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1
NO !
3
The most noticeable difference in this operational definition of Quality is that it requires CONTINUOUS IMPROVEMENT
WHY CHANGE ?
The reason is simple, to remain or become competitive and thereby increase Profitability and Market Share
1,000,000 ppm
6 ppm
3.4 ppm
S (X X)2 n
1
Upper Specification Limit (USL) Target Specification (T) Lower Specification Limit (LSL) Mean of the distribution (m) Standard Deviation of the distribution (s)
p(d) USL
1 2 3
Target
Customer Specification
After
1 2 3 4 5 6
No Defects!
6 !
Leadership Process
Focus is on statistical process capability and process variation analysis Products must be designed to be manufactured within process capability Process capability must be quantified
Tools Metrics
Goal is defect free products and processes Focus is on true capability (rolled throughput yield) rather than end of line yield All decisions must be data driven
11
12
13
Industry Overview
The Six Sigma Define-Measure-Analyze-Improve-Control (DMAIC) model consistently yields rapid, measurable, benefits Avery Dennison Results:
Implemented 6s in March, 1998. 52 completed projects Forecast 99 savings = $18,500,000 Actual savings (through 2Q)=$5,800,000 130 projects planned or in progress Annualized savings = $35M 99 impact = $12.3M
AlliedSignal Results:
Implemented 6 in 1994 for Operations. Initial 4 months, 600 projects reduced defects by 68%. Saved $175M at bottom line in 95; $500M in 98 ! (not including overhead, inventory, indirect charges, or avoidance. Over $2B in savings realized since 1992. Fastest rate for implementing 6 yet!
GE Results:
Implemented 6 efforts in late 1995. Targets savings over $10 B during next few years by reducing its current COPQ ($7B /yr.) to less than $1B annually by: - Reducing scrap parts. - Reducing reworked parts. - Rectifying transaction mistakes.
Motorola Results:
Implemented 6 program in 1987 when it was performing at a 4 level. By 1992 it averaged a 5.21 level. Sales productivity increased from $68.9K to $110.1K per employee and savings due to US operations improvements were over $2.2 Billion.
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Cost Opportunity
Cost of Failure (% Revenue)
233 5
6210 4 3
66,807 2
308,537 1
691,462
15
1450
$ Million
1000 500
0 1996 -500
200 380 170 -30
550
1997
1998
1999
16
Up front investment and staying power Significant impact on the bottom line
Scrap Rework
1.5 % COQ
Long cycle times Field Modifications More Setups Expediting costs Customer Productivity Loss Engineering change orders
15 % COQ
Lost Opportunity
17
3
4
5
6
18
Process Capability
Bulk of Fruit
Process Characterization and Optimization
----------------------------------
----------------------------------
Ground Fruit
Logic and Intuition
19
Statistical Problem
Statistical Solution
Practical Solution
20
Install standard measurement system for each technology Reward & recognition policy to retain experienced labours in order to increase productivity
Y
Y Dependent Output Effect Symptom Monitor
f(X)
X1 . . . Xn Independent Input-Process Cause Problem Control
21
Would you control shooter or target to get the Gold Medal at Olympics
Y
OUTPUT SIGNAL
(x)
IN-PROCESS PARAMETERS
RELATIONSHIP or EQUATION THAT EXPLAINS Y IN TERMS OF X Distance traveled Money to Spend Determined by Car speed, traveling time Income, Commitments, Credit Rating
Determined by
22
Y
OUTPUT SIGNAL
(x)
IN-PROCESS PARAMETERS
RELATIONSHIP or EQUATION THAT EXPLAINS Y IN TERMS OF X Distance traveled Determined by Car speed, Car Speed traveling time Amount of wear on brakes Selection of CDs available Amount of gas in the tank Time since last service Traveling time Number of passengers Weather Car inside temperature
Understanding the 23
F (x)S
Y
OUTPUT SIGNAL,
=
Y
F
UNDERSTANDING OF
(x)
SELECT IMPORTANT
F (x)S
VERIFY UNDERSTANDING
OF
Y
OUTPUT SIGNAL,
=
POOR OR NO
F
UNDERSTANDING OF
(x)
BRAINSTORM
F (x)S
Y
NO CORRELATION
Model
Y
Capturing the measurement on a Customer unit basis
=
Understanding our output as the Customer sees it
(x)
F
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27
Cost of Quality
Sigma Level 2 3 4 Defects/Million Opportunities 308,000 66,800 ($12b) Cost of Quality Not Competitive 25 - 40% of Sales 15 - 25% of Sales
5 6
28
SPAN
Order-to-Delivery Time vs Customer Want Date
40 Day Span
5% of orders are >15 days early to request 5% of orders are >25 days late to request
-15 days
Early
0
Customer Want Date On Time
+25 days
Late
29
Outside In Thinking
Delivery cycle time (days)
Baseline
12 24 13 7 16 8 20 25 14 10 11 30 16 Mean 15.8 Std Dev 7.0
Improved?
27 7 15 4 18 6 23 6 2 24 2 6 5 11.2 9.0
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Customer Process
A B C
32
CRT
6 Sigma
Methods Finance Admin / Transport Projects Quality
IT
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Why Now?
Customers & Competitors are adopting elements of this business improvement process:
Customers:
HP Intuit
Competitors:
Wipro Spectramind EXL Hughes
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Table of Contents
Six Sigma Overview
What is Six Sigma Overview of Scope Linkage to Vision
Pre-Tea
Roles and Responsibilities as Leaders/ Sponsor Criteria for Project Selection Criteria for BB/GB Selection Introduction to Process
35
Implementation Strategy
Train. Apply.. Review..
Every Participant arrives to training with a well defined project with measurable savings opportunities!
Integrate training with metrics performance to maximize the bottom line impact. 36
Management
Leadership Black Belt
Process Owner
Control
37
38
Team Members
Team Members Are The Individuals Who Comprise The Six Sigma Project Team. Team Members Are Individually And Collectively Accountable For Specific Tasks That Will Result In The Teams Final Recommendation. When Team Members Are Responsible For A Particular Aspect Of A Project, They Often Will Make Their Own Decisions
39
Table of Contents
Six Sigma Overview
What is Six Sigma Overview of Scope Linkage to Vision
Pre-Tea
Roles and Responsibilities as Leaders/ Sponsor Criteria for Project Selection Criteria for BB/GB Selection Introduction to Process
41
Customer Focus
42
Customer Focus
What I Want to be
What I Am (?)
What I Am(?)
What I Am(?)
Performance Continuum
43
Project Selection
Objective:
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Project Objectives
What exactly is the problem being addressed in measurable terms? PROBLEM The problem this project is going to solve is:
- Takes too long to submit the quotation to customer - The productivity is very poor in our company - There is too much documentation in our work
45
Project Need
Why is this project worth doing?
Customer
[Company Name]
Customer
[Company Name]
Customer 47
[Company Name]
Project Need
Write down threat and opportunity for short term and long term for the problem you are addressing in your project
Threat Short Term Opportunity
1 2
Long Term
3 4
48
Expectations
What specific goals must be met? When must they be met?
For each goal, what milestones are critical and must be met?
49
Project Scoping
50
Project Scoping
Why? High level problem Level A Initial Contributor Level B
When you can no longer answer the Why? with confidence, you have arrived at the project level.
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Project Scoping
Why?
AHT too high
Why?
AHT for Pavilion P.L. is too high
Why?
AHT for Team 11 is too high AHT for New Agents is too high
Level A Level B
Why?
Level C
Level D Our project then becomes in measurable terms: Improving the AHT for New Batches from 30 min. to 20 min.
52
Project Scoping
What must this project accomplish? What (if anything) is out of bounds for the team?
53
Result Orientation
Relationship Building and Influence Coaching and Mentoring Team Leadership Change Leadership
54
Table of Contents
Six Sigma Overview
What is Six Sigma Overview of Scope Linkage to Vision
Pre-Tea
Roles and Responsibilities as Leaders/ Sponsor Criteria for Project Selection Criteria for BB/GB Selection Introduction to Process
56
IDENTIFY
NO
PROCESS ?
YES
MEASURE
ANALYSE
DESIGN
NO
CAPABLE ?
YES
OPTIMISE
IMPROVE
VALIDATE
CONTROL
57
DMAIC Process
Define the project (Y) & make the team & plan Measure Y & Xs Whats wrong with Xs How much and what I can improve
Control
Sustain the improvement
Define
Measure
Analyze
Improve
PLAN
58
DO
Measurement Purpose
Document Process Map
60
4-8
3-6
Optimized Process 61
Output Measures
Output Measures Are Measures Used To Determine How Well Customer Needs And Requirements Are Met.
62
Suppliers
Inputs Start
Process
Outputs
Customers
Requirement
64
START Boundary
Boundary
Input
What Must My Suppliers Provide My Process To Meet My Needs?
Process
Output
How Can I Assure That My Process Output Meets The Needs Of My Customer?
65
Process Map
[Company Name]
What You Think It Is... What It Really Is... What It Should Be... What It Could Be...
66
Industry Overview
Traditional View
Final Test
The Hidden Factory RTY is the probability that a product will pass through the entire process without rework and without any defects. It is the true yield for a product at the completion of all the individual processes.
C
0.90
$ 5 / Unit 400 un/dy
D
0.583 $19 200 un
RTY
COPQ Capacity 68
0.80
$2 / Unit 700 un/dy
Project Prioritization
A
0.80
$2 / Unit 700 un/dy
B
0.90
$10 / Unit 500 un/dy
C
0.90
$ 5 / Unit 400 un/dy
D
0.583 $19 200 un
0.90
$2 /Unit 200 un/dy
Project # A 69
Project # B
Project # C
Role of Statistics
Can you always measure 100% or less
What is Population what is sample? Roll of statistics in measurement (descriptive / Inference) 1. We only use experience, not data. 2. We collect data, but just look at the numbers. 3. We group the data so as to form charts and graphs. 4. We use census data with descriptive statistics. 5. We use sample data with descriptive statistics. 6. We use sample data with inferential statistics.
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Basic Statistics
Types of data Measures of the Center of the data Mean Median Mode Measures of the Spread of Data Range Variance Standard Deviation Normal Distribution and Normal Probabilities
71
Mean: Arithmetic average of a set of values Reflects the influence of all values Strongly Influenced by extreme values
x xi n
i 1
Median: Reflects the 50% rank - the center number after a set of numbers has been sorted from low to high. Does not include all values in calculation Is robust to extreme scores The mean and median will be affected by the nature of the distribution of numbers Mode - Most Common Observation Why would we use the mean instead of the median in process Improvement?
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Different Distributions
Sketch in the Means and Medians on each Distribution.
Comparison of Distributions.
300
300
Comparison of Distributions.
Frequency
Frequency
200
200
100
Tail
0 10 20 30 40 50 60 70 80
100
Tail
60 70 80 90 100 110 120 130
C2
C3
Negative Skew
Positive Skew
Comparison of Distributions.
100
Frequency
50
0 20 30 40 50 60 70 80 90 100 110
C1
Symmetric Distribution
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m = Population Mean
X ^
= Sample Mean
74
Computational Equations
Population Mean
m =
X
i 1
=S=
(Xi m ) 2
i=1
Sample Mean
^ m =x=
N
x
i =1
n
i --
^ = s=
(X
i =1
X )2
n -1
Measures of Variability
Range: the distance between the extreme values of a data set. (Highest - Lowest) Variance ( ): the Average Squared Deviation of each data point from the Mean. Standard Deviation ( ): the Square Root of the Variance. The range is more sensitive to outliers than the variance.
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X - X (X - X) 2
Variance
(X i X ) 2
i=1
N -1
(X
i=1
X )2
Sum
N -1
Standard Deviation
77
1.581139
Types of Data
Attribute / Discrete Data (Qualitative) Categories Yes, No Go, No go Operator 1, Operator 2, Operator 3 Pass / Fail Variable / Continuous Data (Quantitative) Decimal subdivisions are meaningful Time, Pressure, Conveyor Speed
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Variation
While every process displays Variation, some processes display controlled variation, while other processes display uncontrolled variation (Walter Shewhart). Controlled Variation is characterized by a stable and consistent pattern of variation over time. Associated with Common Causes. Uncontrolled Variation is characterized by variation that changes over time. Associated with Special Causes.
X - B a r C h a r t fo r P r o c e s s B
UCL =7 7.27 X =7 0.98 L CL =6 4 .7 0 60
Sample Mean
75
Sample Mean
70
X =70.91
70
65 0 5 10 15 20 25
LCL=64.62 50 0 5 10 15 20 25
Sa mp le Nu mbe r
S a mp le Nu mb e r
79
Special Causes
Stratification
Customer Type
Geography
Etc.
Company Process
ALL DATA
n = 2000 0 (-11, 38) 49 Sample Size , Median (Min, Max) SPAN
The most powerful potential process labels are those that are known at the beginning of the process.
80
Stratification
ALL DATA
n = 2000 0 (-11, 38) 49
Dashboard
n = 899 -2 (-9, 21) 30
Non-Dashboard
n = 1101 1 (-12, 70) 82
North
n = 261 -2 (-8, 8) 16
South
n = 297 -2 (-10, 24) 34
East
n = 103 -1 (-8, 15) 23
West
n = 238 -1 (-8, 23) 32
Commercial
n = 119 -2 (-10, 5) 15
Government
n = 74 -2 (-8, 9) 17
Industrial
n = 68 -2 (-7, 40) 47
Credit A
n = 71 -3 (-10, 0) 10
Credit B
n = 41 0 (-7, 6) 13
Credit C
n=7 5 (-8, 31) 39
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Stratification
Key Learning Points:
The first thing you must do is Separate the Processes. We call this Stratification. If you dont Stratify (isolate) the processes, you will have more than one central tendency in the data set and you will never figure out what drives variance.
If you think you have found the right label to stratify the processes, make sure you double check it to see if there is another label that is influencing the way the data appears. In this case, the real process label was Credit Rating, but it appeared in the Dashboard/Non-Dashboard data. You can double check by cross-cutting the data (look at Credit Rating and Dashboard at the same time in a tabular format), or by continuing to segment to see if the central tendency indicator still moves even though we thought it was an isolated process. In this case, if you continue with Dashboard as an isolated process, you will see the median move for various segmentations (especially Credit Rating). Once you have Stratified (isolated the processes) and you have a segment that reflects several different levels of Variance, you have the first clues to find the critical xs that drive variance. When you find a critical x for one of the processes, check to see if it is also the critical x for the other processes. Often the factors that drive variance in one of the processes, also drive it in another.
82
FMEA Model
Prevention
What made failure mode to take place. Ask 5 Whys.
Detection
Detection
What manner my process was not able to obey me
Cause
Material or process input
Process Step
Effect
External customer or downstream process step.
Controls
83
Product Variability
(Actual variability)
Measurement Variability
Total Variability
(Observed variability)
2 Actual(Part)
2 Meas.System
2 Observed (Total)
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Long-Term Capability
86
st + shift = total
Between Groups
Called shift (truly a measurement in sigma's of how far the mean has shifted) Indicates our process control The vital few
87
Analyse Purpose
To reduce the number of Process Input Variables to a manageable number To determine high risk inputs from Failure Modes and Effects analysis To determine the presence of and eliminate Noise Variables through Multi-vari Studies To plan the first improvement activities
88
Sources of Variation
A common method of analysis at this stage is the variables tree. Try thinking about your process in this manner........
Skill to Skill
Agent to Agent
Call to Call
Customer to Customer
Type of call
89
Tools Used..
Time Series Plot
15
Scatter Plot
15
HrsVar
10
HrsVar
5 10
10
0 Index
Date
HrsVar
8. 0
5. 5
3. 0 D at e Cu s t o m er Sal es m an
Box Plot
15
1000
Pareto Chart
Pareto Chart for : Defects
100 80 900 800 700 600 500 400 300 200 100 20 40 60
r a H sV r
10 5 0 W ater U t il
Count
0
. ev tD i gh We rB Ai bl e ub l or Co f or De n t io ma
C u s to m e r
Min in g
Pa p e r
Defect
Count Percent Cum %
1 32 1 3.5 87.7
1 20 1 2.3 1 00.0
90
Percent
Regression..
Some examples:
Y=Gas Mileage 30 (mpg)
20 10
Y=Sons Height
80 60 40
(Thousands) 35
25 5
6 14 22 30 X=Age of Car
91
Regression..
How do you find a line that fits the data?
What we are looking for is a line which will minimize the distances from the plotted points to the line....
Deviations (distances) How much the line missed by
* * * *
Regression Line
* * * * * *
Input Variable (X)
92
Regression..
The R2 Statistic is defined as the sum of squares of errors divided by sum of the square of difference from average:
Y
Measured Error Measured Predicted
Y=a+bX
r 1
2
^ (yi yi )
(y y )
i 1 i
i 1 n
93
Improve
What will you do for Improve
Identify solutions. Develop change management plan. Conduct cost / benefit analysis. Create implementation plan.
94
Improve
What will you do for Control
95
Control
In the physical world, the law of entropy explains the gradual loss of order in a system. The same law applies to business processes. Unless we add energy (in the form of documentation and ongoing process controls); processes will tend to degrade overtime, losing the gains achieved by design and improvement activities. The quality plan is the structure through which we add this energy to business processes.
Target
96
Control
Three Main Control Mechanism..
Avoid Potential Problems Control Potential Problems
Mistake Proofing 97
Project Sign-off
Answer the following questions before the project is signed off:
What can go wrong and derail improvements ? What controls are in place ? Can you show me your closure plan ? What happen when the people change ?
98
Project Sign-off
Finalize Financial Results
Calculate tangible benefits
Tangible Benefits - Implementation Costs = Net Financial gains (Over one financial year)
Bank
99
Documentation
Complete Documentation Package
..Compile and organize a record of the key aspects of your six sigma project
Hypothesis tests
Process capability analysis Control parameters Audit Plan/ owner Financial results Operational metrics Lessons learned and best practices Project to be signed off by GB/BB, MBB, Financial controller, Process Owner, Champion.
100
?...
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