Six sigma

Six Sigma

What is Six Sigma

Six Sigma is …… a highly structured strategy for acquiring, assessing, and applying
customer, competitor, and enterprise intelligence for the purposes of product, system
or enterprise innovation and design.

• Six Sigma is a disciplined, data-driven approach and methodology for

eliminating defects in any process -- from manufacturing to transactional and
from product to service.
• To achieve Six Sigma, a process must not produce more than 3.4 defects per
million opportunities.
• A Six Sigma opportunity is then the total quantity of chances for a defect.
• This is accomplished through the use of two Six Sigma sub-methodologies:
DMAIC and DMADV.
• The Six Sigma DMAIC process (defines, measure, analyze, improve, control) is
an improvement system for existing processes falling below specification and
looking for incremental improvement.
• The Six Sigma DMADV process (define, measure, analyze, design, verify) is an
improvement system used to develop new processes or products at Six Sigma
quality levels.
• Both Six Sigma processes are executed by Six Sigma Green Belts and Six
Sigma Black Belts, and are overseen by Six Sigma Master Black Belts.

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• According to the Six Sigma Academy, Black Belts save companies

approximately $230,000 per project and can complete four to 6 projects per
year.
• General Electric, one of the most successful companies implementing Six
Sigma, has estimated benefits on the order of $10 billion during the first five
years of implementation.

Cost of Poorly Performing Processes (CP3)

σ level DPMO CP3

2 308537 Not Applicable

3 66807 25%-40% of sales

4 6210 15%-25% of sales

5 233 5%-15% of sales

6 3.4 < 1% of sales

Each sigma shift provides a 10% net income improvement

Sigma (σ ) is a measure of “perfection” relating to process performance capability
… the “bigger the better.” A process operating at a “Six Sigma” level produces

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only 3.4 defects per million opportunities (DPMO) for a defect. Without
dedication of significant and appropriate attention to a process, most processes in
leading U.S. companies operate at a level between 3 and 4 sigma.

What Does Six Sigma Tell Us?

1. We don’t know what we don’t know.
2. We can’t do what we don’t know.
3. We won’t know until we measure.
4. We don’t measure what we don’t value.
5. We don’t value what we don’t measure
Typical Results: companies that properly implement Six Sigma have seen profit
margins grow 20% year after year for each sigma shift (up to about 4.8s to 5.0s. Since
most companies start at about 3s, virtually each employee trained in Six Sigma will
return on average $230,000 per project to the bottom line until the company reaches
4.7s. After that, the cost savings are not as dramatic.
However, improved profit margins allow companies to create products & services
with added features and functions that result in greater market share.
How does Six Sigma Work?

The Voice of the Customer (VOC) is aggressively sought and rigorously evaluated
and used to determine needed outputs and hence the optimal process configuration
needed to yield those outputs and their necessary inputs for which the best suppliers
are identified and allied with.

From Concept to Market: the Voice of the Customer

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Outputs Process Inputs

Customers Suppliers

Steps

Six Sigma DMAIC

 DMAIC

 Define the project goals and customer (internal and external) deliverables
 Measure the process to determine current performance
 Analyze and determine the root cause(s) of the defects
 Improve the process by eliminating defects
 Control future process performance

 When To Use DMAIC

 The DMAIC methodology, instead of the DMADV methodology, should
be used when a product or process is in existence at your company but is
not meeting customer specification or is not performing adequately
Six Sigma DMADV

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 DMADV

 Define the project goals and customer (internal and external) deliverables
 Measure and determine customer needs and specifications
 Analyze the process options to meet the customer needs
 Design (detailed) the process to meet the customer needs
 Verify the design performance and ability to meet customer needs
 When To Use DMADV
 A product or process is not in existence at your company and one needs
to be developed
 The existing product or process exists and has been optimized (using
either DMAIC or not) and still doesn't meet the level of customer
specification or six sigma level
DMAIC Versus DMADV
 The Similarities of DMAIC and DMADV
 Six Sigma methodologies used to drive defects to less than 3.4 per
million opportunities.
 Data intensive solution approaches. Intuition has no place in Six Sigma --
only cold, hard facts.
 Implemented by Green Belts, Black Belts and Master Black Belts.
 Ways to help meet the business/financial bottom-line numbers.
 Implemented with the support of a champion and process owner
Six Sigma DMAIC Roadmap
 D - Define Phase:
 Define Customers and Requirements (CTQs)
 Develop Problem Statement, Goals and Benefits
 Identify Champion, Process Owner and Team

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 Define Resources
 Evaluate Key Organizational Support
 Develop Project Plan and Milestones
 Develop High Level Process Map
 M - Measure Phase:
 Define Defect, Opportunity, Unit and Metrics
 Detailed Process Map of Appropriate Areas
 Develop Data Collection Plan
 Validate the Measurement System
 Collect the Data
 Begin Developing Y=f(x) Relationship
 Determine Process Capability and Sigma Baseline
 A - Analyze Phase:
 Define Performance Objectives
 Identify Value/Non-Value Added Process Steps
 Identify Sources of Variation
 Determine Root Cause(s)
 Determine Vital Few x's, Y=f(x) Relationship
 I - Improve Phase:
 Perform Design of Experiments
 Develop Potential Solutions
 Define Operating Tolerances of Potential System
 Assess Failure Modes of Potential Solutions
 Validate Potential Improvement by Pilot Studies
 Correct/Re-Evaluate Potential Solution

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 C - Control Phase:
 Define and Validate Monitoring and Control System
 Develop Standards and Procedures
 Implement Statistical Process Control
 Determine Process Capability
 Develop Transfer Plan, Handoff to Process Owner
 Verify Benefits, Cost Savings/Avoidance, Profit Growth
 Close Project, Finalize Documentation
 Communicate to Business, Celebrate

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CASE STUDY:

Six Sigma Innovation & Design for

Information Technology: Averting
Disaster in Washington, DC

Imagine what was once unthinkable …

Imagine the potential implications of a well-timed and successful terrorist strike
initiated by crippling or otherwise compromising the integrity of the information
technology infrastructure of the government of Washington, DC – tourist haven;
within 100 kilometres of three major international airports; home of key defence,
biotechnology, and information technology firms; host to diplomats; the military and
political capitol of the free world. Truly the potential impact on the world order is
staggering and likely well beyond what the majority of us are reasonably able to
guess.

Goal: to immunize / protect the IT infrastructure of the government of the District of

Columbia.
Means: Six Sigma Innovation and Design applied to critical IT functions

The Office of the Chief Technology Officer (OCTO) is the primary provider
of information technology (IT) services to all 68 agencies of the government
of the District of Columbia (Washington, DC).

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Agencies of the District of Columbia provide services that simply

must be operational at some minimal level
This includes, for example, police, fire and other emergency response,
Public education, fire, public utilities, and Department of Motor Vehicles.
Service availability was promised to client agencies was well in excess of
OCTO’s ability to deliver. Moreover, the harsh reality of September 11, 2001
underscored the critical role of OCTO. Much of OCTO’s funding comes from the
United States Congress with a large amount of funding from the Department of
Homeland Security.

Five Critical Areas of Information Technology Service to OCTO Client Agencies

were examined and methods of improvement, design, and integration explored. These
areas were:
• Service Level Management (SLM)
• Capacity Management (CaM)
• Availability Management (AM)
• IT Service Continuity, a.k.a., Disaster Recovery (SCM), and
• Financial Management (FM)

These are detailed on the following slide.

Service Level Management (SLM) ensures that SLAs are met and that adverse
impacts on service quality are minimized, assessing the impact of
changes on service quality and SLAs, both when changes are proposed and after their
implementation. Key targets set in SLAs relate to service
availability thus requiring incident resolution within agreed periods. SLM is the hinge
of service support and delivery and relies on the effective

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and efficient working of underpinning support processes, without which an SLA is

useless, since these are foundational to content agreement.

Capacity Management (CM) ensures constant availability of adequate capacity to

meet agency business requirements. CM involves incident
resolution and problem identification for those difficulties related to capacity issues
and generates requests for change (RFCs) that ensure
sufficient capacity. RFCs are subject to a change management process and
implementation often affects hardware, software and documentation
and requires effective release management.

Availability Management (AM) concerns design, implementation, measurement and

management of IT services to ensure that stated
availability requirements are met and requires IT service FMEA and the
understanding the time taken to resume service. Incident management
and problem management provide key inputs ensuring that appropriate corrective
actions occur. Availability targets specified in SLAs are
monitored as part of the AM process that also supports the SLM process by providing
measurements and reporting to support service reviews.

IT Service Continuity Management (SCM) or “Disaster Recovery” manages an

organization’s ability to provide a pre-determined agreed
upon level of IT services to support minimum business requirements. Among the
means used are resilient systems and recovery options such as
back-up facilities. Configuration management data is required to facilitate this
prevention and planning. Infrastructure and business changes

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need to be assessed for their potential impact on continuity plans, and IT and business
plans are then subject to change management procedures.

Financial Management (FM) accounts for costs and returns of IT service

investments and cost recovery from clients. FM requires interfaces
with CM, configuration management, and SLM to identify the true costs of service.
FM works together with business relationship management
and the IT organization during the negotiation of IT budgets and client IT
expenditures.

KEY: SLA = Service Level Agreement. FMEA = Failure Modes and Effects
Analysis. RFC = Request for Change.

Table 1
Examples of Approaches and Their Use in the OCTO DC Project
Approach Description or Example Use 1ITIL Areas
Charter Purpose is to define the business case; All
project goals and limits; way of working
together; and conflict resolution plan.
Brainstorming Uses included cause identification and All
solution generation.
Affinity Diagram Uses included associations among OCTO All
needs (CTQs)
Interrelationship Primarily used to explore causal AM, CtM
Digraph relationships between enablers (“hows”) to
capture correlations and form the roof in
the HOQ.

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Nominal Group Nominal Group Technique used as part of All

Technique: NGT QFD / HOQ to prioritize OCTO needs.
Matrix / Priority Various uses including distribution of tasks All
Matrix Diagrams to team members and relating OCTO needs
(CTQs) to enablers (“hows”) in QFD.
SMART Goals Specific, Measurable, Attainable, Relevant, All
and Time-Bound goals and problem
statements.
Process Maps Included high-level COPIS maps and All
detailed process maps. Both “before” and
“after” improvement versions were used.
VOC Tools Approaches included surveys, focus All
groups, customer complaints, and
interviews.
Drill Down Trees Process-Product Drill Down Tree. All
FMEA Failure Modes & Effects Analysis. AM, CtM
HOQ / QFD House of Quality / Quality Function AM
Deployment. Integrated use of Matrix
Diagrams and NGT to assess internal and
external customer needs and deploy
solutions.

Pareto Chart Used to identify dominant issues / defect All

causes.
Fishbone Diagram Also called Cause-and-Effect Diagrams All
display “effects” representing a problem or
an opportunity with the “causes” being real
or potential drivers of the effect.
SWOT All ITIL areas were assessed for strengths, All
weaknesses, opportunities and threats with
motivations being improvement or

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leverage of strengths, diminution of

weaknesses, welcoming opportunities, and
countermanding threats.
Benchmarking Benchmarking of South Dakota Bureau of CtM
Information Technology and private sector
ISPs.
Chi-Square Tests of homogeneity examined whether AM, CaM,
differing approaches yielded similar results CtM, SLM
and tests of independence explored CTQ-
Enabler relationships.
Correlation & Used to explore, assess, characterize and SLM
Regression exploit CTQ-Enabler relationships.
Design of DOE approaches included experiments AM, CtM,
Experiments (DOE) with operating parameters, critical SLM
elements, or both. Operating parameters
are enablers (X’s) that vary in amount
while critical elements are enablers (X’s)
that differ in type or categorically.
Screening and factorial designs were used.
SPC Charts Statistical Process Control Charts AM, CaM,
recommended or used included p charts, I- CtM, SLM
MR charts, and X-bar and R charts to
(directly) control the X’s, hence indirectly
the CTQs.

RESULTS Total Savings Estimated by Deputy Director = $2M to

$3M from 2003-2007.
ITIL Areas AM = Availability Management, CaM = Capacity
Management , CtM = Continuity Management,

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FM = Financial Management, SLM = Service Level

Management

Conclusion: thus by following and implementing the above mentioned approaches the
company (OCTO) achieved the optimal results.

• Organisations exist to deliver value to their customers

• Six Sigma provides an end-to-end methodology and the tools required to
manage and improve the processes which deliver customer value
• Using high quality data in a way which provides insight into the process is key
• The principles of common and special cause variation must be used to manage a
process and thereby control quality

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