6/28/2019 DMAIC

Six Sigma: Driving Out Variability

(Statistics Version)

Project Overview
The Problem: Get-In-Gear builds and ships
bicycle gear assemblies that are used by many
bicycle manufacturers. Their customers want these
assemblies to be low-cost, reliable, and shipped on-
time. The customers have problems if the gear
assemblies are not shipped when they are promised.
When the gear assemblies are shipped late, the
customers’ bicycle assembly process is brought to a
halt as they wait for them. When the gear
assemblies are shipped early, the excess inventory
backs up at the customers’ warehouses, and they do not have the resources to handle the extra
material. The customers need the delivery times from Get-In-Gear to be predictable.

After meeting with their customers, Get-In-Gear has decided it is important for them to improve
their shipping process. The company held an internal meeting to see what they can measure at their
facility as a predictor of what their facility needs to improve. They defined a measurement,
“Customer Delivery,” which is the number of days between when a shipment is promised and when
it is actually shipped. The measurement is positive number if the shipment is late and is negative if
the shipment is early. Customer Delivery was determined to be the most vital measurable factor.
The chart below shows how Get-In-Gear prioritized different areas for improvement.
Product Requirements

Material $
$ charged per unit

Instantaneous Failure Rate

Customer Delivery

% markup

Days from dock to dock

Mean Time to Failures

Mean Time Between Failures

Importance

Total
Customer Expectations
Voi

On-Time Deliver 5 H L 50
ce
of

Low Cost 3 H M L M L L L 57
stoCu

Reliable 2 H H M L 44
me
r

Total 45 27 27 21 9 9 8 5
In the above, each H(igh) has a value of 9, each M(edium) has a value of 3, each L(ow) has a value of 1
To find the total value, multiply the value of each letter by its customer importance for that row

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The customer requires that Customer Delivery falls within the range of 10 days early to 20 days
late 95% of the time.

Now that Get-In-Gear has identified the delivery time as being critical to their customers’
satisfaction, they need you to apply a six-sigma process to drive out the variability in their
delivery time. They’ve done the first step, which is to brainstorm a list of factors that affect
delivery time. They now want to focus their efforts on the factor that is having the greatest effect
on the delivery time variability. Your goal is to analyze the data which they have recorded for
1000 parts and to present a plan to most effectively improve the variability in the delivery time.

Courses:
 Algebra I
 Algebra II
 Statistics

Areas of Application:
 Data analysis
 Regression and correlation
 Histograms, mean, and standard deviation
 Excel (Statistics software such as Mini-tab or SPSS could be used)

Alignment with Standards:

Massachusetts Framework NCTM Mathematic Standards

Data Analysis, Statistics, and Data Analysis and Probability
Probability 12.D.4-5
10.D.1-2 12.D.7
12.D.2-5 12.D.14

Materials Included:
Excel files:
 DataFile.xls
 GageRR.xls
 MSAResults.xls
 ICD.xls

Goal: Since the supplier has decided that Customer Delivery has the highest priority in
keeping their customers satisfied, the supplier would like to explore the various factors that
cause the variability in Customer Delivery and determine mathematically which, if any, can
be controlled. The delivery dates acceptable to the customer are in the time frame of 10 days
early and 20 days late 95% of the time.

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Background Information

Six-sigma is a statistical process that is used by companies all over the world to improve
quality and performance. One common technique used in six-sigma is the DMAIC
process. DMAIC is an acronym for the steps in the process: Define, Measure, Analyze,
Improve, and Control. Apply this process to improve the variability in delivery time for
Get-In-Gear.

Define: What is the quantity to be improved (the Y)?

What are the requirements for this Y?
 Define who customers are, what their requirements are for products and services,
and what their expectations are.
 Identify the critical output of the process (the Y).
 What are the requirements for the critical output? Specify the required mean and
standard deviation.

Measure: Does the selected Y meet the specification?

 Analyze the data for the critical output.
 Does it meet the specification?

Analyze: What are the critical factors ( X’s) affecting the variation in the Y?
 Identify potential sources of variation in the output.
 Analyze data for each of these sources to determine which inputs are most
significantly affecting the output.

Improve and Control: What changes can be made to control the critical X’s?
 Create an Improve plan complete with recommended actions. Justify the plan
based on results from the Analysis phase.
 Create a Control plan to keep your improvements “on track.” This plan will be
used to monitor the success of the Improve plan and to ensure its continued
success.
 Examine data from after the new plans were implemented to see if the changes
made were successful. Determine whether you have met your statistical goals.

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Glossary:
Customer Delivery: The difference between when Get-In-Gear tells the customer they’ll receive
their part, and when they actually receive it. A positive value indicates the number of days
the part was shipped late. A negative value means the number of days the part was shipped
early.
Supplier Delivery: The time it takes for Get-In-Gear to get a part from their suppliers.
Supplier: The name of the supplier for a part. There are four different suppliers.
Schedule Variation: The time it takes for Get-In-Gear to schedule the ordering of the part. This
time is based on three factors: who plans the ordering of the part, which part it is, and
whether our company is near the end of its quarter.
Parts: The different parts that are shipped by Get-In-Gear.
Planner: The name of the person that coordinates the shipping of the part.
End of Quarter: True if the part was shipped near the end of the quarter.
Turn-Around-Time: The time the Get-In-Gear factory to make the parts to ship.
Gate 1: Receiving and Cleaning
Gate 2: Inspecting and Machining
Gate 3: Cleaning, Inspecting, and Shipping

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Student Handout
There are a number of questions the supplier would like to explore. Use the DMAIC
process to drive out the variability.

Define:
 What is important to the customer?
 What is the critical output? In other words, what is the quantity to be improved?

Measure:
 How high is the quality of the data available? Could it be that the problem lies in
the measurement system and not the process itself? The quality of data is and
always should be an area of concern. There is always the tendency to have human
errors and differences in measuring. For example, there are two shipping clerks
who record information about Customer Delivery for Get-In-Gear. Are the two
employees sufficiently consistent in their measurements? One way to measure
this is to use a method called Gage Repeatability and Reproducibility, or Gage
R&R. Use the Gage R&R (GageRR.xls) tool and MSA Results (MSAResults.xls)
to determine if the variation is too large between the two operators. Explain and
justify your answer.

Working with the Gage R&R Tool. You must enter data in all of the green fields:
A. Enter operator measurement data from MSA Results.xls.
o The spreadsheet then calculates the range for each part, and then calculates
an average range between the two operators.
B. Enter the identical Part ID next to Part Number. For Part 1, the Part ID is 1,
and so on.
C. Enter the number of operators: 2
o Enter the number of parts: 10
 The spreadsheet will then determine the d2* value, based on a
standard table of reliabilities that takes into account the number of
operators versus the number of parts.
D. Your tolerance for delivery has a range from 10 days early to 20 days late.
o Enter your lower and upper limits for delivery time in LSL and USL,
respectively.
 The spreadsheet will calculate the tolerance
E. The spreadsheet will now calculate several more values:
o First, the spreadsheet estimates standard deviation [Sm (Est.)] by dividing
the average range by the d2* value.
o Next, the standard deviation estimate is multiplied by 5.15 (because 5.15
standard deviations represent 99% of the expected population of ranges) to
determine the Gage Error.
o Finally, % R&R is calculated by dividing the Gage Error by the calculated
tolerance. If the % R&R is less than 30%, we can be confident that
measurement is not the primary cause of the variability.

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 Currently, how good is the supplier relative to the customer’s requirements (show
graphically)? How far off is the company in terms of its Customer Delivery
goals? Express the answer in terms of mean and standard deviation. What should
the mean and standard deviation be in order to meet the customer’s requirements?

Analyze:

 Look at the fishbone diagram and discuss what you think are the two major causes
for the Customer Delivery problem.
Potential X’s
Measurements Materials Men

Data Base Supplier Delivery

Plant Location

Manual Supplier
Documentation

Customer
Delivery
Near holiday Cleaner

Internal TAT

Near end of quarter Grinder

Environment Methods Machines

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 Looking at the next fishbone diagram, discuss what you think would be the top
two causes of Supplier Delivery variation.
Potential X’s
Measurements Materials Men

Tracking System Weld Supplier

Supplier
Delivery
Holidays

Schedule variation Type

Strike

Environment Methods Machines

 What drives schedule variation? Look at the next fishbone diagram and discuss.

Potential X’s
Measurements Materials Men

Parts

Planner

Sales input

Schedule
Variation

End of Quarter End of Quarter

Environment Methods Machines

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Using statistical analysis of company data, Get-In-Gear has determined the factors
which most significantly affect Customer Delivery. These are shown in the following
tree diagram.

Customer Delivery

Supplier Delivery Turn-Around Time

Supplier Schedule Variation Gate 1 Gate 2 Gate 3

Deliver Deliver Deliver
y y y
Parts Planner End of Quarter
Deliver Deliver Delivery
y y
 Analyze the correlation between the X’s and Customer Delivery.
 How would you prioritize opportunities for improvement?
 See DataFile.xls for data for Customer Delivery and all of the X’s for 1000 parts.

 Get-In-Gear is also interested in looking at ways to improve the Turn-Around

Time (TAT). Looking at the internal process below, which of the three
manufacturing “Gates” appear to have the greatest influence on TAT? Justify
your choice using the Excel file Data File.xls and making regression plots (scatter
plots) between the Gates and TAT and looking at the correlation.

Process Map: Turn-Around Time

Receive Clean Inspect Machine Clean Inspect Ship

Gate 1 Gate 2 Gate 3

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Improve and Control:

 Based on your findings, create an Improve plan complete with recommended

actions and a Control plan for each of your corrective actions that will need to be
implemented to control and minimize the variability in the Customer Delivery
problem. Support the Improve plan with your data analysis, as you will be trying
to convince the finance department and other groups to support your actions.

 With the newly implemented changes, Customer Delivery has improved. Use the
new data in Improved Customer Delivery.xls to determine if you have reached
your statistical goals. Show your results using graphical and statistical methods.
Has the Customer Delivery improved enough that 95% of the deliveries occur
within the given tolerance?

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Solutions to Handout
There are a number of questions the supplier would like to explore. Use the DMAIC
process to drive out the variability.

Define:
 What is important to the customer?

Possible Solution: The company needs to deliver goods and services on time and in a
consistent manner. Therefore, Customer Delivery is the factor to be improved. Ten days
early and twenty days late is the time frame that is acceptable to the customer.

Measure:
 How high is the quality of the data available? Could it be that the problem lies in
the measurement system and not the process itself? The quality of data is and
always should be an area of concern. There is always the tendency to have human
errors and differences in measuring. There are two shipping clerks who record
information about Customer Delivery for Get-In-Gear. Are the two employees
sufficiently consistent in their measurements? Use the Gage R&R (GageRR.xls)
tool and MSA Results (MSAResults.xls) to determine if the variation is too large
between the two operators. Explain and justify your answer.

Possible solution: The % R&R is calculated to be 7.84%. This is less than 30%, which
indicates that are no significant differences in measurement between the two operators
and that measurement is not the primary cause of the variability, so we proceed to look
for the true cause of the variability in the process.

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 How good is the supplier relative to the customer’s requirements (show

graphically)? How far off is the company? Express the answer in terms of mean
and standard deviation. What should the mean and standard deviation be in order
to meet the customer’s requirements?

Possible solution: Develop a histogram in Excel using the file Data File.xls.

You can easily see that the company is not meeting the customer’s time frames, as only
55.3% of the deliveries occur within the acceptable timeframe. The mean is 17.96 and
the standard deviation is 12.42.

In order to maximize the number of deliveries that occur within the acceptable timeframe,
the mean value for the ideal situation would be halfway between the minimum and
maximum limits for delivery, 10 days early and 20 days late. Therefore, the mean should
be 5 days late.

We know that, based on the empirical rule of a normal distribution, 95% of the data is
included within 2 standard deviations of the mean. Therefore, 95% of the data must lie
between -10 and 20, or 15 days in either direction of the mean. In order to ensure that
95% of the deliveries occur within the acceptable timeframe, the standard deviation
should be 7.5.

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Analyze:
 Look at the fishbone diagram and discuss what you think the two major causes for
the customer delivery problem are. Use data analysis to verify these causes.

NB: In their discussion of the three fishbone diagrams, students are not instructed to
justify their conclusions mathematically. In these sample solutions, a mathematical
justification is provided, for illustrative purposes, based on a correlation analysis that
would have been done by Get-In-Gear.

Potential X’s
Measurements Materials Men

Data Base Supplier Delivery

Plant Location

Manual Supplier
Documentation

Customer
Delivery
Near holiday Cleaner

Internal TAT

Near end of quarter Grinder

Environment Methods Machines

Possible solution: Looking at the fishbone diagram, it is logical that Supplier Delivery
(how well the suppliers are performing) and Internal TAT (the company’s manufacturing
Turn-Around-Time) are the key drivers influencing the customer delivery problem.

To investigate the correlation between Supplier Delivery and Customer Delivery, a scatter
plot was generated in Excel, graphing Supplier Delivery (x) vs. Customer Delivery (y).
Then the data was regressed (a linear trend line was added) and the correlation
coefficient, R, was calculated. The R value was calculated to be .781, which indicates a
strong positive relationship between Supplier Delivery and Customer delivery, implying a
correlation between the variation in the delivery times of each.

The investigatory process for determining the correlation between Turn Around Time
(TAT) and Customer Delivery is similar. The R value was calculated to be .477,
indicating only a mild positive relationship between TAT and Customer Delivery.

(See scatter plots on following page)

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 Looking at the next fishbone diagram, discuss what you think would be the top
two causes of Supplier Delivery variation. Use graphical and/or mathematical
verification.

Potential X’s
Measurements Materials Men

Tracking System Weld Supplier

Supplier
Delivery
Holidays

Schedule variation Type

Strike

Environment Methods Machines

Possible solution: Schedule Variation and Supplier are the top two causes of Supplier
Delivery variation. Most of the other factors affecting Supplier Delivery cannot be
controlled.

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A scatter plot was developed in Excel to compare Schedule Variation vs. Supplier
Delivery. The R value was calculated to be 0.728, indicating a fairly strong positive
relationship between Schedule Variation and Supplier Delivery.

To demonstrate that the different suppliers affect supplier delivery variation, the mean
and standard deviation were calculated for the delivery times for each supplier, ACME,
Best, Kansans, and New Buy. The standard deviations are relatively close for each
company: every company delivers 95% of its shipments within about a 72 day time span
(2 standard deviations). The differences in variation come into play because of where
these times spans are centered, or their mean delivery times. For instance, ACME is on
average 6 days early, while New Buy is 35 days late. With a range of 72 days, ACME
delivers 95% of its products between 42 days early and 30 days late, while New Buy
delivers 95% of its products between 1 day early and 71 days late. Each company is
consistent within a 72 day range, but the overlap is minimal, causing a huge variation in
overall supplier delivery.

ACME Best Kansans NewBuy

Mean -6.3 Mean 24.3 Mean 2.6 Mean 35.0
St. St. St.
St. Dev 18.5 Dev 18.67859 Dev 17.4 Dev 17.29501

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 What drives schedule variation? Look at the next fishbone diagram and
remember to use graphical and/or mathematical verification.

Potential X’s
Measurements Materials Men

Parts

Planner

Sales input

Schedule
Variation

End of Quarter End of Quarter

Environment Methods Machines

Possible Solution: Schedule Variation is affected by Parts, End of Quarter, and Planner.

 Parts:

The schedule variations were sorted by parts and their means and standard deviations
were calculated.

A B C D
Average -2.8 1.1 -3.0 28.2
Standard Dev 21.1 21.7186 19.96461 20.25956

As can be seen in the table, parts A through C have an average schedule variation close to
zero, meaning that on average the parts come in on time, and similar standard deviations.
Part D, however, has an average schedule variation of 28.2, meaning that it is always
significantly late, and could account for a lot of the schedule variation in the parts.

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 End of Quarter:

The data for schedule variation were sorted by whether the deliveries occurred at the end
of the quarter or not. The average and standard deviations were calculated.

EOQ? Average St. Dev.

Yes -17.1 21.45522
No 13.1 20.39629

The calculations show that, while standard deviation is similar at either time (the delivery
times always vary by the same amount), the average time of delivery at the end of the
quarter is 17 days early, while the average delivery time otherwise is 13 days late. This
indicates that whether or not the delivery occurs near the end of the quarter can cause
great variation in the delivery schedule.

 The Planner

The data for schedule variation were sorted by the planner, John or Mary. The average
and standard deviations were calculated.

Planner Average St. Dev.

John 20.2 18.91597
Mary -9.8 19.62879

The calculations show that, while standard deviation is similar at either time (the delivery
times always vary by the same amount), the average time between planners is very
different. John is, on average, 20 days late, while Mary is about 10 days early on
average. This indicates that the planner can cause great variation in the delivery
schedule.

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 Looking at the internal process below, which of the three manufacturing “Gates”
appear to have the greatest influence on TAT? Prove using the Excel file Data
File.xls and making regression plots (scatterplots) between the Gates and TAT and
looking at the correlation.

Process Map

Receive Clean Inspect Machine Clean Inspect Ship

Gate 1 Gate 2 Gate 3

Possible solution: Gate 2 has the greatest influence on TAT. The correlation is the
strongest (0.816) for this Gate. See scatterplots below.

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Improve and Control:

 Based on your findings, create an Improve plan complete with recommended
actions and a Control plan for each of your corrective actions that will need to be
implemented to control and minimize the variability in the customer delivery
problem. Support the Improve plan with your data analysis as you will be trying
to convince the finance department and other groups to support your actions.

Possible Solution:

Improve/Control: TAT
Gate 2
Since Gate 2 has the highest influence on TAT, the company needs to
improve their performance in the inspect and machine areas.

Improve/Control: Supplier Delivery

Supplier
Kansans has the least variability of all the suppliers. They are also closest,
on average, to the mean date and to the range of delivery times for customer
delivery. The company should either use Kansans more or to ask the other
suppliers to reduce their schedule variability.
Institute a penalty if the suppliers do not deliver their parts within an
acceptable range of times.

Schedule Variation
Improve the efficiency of manufacturing part D so that it can be closer to
Parts
on-time delivery as the other parts are.
The parts coming in at the End of Quarter are too early. Minimize
End of variations due to the changes that occur near the End of Quarter. Offer
Quarter incentives throughout the quarter, and include employees in the planning
process to smooth the workflow throughout the quarter.
The company should analyze planner performance to identify best practices
for the company. They should use the best practices to develop a training
Planner program for both current and new employees. In addition, they should
assign mentors to underperforming and new planners and offer incentive
programs to those planners who meet the company’s goals.

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 With the newly implemented changes, customer delivery has improved. Use the
new data in Improved Customer Delivery.xls to determine if you have reached
your statistical goals. Show your results using graphical and statistical methods.
Has the customer delivery improved enough that 95% of the deliveries occur
within the given tolerance?

Possible Solution: Develop a histogram in Excel using Improved Customer Delivery.xls

We can see that the company is now very close achieving their goals and meeting
their customer’s needs. The deliveries occur within the acceptable time frame 94.4% of
the time, an increase of 39.1%. The mean has been reduced to 6.05 days late, and the
standard deviation has been reduced to 7.95. This is very close to the ideal situation
which prescribes an average of 5 days and a standard deviation of 7.5. The company has
done a good job and the customer is happy.

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