• Rework• Retest requirements• Scrap• Customer defects• Cost of operation• Supplier quality

• Machine run time• Maintenance• Replacement• Repair• Capital issues• Constraint

• Training needs• Process flow• Maintenance• Hidden rework• ROA issues

Use Six Sigma Tools to Solve Problems Across the Board……Use the Right Metrics to Measure Progress

Getting Started

The organization becomes aware of the Six Sigma concept and seeks additional information.

Management makes the decision to take the next step by selecting a key executive as their Six Sigma Senior Champion.

Contact

An executive briefing provides management insights on how Six Sigma can be implemented and applied within their business.

Briefing

Decision

Deploying the Program

The deployment plan spells out the details of how Six Sigma will be implemented.

The Six Sigma deployment and project champions oversee and guide the overall Six Sigma initiative. They understand all of the implementation and application details associated with Six Sigma and develop a comprehensive deployment plan.

Black Belts are trained in the strategies, tactics and application tools of Six Sigma. Once the training experience is complete, they are certified. Back on the job, they guide and assist project teams in pursuit of process improvement goals.

Plan

Champions

Black Belts

Lear Structure Established to Implement the Six Sigma Process

Role of Champions

• Create the vision

• Select meaningful business impact projects

• Ensure adequate resources are available

• Support and mentor the Black Belts

• Ensure finance values the projects appropriately

• Sustain the gains

Role of Black Belts

• Use the tools to quickly and efficiently drive improvement

• Share recognition with team members

• Work with Champion to define additional opportunities for Black Belt projects

• Work with Champion to resolve any resource or implementation issues

• Keep Champion apprised of project(s) status and issues

• Help the team learn and understand the Six Sigma tools and techniques

Role of Project Teams

• Learn the Six Sigma tools and methods

• Keep Black Belt informed on any relevant issues

• Conduct experiments and gather data

• Design solutions which are low maintenance

• Analyze and solve problems

Roles and Responsibilities

The Impact on CostsTen to 50 percent of a typical company’s costs are wasted on inspection, scrap, rework, warranty issues, crisis fire fighting, and recurring corrective actions. In addition, untold losses are incurred when customers are lost.

Price to customerCost to business

ProfitOverhead

Material and labor costs

Higher Quality and Increased Margin Market Advantage as the Low Cost Provider

The Fundamental Logic

Some corporations are experiencing significant gains in profitability and quality.

Breakthrough in costs and defects is achieved by reducing variation in key business processes.

Variation in key process is driven down through Six Sigma.

Six Sigma is attained through focused projects, which follow the breakthrough strategy.

Focused Six Sigma breakthrough projects are led by Black Belts.

Progress is made completing projects.