Project Report

On

Six Sigma Applications

Name of the Learner:

Registration No.:

Program Name:

P os t G r a d u a t e
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D i p l o m a i n B u s i n es s A d m i n i s t ra t i o n

Specialization:

Operations Management

Address:

Submitted to

Symbiosis Centre for Distance Learning (SCDL)

D E C LA R A T I O N

T h i s i s t o d e c l a r e t ha t I h ave c ar r i e d ou t t hi s pr oj ec t wo r k my s e l f i n p ar t f u l fi l m e n t of t h e Po s t Gr ad u a t e Di p l o m a i n Bu s i n e s s A dm i n i s t r a t i o n S p ec i a l i z a t i o n i n Op e r a t i o n Ma n a ge m e n t Pr o gr a m of S C DL .
2

T h e wo r k i s o r i gi n a l , h as no t b ee n co pi e d f r o m a n y wh e r e e l s e a n d ha s n ot b ee n s u b m i t t e d t o a ny o t h e r Un i v e r s i t y / I n s t i t u t e fo r a n a war d o f an y degree/diploma.

Da t e :

S i gn a t u r e :

Place:

N am e :

C E R T I F I C A T E O F S UP E R V I S O R

C e r t i f i e d t h a t t h e wo r k i n co r p o r a t e d i n t h i s P r o j e c t Re p o r t o n S i x S i g m a A p p l i c a t i o n s u bm i t t e d b y Vi s h a l Mal i k i s his/her original wo r k an d co m pl e t e d u nd er my supervision.

Ma t e r i a l o b t a i n e d fr o m ot he r s ou r c es h as be en du l y a c k n o wl e d g e d i n t h e Pr oj ec t Re p or t
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Da t e :

S an j a y Ku m a r

( Gu i d e N am e )

Place:

INDEX
SR.NO 1. 2. 3. 4. TOPIC Introduction Objective and Scope Limitations Th e o r e t i c a l P e r s p e c t i v e PAGE NO 5 18 19 21

5. 6. 7. 8. 9.

Analysis of Data Methodology and Procedure of Work Findings, Inferences and Recommendations Conclusion Summary

23 25 65 83 84

ANNEXURES

INTRODUCTION
In recent decades, the companies and organizations around the world are showing great interests in quality. Especially in 1970s and 1980s, the success of Japanese industry s t i m u l a t e s t h e w h o l e w o r l d t o f o c u s o n q u a l i t y i s s u e s . Th e experience from them proved that the requirements and expectations of customers are the key factors which decide the quality.

The roots of Six Sigma as a measurement standard can be traced back to Carl Frederick Gauss (1777-1855) who introduced the concept of the normal curve. Six Sigma as a measurement standard in product variation can be traced b a c k t o t h e 1 9 2 0 ' s w h en W a l t e r S h e w h a r t s h o w e d t h a t t h r e e sigma from the mean is the point where a process requires correction. Many measurement standards (Cpk, Zero Def ects, etc.) later came on the scene but credit for coining the term "Six Sigma" goes to a Motorola engineer named Bill Smith. (Incidentally, "Six Sigma" is a federally registered trademark of Motorola).

In the early and mid-1980s with Chairman Bob Galvin at the helm, Motorola engineers decided that the traditional quality levels -- measuring defects in thousands of opportunities -didn't provide enough granularity. Instead, they wanted to measure the defects per million opportunities. Motorola developed this new standard and created the methodology and needed cultural change associated with it. Six Sigma helped Motorola realize powerful bottom-line results in their organization - in fact, they documented more than $16 Billion in savings as a result of our Six Sigma efforts.

Since then, hundreds of companies around the world have adopted Six Sigma as a way of doing business. This is a direct result of many of America's leaders openly praising the benefits of Six Sigma. Leaders such as Larry Bossidy of Allied Signal (now Honeywell), and Jack Welch of General Electric Company. Rumor has it that Larry and Jack were playing golf one day and Jack bet Larry that he could implement Six Sigma faster and with greater results at GE t h a n L a r r y d i d a t A l l i e d S i gn a l . T h e r e s u l t s s p e a k f o r themselves.

Six Sigma has evolved over time. It's more than just a quality system like TQM or ISO. It's a way of doing business. As GE off Tennant describes in his book Six Sigma: SPC and TQM in Manufacturing and Services: "Six Sigma is many things, and it would perhaps be easier to list all the things that Six Sigma quality is not. Six Sigma can be seen as: a vision; a philosophy; a symbol; a metric; a goal; a methodology." We couldn't agree more. 6

The roots of six sigma as a measurement standard can be traced back to Carl Frederick Gauss (1777-1855) who introduced the concept of the normal curve. Six sigma as a measurement standard in product variation can be traced b a c k t o t h e 1 9 2 0 ' s w h en W a l t e r S h e w h a r t s h o w e d t h a t t h r e e sigma from the mean is the point where a process requires correction. Many measurement standards (Cpk, Zero Def ects, and so on) later came on the scene but credit for coining the term "six sigma" goes to a Motorola engineer named Bill Smith (six sigma is a federally registered trademark of Motorola).

In the late 1970's, Dr. Mikel Harry, a senior staff engineer at Motorola's Government Electronics Group (GEG), began to experiment with problem solving through statistical analysis. Using his methodology, GE began to show dramatic results GEG's products were being designed and produced faster and more cheaply. Subsequently, Dr. Harry began to formulate a method for applying six sigma throughout M o t o r o l a . H i s w o r k c u l m i n a t e d i n a p a p e r t i t l e d " Th e Strategic Vision for Accelerating Six Sigma Within Motorola." He was later appointed head of the Motorola Six Sigma Research Institute and became the driving force behind six sigma.

Dr. Mikel Harry and Richard Schroeder, an ex-Motorola executive, were responsible for creating the unique combination of change management and data-driven methodologies that transformed six sigma from a simple q u a l i t y m e a s u r e m e n t t o o l t o t h e b r e a k t h r o u gh b u s i n e s s e x c e l l e n c e p h i l o s o p h y i t i s t o d a y . Th e y h a d t h e c h a r i s m a a n d the ability to educate and engage business leaders such as Bob Galvin of Motorola, Larry Bossidy of AlliedSignal (now Honeywell), and Jack Welch of GE. Together, Harry and Schroeder elevated six sigma from the shop floor to the boardroom with their drive and innovative ideas regarding entitlement, breakthrough strategy, sigma levels, and the roles for deployment of Black Belts, Master Black Belts, and Champions. In effect, they created a business revolution that continues to challenge the thinking of executives, managers a n d e m p l o y e e s a l i k e . Th e i r s t r a t e g i e s a n d t o o l s h a v e b e e n perfected through the years by Six Sigma Academy. In brief, we believe our contribution was the unique combination of

business leadership plus quality and process improvement tools and techniques which made it possible for leaders to recognize the value of six sigma, not just as a tool for operational efficiency, but as an enterprise wide business strategy with direct bottom line impact.

Having said all that, I believe every six-sigma practitioner, consulting firm, and black belt has contributed to the evolution of six sigma. We should therefore focus our time and resources, not on diatribes about who can claim credit for six sigma, but rather on continuously improving upon the strategies and tactics to achieve breakthrough results in business excellence. For example, six sigma has been indisputably successful in eliminating waste, reducing variance and increasing productivity and profits. But its potential to create new business models for growth and innovation is barely tapped. I urge all of us to take six sigma to the next level by being thought leaders inspiring creativity and originality in our successors, instead of simply regurgitating what others have said before us. Doing so will ensure six sigma will become the global standard for conducting business, not just another management trend doomed to fall by the wayside.

Six Sigma is a breakthrough management tool, which enables companies to increase profits dramatically by streamlining operations, improving quality, and eliminating defects and mistakes in everything a company does. The darling of Wall Street, it has become the mantra of Fortune 500 boardrooms around the world because of its proven and measurable capabilities.

Six Sigma reduces the variables involved in a process in order to improve and achieve the goal of 3.4 defects per million. The methodology is based on 5 steps

Define: Identifies a project suitable for Six Sigma efforts based on business objectives as well as customer needs.

 Measure: It measures the variables of the process and counts the defects.

reduced.

Analyze: Defects are identified and the key variables

I mp r o v e : I t c o n f i r m s t h e k e y v a r i a b l e s a n d q u a n t i f i e s their effects on the process.

Control: Tools are put in place to ensure that under the modified process the key variables remain within the maximum acceptable ranges over time.

Six Sigma Quality is an advanced technique of improving processes and profitability that has revolutionized industries across America and around the world. The facts are plain: by improving quality with Six Sigma techniques, businesses have been able to save billions while gaining a competitive edge.

Six Sigma means something different to every company. For some, Six Sigma is a total management philosophy, for others it is simply a process improvement effort designed to increase productivity and reduce costs. Regardless of the way it is used within your organization, Six Sigma means data driven decision making!

In its most simple sense, Six Sigma is a highly disciplined approach to decision making that helps people focus on improving processes to make them as near perfect as possible.

Done properly, Six Sigma ensures that internal processes are running at optimum efficiency. Competition, costs, and customer demands are driving suppliers to improve product

quality and transactional processes. Six Sigma is a methodology that allows companies to formalize this improvement process, speak a common language, streamline processes, expose performance bottlenecks and drive continuous and controlled improvement.

Six Sigma at many organizations simply means a measure of quality that strives for near perfection. Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects (driving towards six standard deviations between the mean and the nearest specification limit) in any process -- from manufacturing to transactional and from product to service.

The statistical representation of Six Sigma describes quantitatively how a process is performing. To achieve Six Sigma, a process must not produce more than 3.4 defects per million opportunities. A Six Sigma defect is defined as anything outside of customer specifications. A Six Sigma opportunity is then the total quantity of chances for a defect. Process sigma can easily be calculated using a Six Sigma calculator.

T h e f u n d a m en t a l o b j e c t i v e o f t h e S i x S i g m a m e t h o d o l o g y i s the implementation of a measurement-based strategy that focuses on process improvement and variation reduction t h r o u gh t h e a p p l i c a t i o n o f S i x S i g m a i m p r o v e m e n t p r o j e c t s . This is accomplished through the use of two Six Sigma submethodologies: DMAIC and DMADV. The Six Sigma DMAIC process (define, 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. It can also be employed if a current process requires more than just incremental improvement. 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, h a s e s t i m a t e d b en e f i t s o n t h e o r d e r o f $ 1 0 b i l l i o n d u r i n g t h e first five years of implementation. GE first began Six Sigma in 1995 after Motorola and Allied Signal blazed the Six Sigma trail. Since them, thousands of companies around the w o r l d h a v e d i s c o v e r e d t h e f a r r e a c h i n g b en e f i t s o f S i x Sigma.

Many frameworks exist for implementing the Six Sigma methodology. Six Sigma Consultants all over the world have developed proprietary methodologies for implementing Six Sigma quality, based on the similar change management philosophies and applications of tools.

Definition
Six Sigma is a rigorous and disciplined methodology that uses data and statistical analysis to measure and improve a company's operational performance by identifying and e l i m i n a t i n g " d ef e c t s " i n m a n u f a c t u r i n g a n d s e r v i c e - r e l a t e d processes. Commonly defined as 3.4 defects per million opportunities, Six Sigma can be defined and understood at three distinct levels: metric, methodology and philosophy"

Six Sigma is a term used to describe a measure of quality c o n t r o l t h a t i s h i gh e r t h a n " n o r m a l " . S i x S i g m a i s a methodology that is intended to reduce process variation to within a limit that will result in 3.4 defects per million samples or less.

The word quality comes from the Latin qualitas, and Cicero (a roman orator and politician, 106-43 B.C.) is believed to be the first person who used the word. Until the a few decades before, the concept of quality has been s i gn i f i c a n t l y e x t e n d e d a s w e k n o w i t t o d a y .

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Firstly, almost all factors are conducted around customers. In another word, it can be said as customers decide the quality (e.g. Juran in 1951, Deming in 1985, and Tribus in 1990). Secondly, according to customer, two things are commonly considered as which shall be fulfilled customer r e q u i r e m e n t s a n d c u s t o m e r e x p e c t a t i o n s . Th e r e q u i r e m e n t s a r e w h a t c u s t o m e r s r e q u e s t a n d d e m a n d . Th e s e a r e t h e b a s i c s o f t h e q u a l i t y . Th e e x p e c t a t i o n s a r e w h a t t h e c u s t o m e r s expect and look forward to. Sometimes, the customers do not know what they really need. So that demands developers to have a good understanding about the customers minds.

Quality is free. It is not a gift, but it is free. What costs money are in-quality things - all the actions that involve not doing jobs right the first time. Philip Crosby Many companies pay process improvement aims to have a better control in software development. Managers or organizations generally divide the whole project into smaller phases, such as requirement analysis, planning, coding, testing, releasing, etc.

Many companies pay a lot in correction, i.e. 80% of the cost i n a S o f t w a r e E n gi n e e r i n g ( S E ) p r o j e c t i s c o m m o n l y r e l a t e d to after- delivery corrections. And we also found:

Unsatisfied customers tell in average 10 persons about their bad experiences. 12% tells up to 20 other persons.

Satisfied customers tell in average 5 persons about their positive experiences.

It costs 5 times as much to gain new customers than keeping existing ones.

Up to 90% of the unsatisfied customers will not make business with you again, and they will not tell you.

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 95% of the unsatisfied customers will remain loyal if their complaints are handled fast and well.

All above motivate us to improve quality. Improved quality can affect the success in many different ways:

More satisfied and loyal customers

Lower employee turnover and sick leave rates

A stronger market position

Shorter lead times

Opportunities for capital release

Reduced costs due to waster and rework

Higher productivity

P roce ss Im prove me nt
Process improvement aims to software development. Managers divide the whole project into requirement analysis, planning, etc. have a better control in or organizations generally smaller phases, such as coding, testing, releasing,

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Process is a sequence of steps performed for a given purpose. It provides project members a regular method of using the same way to do the same work. Process improvement focuses on defining and continually improving process. Defects found in previous efforts are fixed in the next efforts. There are many models and techniques for process improvement, such as CMMI, ISO9000 series, SPICE, Six Sigma, etc.

Si x Si gm a
Six Sigma approach is a structured quantitative method which is invented by Motorola in 1986 for improving the product quality. Its aim is to enhance organizations performance by using statistical analytic techniques. After two decades of successful implementation in manufacturing, Six Sigma is approved as an effective methodology for improving quality. Nowadays, some researchers believe that Six Sigma can bring large benefits for software companies

Six Sigma equates to 3.4 Def ects Per Million Opportunities (DPMO). Therefore, as a metrics, Six Sigma focuses on reducing defects.

If we achieve 99.9997% of aims, then we are at the 6 level which equates to 3.4 DPMO. From this point of view, Sigma level is to show how well the product is performing. It seems this level can never be achieved. However, the Sigma level is not our purpose, the real purpose is to improve quality continually. The higher Sigma level we have reach, t h e h i gh e r q u a l i t y w e g e t .

The calculation of Sigma level is based on the number of defects per million opportunities (DPMO). The formula is

D P MO = 1 0 6 * D / ( N * O )

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Where D means the number of defects, N means number of units produced, and O is the number of opportunities per unit.

What does it mean to be "Six Sigma"? Six Sigma at many organizations simply means a measure of quality that strives for near perfection. But the statistical implications of a Six Sigma program go well beyond the qualitative eradication of customer-perceptible defects. It's a methodology that is well rooted in mathematics and statistics.

The objective of Six Sigma Quality is to reduce process output variation so that on a long term basis, which is the customer's aggregate experience with our process over time, this will result in no more than 3.4 defect Parts Per Million (PPM) opportunities (or 3.4 Defects Per Million Opportunities DPMO). For a process with only one specification limit (Upper or Lower), this results in six process standard deviations between the mean of the process a n d t h e c u s t o m e r ' s s p e c i f i c a t i o n l i m i t ( h en c e , 6 S i g m a ) . F o r a process with two specification limits (Upper and Lower), this translates to slightly more than six process standard deviations between the mean and each specification limit such that the total defect rate corresponds to equivalent of six process standard deviations.

Many processes are prone to being influenced by special a n d / o r a s s i gn a b l e c a u s e s t h a t i m p a c t t h e o v e r a l l p e r f o r m a n c e of the process relative to the customer's specification. That is, the overall performance of our process as the customer views it might be 3.4 DPMO (corresponding to Long Term performance of 4.5 Sigma). However, our process could indeed be capable of producing a near perfect output (Short Term capability also known as process entitlement of 6 Sigma). The difference between the "best" a process can be, measured by Short Term process capability, and the customer's aggregate experience (Long Term capability) is k n o w n a s S h i f t d ep i c t e d a s Z s h i f t o r h i f t . F o r a " t y p i c a l " s p r o c e s s , t h e v a l u e o f s h i f t i s 1 . 5 ; t h e r e f o r e , w h en o n e h e a r s about "6 Sigma," inherent in that statement is that the short term capability of the process is 6, the long term capability is 4.5 (3.4 DPMO what the customer sees) with an assumed 15

s h i f t o f 1 . 5 . T y p i c a l l y , w h en r e f e r e n c e i s g i v e n u s i n g D P M O , i t d en o t e s t h e L o n g T e r m c a p a b i l i t y o f t h e p r o c e s s , w h i c h i s the customer's experience. The role of the Six Sigma professional is to quantify the process performance (Short Term and Long Term capability) and based on the true process entitlement and process shift, establish the right strategy to reach the established performance objective

As the process sigma value increases from zero to six, the variation of the process around the mean value decreases. W i t h a h i gh e n o u g h v a l u e o f p r o c e s s s i g m a , t h e p r o c e s s approaches zero variation and is known as 'zero defects.'

St at i sti c al T ake A w ay
Decrease your process variation (remember variance is the square of your process standard deviation) in order to i n c r e a s e y o u r p r o c e s s s i g m a . Th e e n d r e s u l t i s g r e a t e r customer satisfaction and lower costs.

PROCESS SIGMA CALCULATION

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Defects Per Million Opportunities (DPMO) =

(Total Defects / Total Opportunities) * 1,000,000

Defects (%) = (Total Defects / Total Opportunities)* 100%

Yield (%) = 100 - %Def ects

Process Sigma (type this formula into Excel):

=NORMSINV(1- (total defects / total opportunities))+1.5

B e s u r e t o i n c l u d e t h e E q u a l s ( = ) s i g n . Th i s w i l l g i v e y o u your process sigma (or sigma capability) assuming the 1.5 sigma shift.

For example if you type this into Excel,

=NORMSINV(1- 100/1000000) +1.5

you will get 5.22 for your Process Sigma.

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OBJECTIVE AND SCOPE

The main aim of this paper is to provide Steps for software companies who want to implement Six Sigma for process improvement. To achieve that, following objectives shall be reached:

Identify the differences of Six Sigma in manufacturing and software companies.

Discuss the acceptance of Six Sigma in software companies.

Compare the academic research results with the reality of software companies.

Identify the state-of-art of Six Sigma in software.

Screen out the suitable Six Sigma tools and techniques for software companies.

Discuss companies.

the

future

work

for

Six

Sigma

in

software

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LIMITATIONS
Thre a t s To Va l i d i t y

Validation for threats is very necessary to validate research results. According to, four main types of validity were conducted as below.

1 Internal Validity

The internal validity threats in the research are related to the procedures and experiences of participants. In this paper, people involved in studies came from different levels. That will influence the research result. Another threat relates to case studies, the chosen cases came from different fields. Although this can help to generate the generic method for common cases, it also can be a threat to puzzle researchers.

2 Construct Validity

To minimize this threat, the sources of authors research materials general came from trustable or certificated originations, such as IEEE, ACM digital library, etc. However, some sources still have a low level risk. This may mislead authors research direction.

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3 Conclusion Validity

The research conclusion concluded literature review, c o m p a r i s o n s , i n t e r v i e w a n d c a s e s t u d i e s . Th e r e i s a t h r e a t that authors have not exactly concluded the real research findings. And to minimize this threat, authors have invited several friends to help validate research paper.

4 External Validity

External validity is related to generalize research results with whole population. To degrade this threat, literatures, cases were selected from different fields in authors research. At the same time, the research goal is to generate a generic method for software companies. So this parts threat is minimized.

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THEORETICAL PERSPECTIVE
A mixed methodology will be used which include both qualitative and quantitative research. And this mixed methodology has been used for authors research. Both qualitative and quantitative research methodologies were used. In the qualitative research methodology part, a d e t a i l e d a n d c o m p r eh e n s i v e l i t e r a t u r e s t u d y h a v e b e e n carried out. The literature study consists of articles, books, web materials, discussion forms and others. The literature study is used to find out the characteristics of Six Sigma, the tools and techniques used in Six Sigma, and to analyze the suitability of these tools and techniques for process improvement in software companies. A list of tools and techniques have been provided, which are helpful for Six Sigma implementation. With the help of the literature study, the condition of Six Sigma in manufacturing has been identified. After completely understanding the usage of Six Sigma in manufacturing, the research moved to follow research questions applicability of Six Sigma in software and why software companies choose Six Sigma for process improvement. In order to answer these research questions, different views which provided by software specialists have been discussed. Then authors analyzed the difference between manufacturing process and software process. Once the differences are clear, we can easily find out the applicability of Six Sigma for software.

In the quantitative research methodology part, two interviews have been conducted, one case study, and three case studies are reviewed. The first interviewee was one employee in a world-class manufacturing company. The company has over 5 years experience in implementing Six Sigma. And the interviewee currently is a Green Belt who have participated more than three Six Sigma projects. And the interview was conducted through phone. Before interview, authors have made enough preparations which include company background investigation, question list p r ep a r a t i o n , a n d s o m e i n t e r v i e w s k i l l l e a r n i n g . T o h a v e a best communication, a quite environment and one backup

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p h o n e h a v e b e e n p r ep a r e d . R e g a r d i n g q u e s t i o n l i s t , i t w a s generated after Six Sigma approach studying and company background learning. The motivation behind the interview was firstly to understand how Six Sigma is implemented in a manufacturing company. Secondly how Six Sigma improves a particular manufacturing process. And the employee has additional provided documents regarding to a real Six Sigma c a s e s t u d y . Th e c a s e s t u d y s h o w s h o w a p a r t i c u l a r m a n u f a c t u r i n g p r o c e s s i s i m p r o v e d u s i n g S i x S i g m a . Th e Second interview was in a company, where they have implemented Six Sigma for Softwares. The motivation behind the interview was firstly to understand how Six Sigma is implemented in Software Company. Secondly how i t i m p r o v e s p a r t i c u l a r s o f t w a r e p r o c e s s e s . Th e i n t e r v i e w e e was one employee in the company. He was working as a quality head. He had trainings in Six Sigma Green Belt and Black Belt. To have a farther research on Six Sigma approach, three case studies have been found from previous researchers work. The motivation behind the case studies review is to find out the state-of-art for Six Sigmas implementation. The companies which provided those cases came from three different fields software, human resource and consultancy. That is good for our research. By comparing their differences and similarities, author have g a i n v e r y i n t e r e s t i n g a n d u s e f u l f i n d i n gs . Th o s e f i n d i n g s were integrated with Six Sigma implementation model, and presented as the research final results for software companies and researchers. To validate the threats in authors research, a validation was conducted at last. Learning from, the validation was made up by four parts internal validity, construct validity, conclusion validity and external validity. With help of mixed research methodology and reasonable validation, authors research is believed to fulfill both correctness and authenticitys requirements.

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ANALYSIS OF DATA
B e n c h m a r k i n g : H o w d o yo u r p r o c es s es c o m p a r e ?

The following Sigma metrics are drawn from Nevalainen D, Berte L, Kraft C, Leigh E, Morgan T. Evaluating laboratory performance on quality indicators with the six sigma scale. Arch Pathol Lab Med 2000;124:516-519. Q-Probe QUALITY INDICATOR Order accuracy Duplicate test orders Wristband errors (not banded) TDM timing errors Hematology specimen acceptability Chemistry specimen acceptability Surgical pathology specimen accessioning Cytology specimen adequacy Laboratory proficiency testing Surg path froz sect diagnostic discordance PAP smear rescreening false negatives Reporting errors % ERROR DPM 1.8 % 1.52 0.65 24.4 0.38 0.30 3.4 7.32 0.9 1.7 2.4 0.0477 SIGMA*

18,000 3.60 15,200 3.65 6,500 4.00

244,000 2.20 3,800 3,000 4.15 4.25

34,000 3.30 73,700 2.95 9,000 3.85

17,000 3.60 24,000 3.45 477 4.80

*Conversion using table with allowance for 1.5s shift

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As shown by the variety of preanalytic, analytic, and postanalytic processes in this table, the approach of using outcome measures can be applied to virtually any process. The observed error rates for several of these processes are in the 3.0% to 0.3% range, which translates to typical sigma levels of 3 to 4. Even analytical performance, as estimated from proficiency testing data, is only at the 3.85 sigma l e v e l . Th e b e s t p r o c e s s i s " r e p o r t i n g e r r o r s " w h i c h h a s a sigma metric of 4.80. No process achieves the six sigma goal.

Some rules of thumb:

3-Sigma performance is considered the minimum for any industrial process.

Typical performance of business processes is considered to be around 4-Sigma.

and

industry

The first goal of a Six Sigma project in business and i n d u s t r y i s u s u a l l y t o i m p r o v e f r o m 4 - S i g m a t o 5 - S i g m a . Th i s i s i n f a c t a v e r y s i gn i f i c a n t i m p r o v e m e n t : a 1 0 0 - f o l d r e d u c t i o n i n defects in the short term!

Some processes never reach 6-Sigma. But reaching 5-Sigma may be good enough. In some cases, the process can be reengineered to achieve 6-Sigma performance.

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METHODOLOGY AND PROCEDURE OF WORK

Six Sigma is a structured quantitative method which is originally invented for reducing defects in manufacturing by Motorola in 1986. Its aim is using statistical analytic techniques to enhancing organizations performances, and to improving quality. Since Six Sigma has evolved over the last two decades, its definition is extended to three levels:

Metric

Methodology

Management System

Six Sigma approach satisfies all the three levels at the same time. Those levels are discussed in the following sections.

As a Me t ri c

Sigma is the Latin symbol . Here we use it to symbolize how much deviation exists in a set of data, and that is what we called standard normal distribution, or the bell curve. The normal distribution, also called the Gaussian distribution, is used for continuous probability distributions. The probability density function is shown as below is t h e m e a n a n d 2 i s t h e v a r i a n c e . Th e s t a n d a r d n o r m a l distribution is the normal distribution with a mean of zero and a variance of one. We can see that in a standard normal distribution, 50% of the values are under the mean and 50% of the values are above the mean. 25

In Six Sigma approach, Sigma is used as a scale for levels of process capability or quality. According to that, Six Sigma equates to 3.4 Def ects Per Million Opportunities (DPMO). Therefore, as a metrics, Six Sigma focuses on reducing defects. If we achieve 68% of aims, then we are at the 1 Sigma level. If we achieve 99.9997% of aims, then we are at the 6 level which equates to 3.4 DPMO. From this point of view, Sigma level is to show how well the product is performing. It seems this level can never be achieved. However, the Sigma level is not our purpose, the real p u r p o s e i s t o i m p r o v e q u a l i t y c o n t i n u a l l y . Th e h i gh e r S i g m a level we have reach, the higher quality we get. How Six Sigma measures quality?

Sigma Level Calculation

The calculation of Sigma level is based on the number of defects per million opportunities (DPMO). The formula is

DPMO = 106* D/ (N*O)

Where D means the number of defects, N means number of units produced, and O is the number of opportunities per unit. For example, a software company wants to measure their software products Sigma level. In their product, there are 200,000 lines of code (LOC). For each LOC, the company performs one check to test the quality. During the testing, 191 defects are detected. Then we have DPMO = 106*191 / (200,000*1) = 955. From Table 1, a part of DPMP to sigma conversion table, we can find the sigma level is 4.60. You can also find the free calculators on the website.

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DPMO VALUE TO SIGMA LEVEL CONVERSION TABLE

DPMO 933,193 926,471 919,243 911,492 903,199 894,350 884,930 874,928 864,334 853,141 841,345 828,944 815,940 802,338 778,145 773,372 758,036 742,154 725,747 708,840 691,462 673,645 655,422 636,831 617,911 598,706 579,260 59,618 539,828 519,939 500,000 480,061

Sigma Level 0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50 0.55 0.60 0.65 0.70 0.75 0.80 0.85 0.90 0.95 1.00 1.05 1.10 1.15 1.20 1.25 1.30 1.35 1.40 1.45 1.50 1.55

DPMO 60,571 54,799 49,471 44,565 40,059 35,930 32,157 28,717 25,588 22,750 20,182 17,865 15,778 13,904 12,225 10,724 9,387 8,198 7,143 6,210 5,386 4,661 4,024 3,467 2,980 2,555 2,186 1,866 1,589 1,350 1,144 986

Sigma Level 3.05 3.10 3.15 3.20 3.25 3.30 3.35 3.40 3.45 3.50 3.55 3.60 3.65 3.70 3.75 3.80 3.85 3.90 3.95 4.00 4.05 4.10 4.15 4.20 4.25 4.30 4.35 4.40 4.45 4.50 4.55 4.60

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460,172 440,382 420,740 401,294 382,088 63,169 344,578 326,355 308,537 291,160 274,253 257,846 241,964 226,627 211,856 197,663 184,060 171,056 158,655 146,859 135,666 125,072 115,070 105,650 96,800 88,508 80,757 73,529 66,807

1.60 1.65 1.70 1.75 1.80 1.85 1.90 1.95 2.00 2.05 2.10 2.15 2.20 2.25 2.30 2.35 2.40 2.45 2.50 2.55 2.60 2.65 2.70 2.75 2.80 2.85 2.90 2.95 3.00

816 687 577 483 404 337 280 233 193 159 131 108 89 72 59 48 39 32 26 21 17 13 11 9 7 5 4 3

4.65 4.70 4.75 4.80 4.85 4.90 4.95 5.00 5.05 5.10 5.15 5.20 5.25 5.30 5.35 5.40 5.45 5.50 5.55 5.60 5.65 5.70 5.75 5.80 5.85 5.90 5.95 6.00

Table 1 DPMO to sigma conversion table.

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As a Me t ho d o lo g y

Six Sigma approach is not just counting defects in a process or product, but it is a methodology to improve processes. The Six Sigma methodology focuses on:

Managing the customer requirements.

Aligning the processes to achieve those requirements.

processes.

Analyzing the data to minimize the variations in those

processes.

Rapid

and

sustainable

improvement

to

those

W h en w e l o o k a t S i x S i g m a a s a m e t h o d o l o g y , t h e r e a r e many models available for process improvement like DMADV, DMAIC, Breakthrough strategy, Roadmap, New Six Sigma, Eckes method, Six Sigma Roadmap, IDOV, and DMEDI. The most widely used models are DMAIC and D M A D V . T h e D M A I C m o d e l i s u s e d w h en a p r o c e s s o r product is in existence but is not meeting the customer r e q u i r e m e n t s . A n d t h e D M A D V m o d e l i s u s e d w h en a process or product is not in existence or is needed to be developed

DMAIC Mod e l
29

Motorola implemented the first Six Sigma model called as MAIC (Measure, Analyze, Improve and Control). It was d e v e l o p e d b y D r . M i a k e l H a r r y . Th i s m o d e l w a s u s e d t o solve the already known quality problems. GE, unlike Motorola was unaware of their quality problem. They needed a model that can firstly map the real quality problems and then to solve them. Dr. Miakel Harry took advantage of his experience at Motorola and developed a new model DMAIC (Define, Measure, Analyze, Improve and Control). Nowadays this model is mostly in Six Sigma implementation. The phases of DMAIC model are explained as follows:

Define phase is to define the customer s requirements and their expectations for product or services. To align the project goals with business goals. To define the project scope, the start and stop of the process.

Measure phase is to develop a data collection plan for the current process. To collect data for the current process and to develop a measurement system. The measurement system is used to calculate the current performance of the process.

Analyze phase is to find out the gap between the current performance and the goal performance. To analyze the collected data of current process and to determine the main factors of the poor performance. To find out the source of variation in the current process.

I m p r o v e p h a s e i s t o i d e n t i f y a n d s e l e c t t h e r i gh t d e s i g n s o l u t i o n s t o f i x t h e p r o b l e m s . Th e s e t o f s o l u t i o n s t o improve the sigma performance are selected on the basis of root causes identified in Analyze phase.

Control phase is to finally implement the solutions. To provide the maintenance of the improved process so that the improved Six Sigma process can run for a long time.

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DMADV Mo d e l

DMADV (Define, Measure, Analyze, Design and Verify) m o d e l w a s d e v e l o p e d b y Th o m a s P y z d e k i s . T h i s m o d e l i s applied to the development of new processes or products. The phases of DMADV are described below:

Define phase is to find out the customer needs and expectations and to define the project scope.

Measure phase is to identify the CTQs (critical to qualities), process capability and risk assessment.

Analyze phase is to develop the high level design concepts and design alternatives. To select the best design.

Design phase is to develop plans for test verification, this may require simulations.

Verify operational scale.

phase

is

to

implement

the

process

in

As a Ma na ge me nt Syst em

T h r o u gh e x p e r i e n c e , M o t o r o l a h a s f o u n d t h a t u s i n g S i x Sigma as a metric and as a methodology are not enough to d r i v e t h e b r e a k t h r o u gh i m p r o v e m e n t s i n a n o r g a n i z a t i o n . Motorola ensures that Six Sigma metrics and methodology are adopted to improve opportunities which are directly linked to the business strategy. Now Six Sigma is also 31

applied as a management system for executing the business strategy. Six Sigma approach provides a top-down solution to help the organization. It put the improvement efforts according to the strategy. It prepares the teams to work on t h e h i gh l y i m p o r t a n t p r o j e c t s . I t d r i v e s c l a r i t y a r o u n d t h e business strategy.

Too l s And Te c hni ques In Si x Si gma

The most popular 7 Quality Control (QC) tools. They are Cause- effect Diagram, Pareto Chart, Flow Chart, Histogram, Check Sheet, Control Chart, and Scatter Plot.

Brainstorming is "a conference technique by which a group attempts to find a solution for a specific problem by amassing all the ideas spontaneously by its members"

The affinity diagram is developed by Kawakita Jiro, so it is also called KJ method. It is used to organize large number of data into logical categories. Generally, we use affinity diagram to refine the ideas generated in brainstorming which is uncertain or need to be clarified.

SIPOC diagram is a Six Sigma tool which is used to identify all process related elements before we start to work. Predefine those factors can avoid we forget something which may influence the process improvement, especially in complex projects. SIPOC is the logograms for Suppliers, Inputs, Processes, Outputs, and Customers

Measurement System Analysis (MSA), or called Measurement Capability Analysis (MCA), is used to assess the capability of process measurement systems by using experimental and mathematical methods. The purpose is to improve your measurement system, to ensure the system provides the unbiased results with little variations.

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Voice of the customer method is a process to identify c u s t o m e r s r e q u i r e m e n t s f o r h i gh q u a l i t y p r o d u c t . Th e customers come from different fields. External customers usually are common customers, suppliers, product users, partners, etc. And internal customers include employees from market department, product development department, and so on.

Kano analysis is developed by Dr. Noritaki Kano, it is a quality tool which helps to prioritize customer requirements based on their satisfaction. That is because all identified r e q u i r e m e n t s a r e n o t e q u a l l y i m p o r t a n c e . Th e r e s u l t c a n h e l p us to rank the requirements and identify the few critical ones w h i c h h a v e t h e h i gh e s t i m p a c t . F u r t h e r m o r e , i t c a n h e l p u s to make the decision.

The other methods are seldom used, but still very helpful. They are

P r o j e c t M a n a g e m e n t M e t h o d s Th e p r o j e c t management skills can significantly help the Six Sigma i m p r o v e m e n t p r o j e c t s , s u c h a s p r o j e c t p l a n n i n g, p r o j e c t c h a r t e r , scheduling, communication, HR management, and project management tools.

Failure, Effect and Mode Analysis (FEMA ) The main work of FEMA is to assess risks and put efforts on controlling and minimizing risks. Before you work with those risks and identify their causes and effects, using flow chart to prioritize them in the timely sequence is a nice choice.

S t a k e h o l d e r s A n a l y s i s I d e n t i f y i n g t h e p eo p l e w h o have a stake on the Six Sigma process improvement project. Those people will directly or indirectly influence the projects or results. The ones who are not satisfied will insist to changes.

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 Process Documentation Effective, clear, comprehensive process documentation is very helpful for the Six Sigma projects, such as process maps, task instructions, measures, etc.

Analysis of Variance (ANOVA) It is a collection of statistical models which analyzes the variations presented in the project. It is used to assess the differences between groups of data.

C o r r e l a t i o n a n d R e g r e s s i o n Th e s e t o o l s a s s e s s t h e relationships (presence, strength and nature) among variables in process.

Design of Experiments (DOE) It is used to assess the performance of a process. Generally, it tests two or more characteristics under the different conditions. By comparing, the causes of a problem will be identified. It also can be used to optimize results.

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STEPS IN THE SIX SIGMA METHODOLOGY

The six sigma methodology includes the following five steps.

1 . D e f i n e t h e b u s i n e s s . Th i s s t e p i n c l u d e s d e f i n i n g customer requirements, business goals and objectives, team roles and responsibilities, scope and resources, processes, and performance baselines. For example, Noritaki Kano's quality analysis is useful in defining the customer's requirements. Kano's approach separates customer requirements into three categories:

Assumed requirements - a given feature or function such as wheels on a automobile.

Specified requirements - the customer's explicitly stated requirements.

Expected requirements - the customer's unstated, but real expectations.

These requirements establish how good work and defective work are defined. Other techniques used in this step include: project charter, stakeholder commitment analysis, affinity diagrams, voice of the customer, force field analysis, Pareto a n a l y s i s , p r o c e s s m a p p i n g, a n d S I P O C ( s u p p l i e r s , i n p u t s , process, outputs, customers).

2 . Me a s u r e t h e p r o c e s s e s . M e a s u r e d e f e c t s p e r u n i t , d e f e c t s per million opportunities and the yield percentage. For example,

35

Defects per unit = Total number of defects Total number of units inspected

A unit is the output of a process, e.g., an invoice in accounts payable, a subassembly in an assembly area, a package in a packing department. All defects are counted, not just the number of defective units since a unit may include several defects.

3. Analyze the process to determine the root cause. Pareto charts or diagrams are used in this step to identify critical factors that have the greatest influence on performance, recognizing that most problems are created by a few causes (Referred to as the 80/20 rule). The analyze step continues with cause and effect, or fishbone diagrams to identify potential causes of problems. Other techniques used in this step include multivary analysis and failure mode and effects analysis.

36

4 . I mp r o v e t h e p r o c e s s . T h i s s t e p i n c l u d e s u s e o f t w o techniques, Design of Experiments and change management. Design of experiments involves statistically designed experiments where multiple measurements are made of two or more variables are that vary simultaneously. This allows the interactions between many variables to be included in the experiment. After the experiment is designed, data are collected and analyzed with statistical software.

5. Control. Control tools include control charts, precontrol charts, and run charts. This step includes transforming and maintaining an organizational culture that embraces change and improvement.

37

RELATED PROCESS MODELS THE SIX SIGMA METHODOLOGY

A classic definition: "Six Sigma is a process-focused methodology designed to improve business performance t h r o u gh i m p r o v i n g s p e c i f i c a r e a s o f a s t r a t e g i c b u s i n e s s processes.". From this alone it is clear why there are a n u m b e r o f p a r a l l e l s w i t h I T I L , a l t h o u gh s i x s i g m a o f c o u r s e isn't restricted to information technology.

38

Sigma is a symbol meaning how much deviation exists in a set of data - sometimes called a bell curve, or a standard normal distribution. In a standard normal distribution, 50% of the values lie above the mean (average) and 50% of the values lie below. In Statistics we take it a step further and delineate certain data points within that timeline.

The diagram may look tricky to read, but in simple language: Consider that you run a pizza delivery business and you set a target of delivering pizzas within 25 minutes of receiving the order. If you achieve that 68% of the time, you are running at 1 Sigma. If you achieve it 99.9997% of the time then you are at 6 Sigma (or you are late on average only 3.4 times out of every one million orders).

T h a t i s f u n d a m en t a l l y h o w s i x s i g m a m e a s u r e s q u a l i t y . I t measures the Variance and does not rely on the Mean.

It is argued that all too often businesses base their performance on a mean, or average-based measure, of the recent past. However, reality is that customers DON'T judge businesses on averages. They actually experience the variance in each and every transaction or purchase.

39

Customers also value consistent and predictable business p r o c e s s e s a n d p r o d u c t s t h a t d e l i v e r h i gh l e v e l s o f q u a l i t y . Six Sigma focuses first on reducing variation, and then on improving process capability.

INTERESTING? It is certainly an interesting approach, and is well tried and tested. Since it was developed by Motorola in the eighties it has been adopted by more and more corporations and major organizations. It is now extremely widely used and has resulted in substantial and demonstrable improvements in organizations of all shapes and sizes.

S I X S I G M A C O S T S A N D S A VI N G S

The financial benefits of implementing Six Sigma at your company can be significant.

Many people say that it takes money to make money. In the world of Six Sigma quality, the saying also holds true: it takes money to save money using the Six Sigma quality methodology. You can't expect to significantly reduce costs and increase sales using Six Sigma without investing in training, organizational infrastructure and culture evolution.

Sure you can reduce costs and increase sales in a localized area of a business using the Six Sigma quality methodology -- and you can probably do it inexpensively by hiring an exMotorola or GE Black Belt. I like to think of that scenario as a "get rich quick" application of Six Sigma. But is it going to last when a manager is promoted to a different area or leaves the company? Probably not. If you want to produce a culture shift within your organization, a shift that causes employees to think about how their actions impact the customer and to communicate within the business using a consistent language, it's going to require a resource commitment. It takes money to save money.

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How much financial commitment does Six Sigma require and w h a t m a gn i t u d e o f f i n a n c i a l b e n e f i t c a n y o u e x p e c t t o receive? We all have people that we must answer to -- and rhetoric doesn't pay the bills or keep the stockholders happy (anymore). I was tired of reading web pages or hearing people say:

"Companies of all types and sizes are in the midst of a quality revolution. GE saved $12 billion over five years and added $1 to its earnings per share. Honeywell (AlliedSignal) recorded more than $800 million in savings."

"GE produces annual benefits of over $2.5 billion across the organization from Six Sigma."

"Motorola reduced manufacturing costs by $1.4 billion from 1987-1994."

"Six Sigma reportedly saved Motorola $15 billion over the last 11 years."

The above quotations may in fact be true, but pulling the numbers out of the context of the organization's revenues does nothing to help a company figure out if Six Sigma is right for them. For example, how much can a $10 million or $100 million company expect to save?

While recent corporate events like the Enron and WorldCom s c a n d a l s m i gh t l e a d u s t o b e l i e v e t h a t n o t e v e r y t h i n g w e r e a d in a company's annual report is valid, I am going to provide the following information based on the assumption that these Six Sigma companies operate with integrity until proven otherwise.

I investigated Motorola, Allied Signal, GE and Honeywell. I choose these four companies because they are the companies 41

that invented and refined Six Sigma -- they are the most mature in their deployments and culture changes. As the Motorola website says, they invented it in 1986. Allied S i g n a l d ep l o y e d S i x S i g m a i n 1 9 9 4 , G E i n 1 9 9 5 . H o n e y w e l l w a s i n c l u d e d b e c a u s e A l l i e d S i gn a l m e r g e d w i t h H o n e y w e l l in 1999 (they launched their own initiative in 1998). Many companies have deployed Six Sigma between the years of GE and Honeywell -- we'll leave those companies for another article.
Company Name Motorola (NYSE:MOT) Allied Signal (Merged With Honeywell in 1999) GE (NYSE:GE) Honeywell (NYSE:HON) Ford (NYSE:F) Year Began Six Sigma 2001 2002 2003 2004 2005

Table 2 identifies by company, the yearly revenues, the Six Sigma costs (investment) per year, where available, and the f i n a n c i a l b en e f i t s ( s a v i n g s ) . T h e r e a r e m a n y b l a n k s , especially where the investment is concerned. I've presented as much information as the companies have publicly disclosed.
Table 2: Six Sigma Cost And Savings By Company Year Revenue ($B) Invested ($B) % Revenue Invested Motorola 1986-2001 356.9(e) ND Allied Signal 1998 15.1 ND GE 1996 1997 79.2 90.8 0.2 0.4 0.3 0.4 0.2 1 0.2 1.1 0.5 2 9.9 16 1 4.5 Savings ($B) % Revenue Savings

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1998 1999 1996-1999

100.5 111.6 382.1

0.5 0.6 1.6

0.4 0.5 0.4 Honeywell

1.3 2 4.4 3

1.2 1.8 1.2

1998 1999 2000 1998-2000

23.6 23.7 25.0 72.3

ND ND ND ND Ford

0.5 0.6 0.7 1.8 4

2.2 2.5 2.6 2.4

2000-2002

43.9

ND

16

2.3

Key: $B = $ Billions, United States (e) = Estimated, Yearly Revenue 1986-1992 Could Not Be Found ND = Not Disclosed Note: Numbers Are Rounded To The Nearest Tenth

Although the complete picture of investment and savings by year is not present, Six Sigma savings can clearly be s i gn i f i c a n t t o a c o m p a n y . T h e s a v i n g s a s a p e r c e n t a g e o f revenue vary from 1.2% to 4.5%. And what we can see from t h e G E d ep l o y m e n t i s t h a t a c o m p a n y s h o u l d n ' t e x p e c t m o r e than a breakeven the first year of implementation. Six Sigma is not a "get rich quick" methodology. I like to think of it like my retirement savings plan -- Six Sigma is a get rich slow methodology -- the take-away point being that you will get rich if you plan properly and execute consistently.

As GEs 1996 annual report states, "It has been estimated that less than Six Sigma quality, i.e., the three-to-four Sigma levels that are average for most U.S. companies, can cost a company as much as 10-15% of its revenues. For GE, that would mean $8-12 billion." With GEs 2001 revenue of $111.6 billion, this would translate into $11.2-16.7 billion of savings. Although $2 billion worth of savings in 1999 is impressive, it appears that even GE hasn't been able to yet capture the losses due to poor quality -- or maybe they're

43

above the three-to-four Sigma levels that are the average for most U.S. companies?

In either case, 1.2-4.5% of revenue is significant and should catch the eye of any CEO or CFO. For a $30 million a year company, that can translate into between $360,000 and $1,350,000 in bottom-line-impacting savings per year. It takes money to make money. Is investing in Six Sigma quality, your employees and your organization's culture worth the money? Only you and your executive leadership team can decide the answer to that question.

T H E S I X S I G M A C A LC UL A T O R S

The Calculators:

DP M ( De f e c t s P e r Mi l l i o n ) C al cu l a t or

Process Design Calculator

QC Design Calculator

Limitations

DPM (Defects Per Million) Calculator

Here you can calculate the Sigma-metric by counting the number of Defects in a sample.

Note that this calculator "rounds up" - to the nearest SigmaMetric on the table on this website. 44

Enter the number of Defects Observed: Enter the size of the sample: (how many total results were examined)
Calculate Sigm

Here are your Defects Per Million: Here is your Sigma-Metric:

Note also that if you know your Def ect/Error rate as a percentage, you can enter it here with the sample size of 100 (i.e. a defect rate of 2% would be entered "2" in the defects observed, and "100" in the size of the sample).

45

Process Design Calculator

Here you can calculate your Sigma-metric by analysis of variance measurements. Enter the Quality Requirement or Tolerance Limit (in %): (If you don't know, look it up below) Observed Bias (as a %): (If you don't know, start with 0) Observed CV (as a %): (If you don't know, find out)
Calculate Sigm

Q C D e s i g n C a l c u l a t o r ( C r i t i c al S ys t e m a t i c E r r o r )

Here you can calculate the size of the error your QC must detect. Enter the Quality Requirement or Tolerance Limit (in %): (If you don't know, look it up below) Observed Bias (as a %): (If you don't know, start with 0) Observed CV (as a %): (If you don't know, find out)
Calculate Critic

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L i mi t a t i o n s

These Javascript calculators are for demonstration purposes o n l y . I n p a r t i c u l a r , i f y o u e n t e r n o n s en s i c a l n u m b e r s , t h e y will return nonsense. Entering 0 for Defects Observed, Sample Size, Quality Required, Observed CV will give you useless answers. More robust Six Sigma calculators are available upon request.

CERTIFICATIONS AND AWARDS

ASQ Certifications

Deming

ISO 9000

Individual State Awards (US)

Malcolm Baldrige

Master Black Belts and Black Belts

Six Sigma

TL 9000

Other Awards

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 American Society for Quality Medals and Awards

Australian Quality Award

European Quality Award

National Quality Institute

S I X S I G M A & Q UA L I T Y M E T H O D O L O G I E S

Balanced Scorecard

Baldrige (@)

Benchmarking

Business Process Reengineering (BPR)

D e m i n g ( @)

Document Control

DMADV / New Product & Service Introduction

DMAIC / Existing Product or Service

48

Financial Analysis / Cost of Quality

ISO 9000 (@)

Lean Manufacturing

Management

Metrics

Plan, Do, Check, Act - PDCA

Process Management

Project Selection

Simulation

Six Sigma

Taguchi Methods

TL 9000 (@)

Total Quality Management (TQM)

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Work-Out

Q UA L I T Y T O O L S & T E M P L A T E S

Affinity Diagram

Brainstorming

Calculators

Cause & Effect / Ishikawa / Fishbone

Charters

Control Charts (@)

C r e a t i v i t y / O u t o f t h e B o x Th i n k i n g

Design Of Experiment

D o c u m e n t C o n t r o l ( @)

Flow Chart / Flow Charting

FMEA / Risk Assessment

50

Glossaries

Histogram

Kano Analysis

Organizing Data

Online Statistics Textbooks (@)

Pareto

Poka Yoke (Mistake Proofing)

Process Map / Process Mapping

Project Charters

Quality Function Deployment / House of Quality

Scatter Diagram / Plot

SIPOC Diagram

Software

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Support and Restraint

Surveys (@)

Thinking Out Of The Box

S A M P L E : S I X S I G M A B E L T P RA C T I C E T E S T

This is a timed practice Six Sigma belt test, not intended to provide you with actual questions from certifying companies or organizations.

Number Of Questions: 2410

Curriculum Level: Black Belt

Time Per Question: 30 secs1 Minute2 Minutes3 Minutes4 Minutes5 Minutes

Question No: 1

What is the present value of $2,000.00 to be paid in 10 years assuming an interest rate of 7%?

$1,808.00

$1,017.00

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$1,529.00

$2,209.00

$1,117.00

Question No: 2

Cost of calibration and first trial test hardware would be included in:

Appraisal cost

Preventive cost

Trial cost

Failure cost

Calibration cost

Question No: 3

Using 2 standard deviation control limits, what is the number of false alarms (the chance of being outside the c o n t r o l l i m i t s ) w h en t h e p r o c e s s h a s n o t s h i f t e d ?

53

None of the answers is correct

460

270

22

Question No: 4

Which of the following statements is not true with respect to "Force Field Analysis" tool?

Generally used in the initial stages of planning.

It is helpful "restraints" pertaining to organization.

in identifying the "drivers" and any new initiative deployed in an

B E S T P RA C T IC E S

Six sigma can be implemented both in manufacturing and service industries. It requires lot of discipline and commitment.

Call Centers

Customer Relationship Management

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Food

Fulfillment

Information Technology - IT

Manufacturing

Medical

Sales

Transactional

C O M P A N I E S I N I N D I A H A VI N G S I X S I G M A

GE practices six sigma in India as it does world over

E-Funds India International, at Gurgaon and Mumbai, having initiated there Six Sigma efforts.

Ispat Industries Ltd., India has taken up the Six Sigma initiative in a big way. They have started the process in all aspect of its operations.

Tisco is also there.

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Escotel

Mumbai Tiffinwala

HOW WELL CAN SIX SIGMA BE I M P L E M E N T E D I N I N D I A N I N D US T R I E S ?

There are quite a few Indian companies, which have already a d o p t e d s i x s i g m a . A l t h o u gh , i t i s t o o e a r l y f o r t h e intervention to take effect, there seems to be no reason why the same sorts of results will not come for the Indian cos. as well.

I guess the basic issue is going to be of attitude: the managements' & the workers'.

MANUFACTURING BEST PRACTICES

The cost of poor quality can represent 20% to 30% of a c o m p a n y s t o t a l r e v e n u e s . Th e f o l l o w i n g c a s e s t u d i e s d e m o n s t r a t e h o w S i x S i g m a d ep l o y m e n t c r e a t e s b r e a k t h r o u g h performance, captures cost savings and increases customer satisfaction. Often, the savings associated with a first project justify the entire cost of Six Sigma training.

PAPER AND PULP INDUSTRY

Straight-line Gluer Efficiency

At a carton-producing facility, the straight-line gluer in use was producing at a rate of 33% below its capacity. The improvement targeted was a 50% increase in Net Efficiency

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Output (NEO), which would save an estimated $250,000 annually. Based on extensive statistical and Pareto analysis, it was decided to target downtime and spoilage specifically. There was a strong focus on mechanical fixes and developing a n d c o n d u c t i n g e x t e n s i v e o p e r a t o r t r a i n i n g . Th e c o m p l e t e d project exceeded the original goals by 11%, with final results of a 50% reduction in downtime and a 40% decrease in spoilage. This increased Net Efficiency Output by 61%, with savings of $316,434 from this project. To maintain this new output, control plans were put in place with preventative maintenance schedules and new hire and refresher training programs.

R e c o v e r y B o i l e r Th r o u g h p u t R e p o r t

Within the recovery department of a major pulp producer, o p e r a t i o n i n ef f i c i e n c i e s w e r e f o u n d w i t h i n t h e t w o b o i l e r s used to convert black liquor into green and then white l i q u o r . Th e p r o c e s s w a s m a p p e d a n d S i x S i g m a m e t h o d o l o g y was applied, providing the company with standard operating procedures to measure liquor solids consistently while giving operators a clear view into how the system is performing. This new streamlined operation removed a chronic bottleneck in the production of green liquor, resulting in annualized savings of $226,000. Based on the new measurement system installed for primary metrics, operators are also able to make refining changes on the control limits, thus decreasing standard deviation between the concentrators.

Turn-up Loss

Within a leading paperboard company, a project goal was set to reduce turn-up loss. Turn-up loss data was collected to quantify the opportunities for improvement, including spool loss, lap loss, winder process loss, and quality sample loss as well as to minimize customer complaints from turn-up tape marks, wrinkles, and core marks. The objective was to reduce the current average of 1.01 percent to .90 percent. Six Sigma tools were applied to target problem areas. By

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improving reporting procedures, the team was able to obtain a .922 percent turn-up loss with an annualized savings of $89,000.

Paperboard Waste Reduction Sheet-Fed Process

Within the sheet/print/cut process of a leading paperboard company, a project goal was set to decrease waste to 6.5% from the current 7.6% historical baseline average, resulting in an annual cost savings of $120,000 based on the same level of production. By reusing waste sheets, improving reporting procedures and developing a set of best practices/procedures, the team was able to obtain a monthly average waste of 4%, resulting in an annualized savings of $696,000 (assuming the waste would otherwise have remained at the 7.6% average). Additionally, it was recommended to continue the improvements in waste reduction and expand beyond the sheet/print/cut process.

UTILITIES INDUSTRY

Condenser Air In-Leak Reduction

At a generating station of an electric utility in the Southeast, the air in-leakage flow for one of the units condensers was out of specification compliance by 25 scfm a t f u l l l o a d . Th e a n n u a l c o s t o f t h i s d e v i a t i o n w a s a p p r o x i m a t e l y $ 2 0 0 , 0 0 0 . T h r o u gh t h e u s e o f t h e P F M E A , i t was determined that the existing process control measurement (turbine backpressure) was inadequate. T h o r o u gh a n a l y s i s c o n c l u d e d t h a t i f H e l i u m l e a k d e t e c t i o n equipment were used as the control measurement, it would resolve the air in-leaking problems. The change of the measurement tool produced final results of a 67.5% reduction in air in-leak flow and a 13.4% reduction of

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turbine backpressure. This improvement produced annual s a v i n g s o f $ 2 0 6 , 4 6 6 , i n a d d i t i o n t o t h e i n t a n g i b l e s a v i n gs due to improved boiler reliability. To maintain this reduction, control plans were put in place.

Call Center Effectiveness

Within a call center of an electric utility company, poor c o m m u n i c a t i o n w i t h c a l l - i n s r e s u l t e d i n a h i gh a b a n d o n e d c a l l r a t e , m u l t i p l e t r a n s f e r s , a n d a n i n ef f i c i e n t u t i l i z a t i o n o f call handling resources. Using the Six Sigma methodology, improvements were made that enhanced staff utilization, messaging systems, and a reduction of abandoned call rates and transfers. The improvements translated into savings of $515,000 annually. Customer surveys were generated to measure customer satisfaction and continuous improvements are made regularly.

Procurement Redundancy and Waste

Within the purchasing department of a major utility in the Northeast, too many vendors and too few leveraged agreements resulted in redundancy and waste within the procurement process. The process was mapped and Six Sigma methodology was applied, identifying that poor planning and communication contributed to low contract utilization rates t h r o u gh o u t t h e 1 4 l o c a t i o n s . B y t r a c k i n g d o l l a r s s p e n t b y each location and analyzing vendor deliveries, they learned that the cost of direct labor superseded any price advantage gained. The team began working with local purchasing personnel to increase the use of approved vendors. They also met with vendors and discussed a shared incentive program. During the first six-month period of implementation, leveraged purchases increased by 46% or $664,000. The company also received two rebate checks in excess of $52,000.

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Contract Complaint Reduction

W i t h i n t h e c o n t r a c t d ep a r t m e n t o f a m a j o r u t i l i t y c o m p a n y , excavation, cable-laying and re-instatement contract c o m p l a i n t s r e s u l t e d i n c u s t o m e r d i s s a t i s f a c t i o n a n d h i gh costs. Using the Six Sigma methodology, a Quality Control System was developed reducing contract complaints from 109 to 55 during 2000-2001.

BENEFITS OF SIX SIGMA

There are numerous benefits of six sigma as a way to address i s s u e s a n d p r o b l e m s . A m o n g t h e b en e f i t s o f s i x s i g m a i s t h e decrease in defects that are allowed to reach the customer. Y o u c a n g e t s o m e s e n s e o f t h e b en e f i t s o f s i x s i g m a b y reviewing some six sigma projects. Other benefits of six sigma include:

Focus on customers.

Improved customer loyalty.

Reduced cycle time.

Less waste.

Data based decisions.

Time management.

Sustained gains and improvements. 60

Systematic problem solving.

Employee motivation.

Data analysis before decision making.

Faster to market.

Team building.

Improved customer relations.

Assure strategic planning..

Reductions of incidents.

Measure value according to the customer.

Better safety performance.

Understanding of processes.

Effective supply chain management.

Design and redesign products/services.

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Knowledge of competition, competitors .

Develop leadership skills.

Breakdown barriers between departments and functions.

Management training.

Improve presentation skills.

Integration of products, services and distribution.

Use of standard operating procedures.

Better decision making.

Improving project management skills.

Sustained improvements.

Alignment with strategy vision, and values.

Increased margins.

Greater market share.

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Supervisor training.

Lower costs to provide goods and services.

Fewer customer complaints.

TOTAL QUALITY MANAGEMENT

Total Quality Management, or TQM, was very popular in the 1980s and 1990s as a way of bringing about major change within organisations.

Total - everyone is involved from senior management to the lowest company junior

Quality - the aim is to improve products and services to the customer

Management - assuming that things get better if you manage them

TQM is well constructed as a methodology, and has a range of powerful tools for aiding and bringing about change. It is o n e o f t h e b e s t m e t h o d s f o r b r i n gi n g a b o u t c u l t u r a l a n d process change in an organisation.

The failure of TQM to be adopted long term is that

It is a tool and not a goal in itself

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It has no visible measure of success

Improvements gained are often lost over time

Six Sigma Quality Methodology uses TQM tools and techniques to aid process improvement and change, but fully addresses the failings of TQM by providing a target goal and a measure by which improvement can be judged and sustained. Six Sigma also firmly places the emphasis on total and complete customer satisfaction, where TQM may have been used by organisations to cut costs rather than deliver perfection to the customer.

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FINDINGS, INFERENCES AND RECOMMENDATIONS

What Can GE Do for You?

From jet engines to power GE neration, financial services to plastics, and medical imaging to news and information, GE people worldwide are dedicated to turning imaginative ideas into leading products and services that help solve some of the world's toughest problems.

Making Customers Feel Six Sigma Quality

Globalization and instant access to information, products and services have chan GE the way our customers conduct business old business models no lon GE work. Today's competitive environment leaves no room for error. We must delight our customers and relentlessly look for new ways to exceed their expectations. This is why Six Sigma Quality has become a part of our culture.

What is Six Sigma?

First, what it is not. It is not a secret society, a slogan or a c l i c h . S i x S i g m a i s a h i gh l y d i s c i p l i n e d p r o c e s s t h a t h e l p s us focus on developing and delivering near-perfect products 65

and services. Why "Sigma"? The word is a statistical term that measures how far a given process deviates from perfection. The central idea behind Six Sigma is that if you can measure how many "defects" you have in a process, you can systematically figure out how to eliminate them and GE as close to "zero defects" as possible. Six Sigma has chan GE the DNA of GE it is now the way we work in everything we do and in every product we design.

GEs Evolution Towards Quality

GE began moving towards a focus on quality in the late '80s. Work-Out, the start of our journey, opened our culture to ideas from everyone, everywhere, decimated the bureaucracy and made boundaryless behavior a reflexive, natural part of our culture, thereby creating the learning e n v i r o n m en t t h a t l e d t o S i x S i g m a . N o w , S i x S i g m a , i n t u r n , is embedding quality thinking process thinking across every level and in every operation of our Company around the globe.

Work-Out in the 1980s defined how we behave. Today, Six Sigma is defining how we work and has set the sta GE for making our customers feel Six Sigma.

Key Elements of Quality

the Customer

the Process

the Employee

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There are three key elements of quality: customer, process and employee. Everything we do to remain a world-class quality company focuses on these three essential elements.

. . . t h e C u s t o me r D e l i g h t i n g C u s t o m e r s

Customers are the center of GEs universe: they define quality. They expect performance, reliability, competitive prices, on-time delivery, service, clear and correct transaction processing and more. In every attribute that influences customer perception, we know that just being g o o d i s n o t e n o u gh . D e l i g h t i n g o u r c u s t o m e r s i s a n e c e s s i t y . Because if we don't do it, someone else will!

...the Process Outside-In Thinking

Quality requires us to look at our business from the customer's perspective, not ours. In other words, we must look at our processes from the outside-in. By understanding the transaction lifecycle from the customer's needs and processes, we can discover what they are seeing and feeling. With this knowled GE , we can identify areas where we can add significant value or improvement from their perspective.

...the Employee Leadership Commitment

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People create results. Involving all employees is essential to GEs quality approach. GE is committed to providing o p p o r t u n i t i e s a n d i n c en t i v e s f o r e m p l o y e e s t o f o c u s t h e i r talents and energies on satisfying customers.

All GE employees are trained in the strategy, statistical tools and techniques of Six Sigma quality. Training courses are offered at various levels:

Quality Overview Seminars: basic Six Sigma awareness.

Team Training: basic tool introduction to equip employees to participate on Six Sigma teams.

Master Black Belt, Black Belt and Green Belt T r a i n i n g : i n - d e p t h q u a l i t y t r a i n i n g t h a t i n c l u d e s h i gh - l e v e l statistical tools, basic quality control tools, Chan GE Acceleration Process and Flow technology tools.

D e s i g n f o r S i x S i g m a ( D F S S ) T r a i n i n g : p r ep a r e s t e a m s for the use of statistical tools to design it right the first time.

Quality is the responsibility of every employee. Every employee must be involved, motivated and knowledgeable if we are to succeed.

Th e S i x s i g m a S t r a t e g y K e y C o n c e p t s

To achieve Six Sigma quality, a process must produce no more than 3.4 defects per million opportunities. An "opportunity" is defined as a chance for nonconformance, or n o t m e e t i n g t h e r e q u i r e d s p e c i f i c a t i o n s . Th i s m e a n s w e n e e d

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to be nearly flawless in executing our key processes. Six Sigma is a vision we strive toward and a philosophy that is part of our business culture.

Key Concepts of Six Sigma

At its core, Six Sigma revolves around a few key concepts. Critical to Quality: Attributes most important to the customer Def ect: Failing to deliver what the customer wants

P r o c e s s C a p a b i l i t y : Wh a t y o u r p r o c e s s c a n d e l i v e r Variation: Stable Operations: Wh a t t h e c u s t o m e r s e e s a n d f e e l s Ensuring consistent, predictable processes to improve what the customer sees and feels Design Sigma: for Six Designing to meet customer needs and

process capability

Our Customers Feel the Variance, Not the Mean

Often, our inside-out view of the business is based on avera GE or mean-based measures of our recent past. Customers don't jud GE us on avera GE; they feel the variance in each transaction, and each product we ship. Six Sigma focuses first on reducing process variation and then on improving the process capability.

Customers value consistent, predictable business processes that deliver world-class levels of quality. This is what

GEs Commitment to Quality

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GEs success with Six Sigma has exceeded our most optimistic predictions. Across the Company, GE associates embrace Six Sigma's customer-focused, data-driven philosophy and apply it to everything we do. We are building on these successes by sharing best practices across a l l o f o u r b u s i n e s s e s , p u t t i n g t h e f u l l p o w e r o f G E b eh i n d our quest for better, faster customer solutions.

What has Six Sigma accomplished?

General Electric is most often used as the example for Six Sigma results, in part because they have been so zealous about using this technique. GE estimates that in 1998, they made $750 million dollars due to Six Sigma improvements, with another estimated $1.5 billion in 1999. Their operating margins continue to make records, and the leaders of GE attribute this extraordinary performance directly to Six Sigma.

Motorola, the company that laid the foundations of the Six S i g m a c o n c e p t , h a s s p en t o v e r a d e c a d e u s i n g S i x S i g m a improvement techniques - and has enjoyed tremendous long term success: 500% growth in sales, estimated savings of $14 billion, nearly 20% profit growth for a decade. After two years of Six Sigma, Motorola also won the prestigious Malcolm Baldrid GE National Quality award.

S I X S I G MA F O R S A L E S

Truth About the Customers' Needs

Is best completed by the project leader rather than by the entire project team.

"The more I learn about customer satisfaction, the less I know," the CEO of a Fortune 500 company recently 70

lamented. Many CEOs can empathize for even the most customer-centered companies fall short on truly understanding their customers' wants and needs and often d o n ' t r e a l i z e i t u n t i l i t ' s t o o l a t e . H o w d o e s t h i s h a p p en ? Many CEOs are inundated with customer satisfaction data that have been gathered as an end in itself rather than a means to an end.

Forward-thinking companies know that GEting the focus right is key. Their underlying sales strategy is to determine what few things will have the greatest levera GE , and to focus scarce resources on these critical areas. One way to accomplish this is to close the gap between what customers value and what you provide using the Six Sigma methodology. Six Sigma is a disciplined methodology that begins and ends with the Voice of the Customer (VOC). It has its roots in manufacturing but is proving equally effective in sales and marketing. Many companies which have reaped the benefits of applying Six Sigma to increase productivity and the bottom line are now using it to create top line growth by applying it in the areas of:

Client relationship management

Sales effectiveness

New market development

Pricing process improvement

Advertising/communication improvement

Branding effectiveness

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Channel effectiveness

Lead management

Service improvement

Product development

General Electric, entering the ninth year of its Six Sigma journey, began using Six Sigma to improve sales effectiveness in year five. Jack Welch said, "We found that Six Sigma isn't only for engineers. . . . Regional sales mana GEs can use it to improve forecast reliability, pricing strategies, or pricing variation."

DuPont, now in its fourth year of integrating Six Sigma, began using Six Sigma for top line growth in year two. "Six Sigma brought a new focus on the voice of the customer. Customer input is valuable in driving research development, product development, and applications," said Don Linsenmann, DuPont vice president and corporate championSix Sigma.

Bombardier, now in its seventh year of implementing Six Sigma, initially focused its business improvement efforts on cash flow, cost reduction, cost improvement, cost avoidance and efficiency improvement. Today, many of their Six Sigma projects are focused on growth projects to increase sales volume and sales margins.

If It Can Make Products Better, Can It Improve Sales?

To understand how Six Sigma impacts top line growth, let's take a look at how it is applied specifically in sales and

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marketing to increase selling effectiveness. We must first begin with an understanding of the theories of Dr. Abraham Maslow and Dr. Noritaki Kano. Many of Kano's concepts are utilized in Six Sigma to enable sales executives to understand the psyche of their customers.

Kano, like Maslow before him, postulated that organizations, like people, have needs and wants. These needs and wants c a n a n d s h o u l d b e s e g m e n t e d i n t o a h i e r a r c h y . Th i s hierarchy provides us with a logical pathway to meeting and exceeding customer needs on the important elements of our relationship.

Many of us first encountered Maslow's theories in Psychology 101 but few would suspect that the key to understanding our customers also may be found in Maslow's Hierarchy of Needs. Maslow believed that an individual's needs must first be satisfied at the lower, more basic levels (food, water, and oxy GE n) before one could seek to gratify needs at the next higher level (safety, love, esteem). Only w h en l o w e r - l e v e l n e e d s a r e s a t i s f i e d c a n s e l f - a c t u a l i z a t i o n needs begin to be addressed. Self-actualization is the f u l f i l m e n t o f o n e' s h u m a n p o t e n t i a l a n d i s o f t e n t h e p o i n t a t which an individual becomes truly creative

There are significant parallels between Maslow and Kano's theories in explaining the needs of organizations and how to meet them. The Kano Model is a powerful tool that enables a sales team to properly identify the few critical items c u s t o m e r s a r e s a y i n g h a v e t h e h i gh e s t i m p a c t . T h e m o d e l segments these needs according to:

1) Must be's

2) One-dimensional

3) delighters

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Must-Be Needs

Must-be's are those needs and wants that have to be met for a customer to even begin to have a positive relationship with your company. Many customers believe their must-be needs are so basic they don't even think of discussing these unless they have been disappointed. Must-be needs for a typical hotel customer, for example, would include an accurate reservation in the system, a clean bathroom and a nonsmoking room preference. Customers of major hotel chains fully expect lower level needs to be met, and simply assume the hotel knows what these needs are.

O n e- D i m e n s i o n a l N e e d s

O n e- d i m e n s i o n a l n e e d s a r e t h e n e e d s a c u s t o m e r w i l l d i s c u s s and are typified by a "win-lose" negotiation. An example m i gh t b e t h e p r i c e o f a h o t e l r o o m . I f a s k e d h o w t h e h o t e l m i gh t m a k e a g u e s t m o r e s a t i s f i e d , a m a j o r i t y m i gh t r e q u e s t a lower room rate. But while each dollar of discount provided to the guest makes them that much happier, the same dollar of discount makes hotel management that much unhappier.

Delighters

D e l i g h t e r s a r e w h en w a n t s o r n e e d s a r e m e t w h e n a c u s t o m e r is not expecting it. During a recent vacation, I received a beautiful fruit and cheese tray when I checked into a well known hotel. Unfortunately they had assigned me to a smoking room. The delighter did not have the desired effect. In fact, it backfired because my must-be need for a nons m o k i n g r o o m w a s n o t m e t . Wh e n a b e l l m a n a r r i v e d t o m o v e me to a non-smoking room, I requested he remove the cheese tray because it smelled of smoke.

The Lesson Is Clear

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 We must be nearly flawless (approaching Six Sigma levels) on meeting customers' must-be needs and we should focus our time, effort and Six Sigma teams on these needs.

W e s h o u l d a c k n o w l e d G E t h e o n e- d i m e n s i o n a l n e e d s o f our customers but quickly move the discussion to the next level to focus on delighters.

We must focus concentrated effort on the delighters -those differentiators that provide extraordinary benefit to the customer without increasing a supplier's cost.

Using Six Sigma to understand a customer's needs and wants ensures you are developing and delivering products and services to create more value for customers and make them more likely to stay with you than go to your competitor. More importantly, since money and time to invest in improvements are scarce, this approach helps you figure out what you're not going to do. This helps you stay ahead of the g a m e i n c l o s i n g a s a l e a n d o p en i n g a p r o f i t a b l e c u s t o m e r centered relationship.

A Case Study

Does wining and dining prospective customers lead to sales? T h e c o n v en t i o n a l w i s d o m o f a p r o d u c t s a l e s t e a m w a s t h a t such entertaining was necessary to close the deal. But a Six Sigma project that examined sales data found that while face time with customers was important, wining and dining was not. The data showed that regular face time helped close sales, but that time could be spent over a cup of coffee, not golfing at a resort. In addition, too much face time with customers was counterproductive. A regularly scheduled customer outing was found to be detrimental to closing sales s i n c e i t w a s a t a b u s y t i m e o f y e a r w h e n c u s t o m e r s p r ef e r r e d not to be away from their offices. Changing this process resulted in an increase of more than 10 percent of sales for the product as well as a decrease in the cost of marketing this product. 75

 Aim of FFA is to remove or contain restrainers and to increase forces which helps the drivers.

BOOKS ON SIX SIGMA QUALITY MANAGEMENT

B r e y f o g l e F W. I mp l e me n t i n g S i x S i g ma : S m a r t e r S o l u t i o n s Using Statistical Methods. John Wiley & Sons, New York, 1 9 9 9 , 7 9 1 p a G E . A h e a v y w e i g h t t e x t , w i t h a h i gh l e v e l o f equations and statistics. Not for the faint at heart.

Eckes G. The Six sigma Revolution - How General Electric and Others Turned Process into Profits. New York:John Wiley & Sons, 2001, 274 pa GE. One of the most readable books, with minimum statistics, but still treats process capability in a quantitative manner. Clearly distinguishes between the indirect method of estimating the process sigma-metric from counting defects and the direct method of calculating the sigma-metric from the observed standard deviation of the process. My favorite book so far, even though it's written by a psychologist.

H a r r y M , S c h r o e d e r R . S i x S i g ma : T h e B r e a k t h r o u g h Management Strategy Revolutionizing the World's Top C o r p o r a t i o n s . C u r r e n c y , N e w Y o r k , 2 0 0 0 . Th e m o s t p o p u l a r of the current books, it mixes concepts and ideas with success stories from well- known companies. No equations and little discussion of process capability and quality control.

N a u ma n n E , H o i s i n g t o n S H . C u s t o me r C e n t e r S i x S i g m a : Linking Customers, Process Improvements, and Financial Results. ASQ Press, Milwaukee, 2001, 340 pa GE. Half of the book is about customer satisfaction and surveys; the other half is about doing something to make improvements. Doesn't work for me, but might be appealing to the marketing oriented person.

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P a n d e P S , N e u ma n R P , C a b a n a g h R R . T h e S i x S i g ma Wa y : H o w G E , M o t o r o l a , a n d O t h e r T o p C o m p a n i e s a r e H o n i n g Th e i r P e r f o r m a n c e . M c G r a w - H i l l , N e w Y o r k , 2 0 0 0 , 422 pa GE. Organized around the themes of I. Executive Overview, II. GE aring up and adapting Six Sigma to your organization, and III. Implementing Six Sigma - Roadman and tools. Good overall treatment of quality management and improvement. Mainly focuses on process yield and defects, with little discussion of process capability and control charts.

Pyzdek T. The Six Sigma Handbook: A Complete Guide for Greenbelts, Blackbelts, & Mana GEs at All Levels. McGrawHill, New York, 2001, 711 pa GE. This handbook weighs in as one of the big GEt books available. It provides a thorough covera GE project improvement methodology and group problem-solving tools, management tools, control charts, and design of experiments. It takes Six Sigma as the theme and unites the quality improvement methodology behind that theme.

S mi t h G M . S t a t i s t i c a l P r o c e s s C o n t r o l a n d Q u a l i t y I mp r o v e me n t : P r e n t i c e H a l l , 2 0 0 0 , 6 5 0 p a G E . F o c u s e s o n statistical process control (SPC), but provides a broad perspective on how SPC fits into the overall management of quality. Chapter 1 provides a good introduction to statistical tools for process control. Chapter 2 reviews TQM, Deming, Crosby, Malcolm Baldrid GE award criteria, and ISO-9000. Chapter 6 integrates process capability indices with sixsigma quality. The rest of the book is about statistical QC, different types of charts and techniques.

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Which is the best Six Sigma book?

'The Six Sigma Way" co-authored by Peter S. Pande,
Robert P. Neuman, and Roland R. Cavanagh. It is an implementation guidebook taking you from is Six Sigma right for your organization to providing checklist on the various phases of DMAIC.

TOTAL QUALITY MANAGEMENT

Total Quality Management, or TQM, was very popular in the 1980s and 1990s as a way of bringing about major chan GE within organisations.

Total - everyone is involved from senior management to the lowest company junior

Quality - the aim is to improve products and services to the customer

Management - assuming that things GE better if you mana GE them

TQM is well constructed as a methodology, and has a ran GE of powerful tools for aiding and bringing about chan GE . It is one of the best methods for bringing about cultural and process chan GE in an organisation.

The failure of TQM to be adopted long term is that

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It is a tool and not a goal in itself

It has no visible measure of success

Improvements gained are often lost over time

Six Sigma Quality Methodology uses TQM tools and techniques to aid process improvement and chan GE , but fully addresses the failings of TQM by providing a tar GE goal and a measure by which improvement can be jud GE and sustained. Six Sigma also firmly places the emphasis on total and complete customer satisfaction, where TQM may have been used by organisations to cut costs rather than deliver perfection to the customer.

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CONCLUSION
Six Sigma is successfully used in manufacturing industry for two decades. The challen GE was to employ Six Sigma in software development. In this thesis research we have concluded that Six Sigma is applicable in softwares. There are differences between software and manufacturing process, b u t i f w e t a k e c a r e o f t h e m S i x S i g m a Wo r k s w e l l i n softwares. It can bring lar GE benefits to software companies. There are software domains where Six Sigma is h i gh l y b e n e f i c i a l i . e . c o m p l e x s y s t e m s , m i s s i o n c r i t i c a l systems etc. Six Sigma tools are very useful for software process improvement. The main challen GE of Six Sigma in software are to identify the CTQs (critical to quality) and to establish cost efficient project Yes that can be used to identify root cause, and measure improvements. Another challen GE is that the processes used have quite long life span (a development project can take 2-3 years) and the processes are furthermore not to be classified as stable and repeatable. We have proposed steps for the implementation of Six Sigma in software. The steps are proposed after interviews and case study reviews. We believe that the steps are reliable. The final research result will help software companies and researchers step by step to achieve their quality goals

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SUMMARY
Six Sigma is a continuous improvement methodology developed at Motorola that is designed to systematically reduce defects recognizing two important relationships.

1. The overall yield of a group of related processes is much lower than the yields of the individual processes. For example, if the individual yields at each of a set of dependent processes is .99, the overall yield for 100 processes or operations would be .99100 = .366.

2. The total cost of a product or service is directly related to the defect rate, i.e., Total cost = (Unit cost)(1+ defect rate).

The six sigma level is where the performance at each function, process, or operation is nearly perfect, GE nerating a defect rate of .000034% or only 3.4 defects per million. For comparison, a three sigma level of performance GE nerates 66,807 defects per million as indicated in the table below.

Sigma* 3 4 5 6

Defects per million 66,807 6,21 233 3.4

Long term yield % 93.32 99.379 99.9767 99.999966

*A sigma is a statistical unit of measure referred to as the standard deviation.

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Nowadays, the quality property of product is becoming much more important than it before. To examine the quality, we should consider different approaches which include c u s t o m e r , t r a n s c e n d e n t - b a s e d , p r o d u c t , m a n u f a c t u r i n g, a n d product value. Not all approaches shall be used in one product, but we use different ones in different parts. Improving quality is not free. It costs a lot of money, time and resources. However, the benefits are also attractive. Not only increasing profits, but also can obtain loyalty, stron GE market position and lead time, reduced costs, higher productivity, and more job opportunities. Proper quality improvement does not mean losing money in business, it means future investment. Software demands high quality. Five approaches should also be considered. Based on those approaches, process improvement is GE nerated to fulfill them. It provides project members a regular method of using the same way to do the same work. Defects found in previous efforts are fixed in the next efforts. One brilliant method is Six Sigma. Six Sigma approach have been invented for more than two decades. It is successfully and continually used in manufacturing. Now it was spread to many other fields all over the world. Six Sigma approach focuses on process improvement. After it was invented, Six Sigmas definition has reached three levels as a metric, as a methodology, and as a management system. As a metric, it aims to reducing defects. The highest level 6 equates to 3.4 defects per million opportunities. As a methodology, it focuses on improving process. DMAIC and DMADV models are the most common used. As a management system, it combines the metric and methodologies for executing the business strategy, and aims to continuous improving product quality.

ANNEXURES

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Six Sigma Applications

Objectives:-

The Six Sigma has definitions at three levels i.e. matrix, methodology and strategy. At matrix level Six Sigma is 3.4 defects per million opportunities which means 99.9997% defect free product. Six Sigma approach at methodology level is not just counting defects in a process or product, but i t i s u s e d t o i m p r o v e p r o c e s s e s . Wh e n w e l o o k a t S i x S i g m a as a methodology, there are many models available for process improvement like DMADV, DMAIC etc. At strategy level, through experience, Motorola has found that using Six Sigma as a metric and as a methodology are not enough to d r i v e t h e b r e a k t h r o u gh i m p r o v e m e n t s i n a n o r g a n i z a t i o n . Motorola ensures that Six Sigma metrics and methodology are adopted to improve opportunities which are directly linked to the business strategy. Now Six Sigma is also applied as a management system for executing the business strategy.

Need for the Topic:-

Six Sigma approach can be applied in software companies if w e i n v o l v e t h e r i g h t p eo p l e , s o l v i n g t h e r i g h t p r o b l e m , a n d u s i n g t h e r i g h t m e t h o d . A t t h e s a m e t i m e , a l t h o u gh u s i n g S i x Sigma approach for process improvement costs a lot, it worth. Few defects, faster delivery and increased customer satisfaction will GE nerate more potential profits than you think. The differences between software and manufacturing are obvious and unavoidable. The main distinct factors of software are non-repetitiveness, unique input and output, cognition, visualization, and some external factors such as employees skill and knowled GE . These differences are reflected on the software product and software process. Still applying Six Sigma approach in software companies is beneficial. Firstly, all deny opinions and misconceptions are built on the misunderstanding of Six Sigma approach and unfamiliar with the software. Secondly, we never say applying Six Sigma approach in software is just the copy of 87

manufacturings method. Th e differences do exist. According to them, we need to modify the Six Sigma approach, as the same time with the software process. Chan GE them to fit for softwares processes. And that demands further research and more experiments. It can help software companies to reduce defects, improve quality, increase customers satisfaction, and enhance market-share. That is also the answer of why software companies choose Six Sigma, especially for complex systems, mission critical systems, and legal responsibility.

M e t h od o l o g y a n d P r o c e d u r e o f Wo r k : -

There is no a specific tool or technique for one specific phase in Six Sigma. Any tool that is helpful for the process improvement can be applied in Six Sigma project. However seven quality tools are most widely used in all kinds of quality improvement. They are Cause-effect Diagram, Pareto Chart, Flow Chart, Histogram, Check Sheet, Control Chart, a n d S c a t t e r P l o t . Th e o t h e r s p e c i a l t o o l s a r e g a t h e r e d f r o m successful Six Sigma cases which include Brainstorming, Affinity Diagramming, SIPOC Diagram, MSA, VOC Method, Kano Analysis, and so on. Using the proper tool in the right place is the key factor which influences success.

Statistical Techniques to be used:-

DMAIC model divides Six Sigma project into five phases. In e a c h p h a s e , t h e r e i s a c l e a r l y d e f i n e i n p u t a n d o u t p u t . Th e output of the previous phase normally is the input of the next phase. In each phase, there are several steps to achieve phase goal. Numbers of quality tools are introduced to each step. There is only one criterion for quality tool selection f i t n e s s f o r u s e . W h en t h e S i x S i g m a p r o j e c t i s t e r m i n a t e d , gained experiences will be documented and applied in other Six Sigma projects. Sometimes the project goal cannot be a c h i e v e b y o n l y o n e S i x S i g m a p r o j e c t . Th e n m o r e S i x S i g m a projects can be organized according to situation. The spirit of Six Sigma approach is towards a long-term improvement.

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I I ) R e f e r e nc e s

"Free Six Sigma Lessons," Motorola University, 2008. http://www.motorola.com/content.jsp?globalObjectId=30695787.

"The History of Six Sigma," iSix Sigma LLC, 2008. http://software.isixsigma.com/library/content/c020815a.asp.

" Wh a t i s S i x S i g m a ? " M o t o r o l a U n i v e r s i t y , 2 0 0 8 . http://www.motorola.com/content.jsp?globalObjectId=3088.

"Normal distribution," Wikipedia, 2008. http://en.wikipedia.org/wiki/Normal_distribution.

"D M A I C V e r s u s D M A D V , " i S i x S i g m a L L C , 2 0 0 8 .

http://software.isixsigma.com/library/content/c001211a.asp.

"Six Sigma," Wikipedia, 2008. http://en.wikipedia.org/wiki/Six_Sigma.

Six Sigma Quality Tools and Templates," iSixSigma, 2008. http://www.isixsigma.com/tt/.

Six Sigma Table," Westgard QC, 2001. http://www.westgard.com/sixsigtable.html.

III) List of Figures, Charts, Diagrams

Page Nos.

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Statistical Diagrams

16

Figure 8-5 Pareto Diagram

36

Figure 8-6 Fishbone Diagram

37

Figure 3-11 X-Bar Control Chart

38

F i g u r e 3 - 12 R C o n t r o l C h a r t

38

Six Sigma Variance Diagram

39

Process design Sigma-metric Calculator

46

QC Design Calculator (Critical Systematic Error)

46

GE's Transaction lifecycle

67

Building a Six Sigma Organization

80

Cultural change Diagram

80

S4 Process Map

81

Customer Feedback

81

90

Areas Under the Normal Curve Diagram

85

IV) List of Tables

Conversion using table with allowance for 1.5s shift 23

Table 1 DPMO to sigma conversion table

27

Table 1 (Company began Six Sigma)

42

Table 2 (Six Sigma Cost And Savings By Company)

42

Six Sigma Defects per million Table

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Detailed Information of Guide

Name:

Sanjay Kumar

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Address: Qualification: Designation:

A-3/77, Paschim Vihar New Delhi MBA in Operation Management from ISBM, Pune Assistant Manager

Special Field of Work: Quality Control Experience: 3 Years of Experience

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