Chapter 7: Six Sigma

TOTAL QUALITY
MANAGEMENT
BY
DR. ASIF MAHMOOD
drasif@uet.edu.pk
Institute of Business & Management

University of Engineering and Technology,

Lahore

HOW GOOD IS GOOD ENOUGH?

99.9% is already VERY GOOD
But what could happen at a quality level of
99.9% (i.e., 1000 ppm),
in our everyday lives (about

4.6 )?

4000 wrong medical prescriptions each year

More than 3000 newborns accidentally falling
from the hands of nurses or doctors each year
Two long or short landings at airports each day
400 letters per hour which never arrive at their destination

HOW CAN WE GET THESE RESULTS?

13 wrong drug prescriptions per year

10 newborn babies dropped by
doctors/nurses per year
Two short or long landings per year.
One lost article of mail per hour

THE ANSWER IS:

Six Sigma

WHAT IS SIX SIGMA?

A statistical concept that measures a
process in terms of defects at the six
sigma level, there 3.4 defects per million
opportunities (DPMO).

Sta
ti

s t ic
s

GOALS OF SIX SIGMA

o

Improve Customer Satisfaction

Reduce variations

Defect reductions

o
o

o
o

Oriented towards developing manufacturing/ service setups

which has zero variations in both product and the process.
Objective of six sigma is to eliminate or reduce the defects
and rejects to practically zero

Standardize Business Development

Coordinate Metrics with Suppliers and
Customers
Ensure Industry and Government Compliance
Develop Career Growth Opportunities

LSS COMPANY STOCK PERFORMANCE

RESEARCH
50 Publicly Traded Companies with Organizational-Wide 6 Deployments

Source: iSixSigma

STATISTICAL BACKGROUND
WHAT IS SIGMA ?
Sigma

is the Greek letter used

in
statistics
to
represent
standard deviation from mean
value, an indicator of the degree
of variation in a set of a process.

Sigma

measures how far a given process

deviates from perfection (the data spread).

STATISTICAL BACKGROUND
n

Mean- measure
of central tendency

The

Deviation
measures the amount
of data dispersion
around mean

Standard

i 1

x
n

i 1

n 1

MEASURING PROCESS PERFORMANCE

THE PIZZA DELIVERY EXAMPLE. . .
Customers

want their pizza

delivered fast!

Guarantee

= 30 minutes or less

What

if we measured performance and found

an average delivery time of 23.5 minutes?
On-time

performance is great, right?

Our customers must be happy with us, right?

HOW OFTEN ARE WE DELIVERING ON TIME?

ANSWER: LOOK AT
THE VARIATION!

30 min. or less

10

20

30

40

50

Managing by the average doesnt tell the whole story. The average
and the variation together show whats happening.

REDUCE VARIATION TO IMPROVE PERFORMANCE

HOW MANY STANDARD
DEVIATIONS CAN YOU
FIT WITHIN
CUSTOMER
EXPECTATIONS?

30 min. or less

10

20

30

40

50

Sigma level measures how often we meet (or fail to

meet) the requirement(s) of our customer(s).

STATISTICAL BACKGROUND
THE 68-95-99.7 RULE OR THREE SIGMA RULE

1 Standard
Deviation

STATISTICAL BACKGROUND
THE 68-95-99.7 RULE OR THREE SIGMA RULE

2 Standard
Deviations

STATISTICAL BACKGROUND
THE 68-95-99.7 RULE OR THREE SIGMA RULE

3 Standard
Deviations

PROCESS CAPABILITY
Process capability is the ability of the process
to meet the design specifications for a service or
product.
Nominal value is a target for design
specifications.
Tolerance is an allowance above or below the
nominal value.

PROCESS CAPABILITY
Nominal
value
Process distribution
Lower
specification

20

Upper
specification

25
Customer Requirement

Our Process is capable

30

PROCESS CAPABILITY
Nominal
value
Process distribution
Lower
specification

Upper
specification
Acceptable

Defects

20

25

Defects

30

Customer Requirement

Our Process is not capable

PROCESS CAPABILITY
INDEX/RATIO, CP
Process capability ratio, Cp, is the tolerance width
divided by 6 standard deviations (process variability).

Cp =
Cp, lower =

Cp, upper =

Upper specification - Lower specification

6
X - Lower specification

Upper specification - X

INTENSIVE CARE LAB

EXAMPLE

The intensive care unit lab process has an average

turnaround time of 26.2 minutes and a standard
deviation of 1.35 minutes.
The nominal value for this service is 25 minutes with an
upper specification limit of 30 minutes and a lower
specification limit of 20 minutes.
The administrator of the lab wants to have three-sigma
performance for her lab. Is the lab process capable of
this level of performance?
Upper specification = 30 minutes
Lower specification = 20 minutes
Average service = 26.2 minutes
= 1.35 minutes

INTENSIVE CARE LAB

ASSESSING PROCESS CAPABILITY

Example
Cp =
Cp =

Upper specification - Lower specification

30 - 20
6(1.35)

= 1.23 Process Capability Ratio

PROCESS CAPABILITY INDEXCP

Poor Process

Cp<1

Just Ok

Cp=1

Good, Excellent

Cp>1

PROCESS CAPABILITY
INDEX, CPK
Process Capability Index, Cpk, is an index that measures
the potential for a process to generate defective
outputs relative to either upper or lower specifications.
Cpk = Minimum of

x Lower specification
3

Upper specification x
3

We take the minimum of the two ratios because it gives

the worst-case situation.

CPK GRASPING THE

CONCEPT
A
B

Specification
Limit

Cpk =
A divided by
B

Specification
Limit

A = Distance from process mean to closest spec limit

B = 3 Standard Deviations (also called 3 Sigma)
A bigger Cpk is better because fewer units will be beyond spec.
(A bigger A and a smaller B are better.)

WHY CPK IS NEEDED? IS CP NOT

ENOUGH?
o Cp tells u only about the smartness of curve
o Cpk tells u about the positioning / location of the curve

PROCESS CAPABILITY INDEX/RATIO

STANDARDS
The current process capability index standards
for Cp and Cpk are:
Cp 1.33
Cpk 1.33

Important Note:
Cp, lower= Cp, upper= Cp= Cpk
(When the process is centered about the

INTENSIVE CARE LAB

EXAMPLECONTINUED

The intensive care unit lab process has an average

turnaround time of 26.2 minutes and a standard
deviation of 1.35 minutes.
The nominal value for this service is 25 minutes with an
upper specification limit of 30 minutes and a lower
specification limit of 20 minutes.
The administrator of the lab wants to have three-sigma
performance for her lab. Is the lab process capable of
this level of performance?
Upper specification = 30 minutes
Lower specification = 20 minutes
Average service = 26.2 minutes
= 1.35 minutes

INTENSIVE CARE LAB

ASSESSING PROCESS CAPABILITY

Example

Cpk = Minimum of

Cpk =
Cpk =

Upper specification = 30
minutes
Lower specification = 20
minutes
Average service = 26.2
minutes
Upper specification x
x Lower specification
,

=
1.35
minutes
3
3

Minimum of

Minimum of

26.2 20.0
3(1.35)

1.53, 0.94

= 0.94

30.0 26.2
3(1.35)

Process
Capabilit
y Index

INTENSIVE CARE LAB

ASSESSING PROCESS CAPABILITY

Example
Does not meet 3 (1.00 Cpk) target due to a shift in mean
(Note variability is ok since Cp is over 1.0)
Before Process Modification
Upper specification = 30.0 minutes Lower specification = 20.0
minutes
Average service = 26.2 minutes
= 1.35 minutes Cpk = 0.94 Cp = 1.23

TECHNICAL DEFINITION OF SIX

SIGMA
75%
1.5

LSL

USL

12.5%

12.5%

3.4 DPMO

Cp=2 Cpk=1.5

Cp=2 Cpk=1.5

Cp=Cpk = 2

- -3

6 to LSL

6 to USL

3.4 DPMO

DEFECTS PER MILLION OPPORTUNITIES

Six Sigma allows managers to readily
describe process performance using a
common metric: Defects Per Million
Opportunities (DPMO)

DPMO

Numb ero f d efects

Nu mb erof
o pp ortun ies
it x No.o f un its
for error per
u nit

x 1,000,00 0

DEFECTS PER MILLION OPPORTUNITIES

Example of Defects Per Million
Opportunities (DPMO) calculation.
Suppose we observe 200 letters
delivered incorrectly to the wrong
addresses in a small city during a
single day when a total of 200,000
letters were delivered. What is the
DPMO in this situation?

DPMO

So, for every one

million letters
delivered this
citys postal
managers can
expect to have
1,000 letters
incorrectly sent
to the wrong
address.

200

x 1 ,000,000 1, 000
x 20 0,000

Cost of Quality: What might that DPMO mean in terms of over-time

employment to correct the errors?

SIGMA LEVELS
Spec.

Sigma

Range/

(with

Sigma

1.5

(DPMO)

Short Long

Defective

Yield

-term -term
Cpk

Cpk

Level

shift)

-0.5

691,462

69%

31%

0.33

0.17

0.5

308,538

31%

69%

0.67

0.17

1.5

66,807

6.7%

93.3%

1.00

0.5

2.5

6,210

0.62%

99.38%

1.33

0.83

3.5

233

0.023%

99.977%

1.67

1.17

4.5

3.4

0.00034%

5.5

0.019

99.99966% 2.00

0.0000019 99.9999981
2.33
%
%

1.5
1.83

SIX SIGMA TEAM

Executive Leader
Champion/Sponsor
Master Black Belt
Black Belt
Green Belt

Yellow Belt

White Belt

SIX SIGMA TEAM

EXECUTIVE LEADER
High

Level Executive committed to Six

Sigma Success
Knowledgeable in Six Sigma Process
Assign key individuals to the
Champion/Sponsor Position.

SIX SIGMA TEAM

Champion (Sponsor)
Promote

awareness and execution of Six

Sigma within lines of business and/or
functions
Identify potential Six Sigma projects to
be executed by Black Belts and Green
Belts
Identify, select, and support Black Belt
and Green Belt candidates
Participate in 2-3 days of workshop
training

SIX SIGMA TEAM

Master Black Belt

Teacher

and mentor for Black Belts

Resource for the Black Belts-experts on
the mathematical theory of statistical
methods
Experts on the Six Sigma process
Works with the Champion/Sponsor to
select projects.

SIX SIGMA TEAM

Black Belt (project leader)

Use

Six Sigma methodologies and advanced

tools (to execute business improvement
projects

Are

dedicated full-time (100%) to Six Sigma

Serve

as Six Sigma knowledge leaders within

Business Unit(s)

Undergo

5 weeks of training over 5-10 months

SIX SIGMA TEAM

Green Belt (project team member)

Use

Six Sigma DMAIC methodology and basic

tools to execute improvements within their
existing job function(s)

May

lead smaller improvement projects within

Business Unit(s)

Bring

knowledge of Six Sigma concepts & tools to

their respective job function(s)

Undergo

8-11 days of training over 3-6 months

Yellow and White Belts

DMAIC THE IMPROVEMENT

METHODOLOGY
Existing Processes
Control

Define

Improve

Measure

Analyze

DEFINE DMAIC PROJECT

WHAT IS THE PROJECT?
$

Project
Charter
Define

Cost of
Poor
Quality

S ta k e h o ld e r s

Voice of the
Stakeholder

the Customer, their Critical to Quality (CTQ) issues, and the

Core Business Process involved.

Define

project boundaries (scope) the stop and start of the process

Define

the process to be improved by mapping the process flow

Key Define Tools

Cost of Poor Quality (COPQ)
Voice of the Stakeholder (VOS)
Project Charter
As-Is Process Map(s)

MEASURE BASELINES AND CAPABILITY

WHAT IS OUR CURRENT LEVEL OF PERFORMANCE?

Measure the performance of the

Core Business Process involved.
Develop a data collection plan for
the process
Collect data from many sources to
determine types of defects and
metrics
Compare with customer survey
results to determine shortfall

Descriptive Statistics
Variable: 2003 Output
Anderson-Darling Normality Test
A-Squared:
P-Value:

10

20

30

40

50

95% Confidence Interval for Mu

0.211
0.854

Mean
StDev
Variance
Skewnes s
Kurtosis
N

23.1692
10.2152
104.349
0.238483
0.240771
100

Minimum
1st Quartile
Median
3rd Quartile
Maximum

0.2156
16.4134
23.1475
29.6100
55.2907

95% Confidence Interval for Mu

21.1423
19.5

20.5

21.5

22.5

23.5

24.5

25.5

26.5

8.9690
95% Confidence Interval for Median

25.1961

95% Confidence Interval for Sigma

11.8667

95% Confidence Interval for Median

19.7313

26.0572

Key Measure Tools

Critical to Quality Requirements

Pareto Chart for Txfr Defects

100

100

60
50
40
20
0

Defect
Count
Percent
Cum %

79
79.0
79.0

17
17.0
96.0

4
4.0
100.0

Percent

80

Count

(CTQs)
Sample Plan
Capability Analysis
Failure Modes and Effect Analysis
(FMEA)
Etc

ANALYZE POTENTIAL ROOT CAUSES

Analyze the data collected

and process map to
determine root causes of
defects and opportunities for
improvement.
Identify gaps between
current performance and
goal performance
Prioritize opportunities to
improve
Identify sources of variation

Key Measure Tools

Histograms, Boxplots, Multi-Vari
Charts, etc.
Hypothesis Tests
Regression Analysis

Ishikawa
Diagram
(Fishbone)

IMPROVE SOLUTION SELECTION

Improve the target

process by designing
creative solutions to fix
and prevent problems.
Create
innovate
solutions
using
technology
and
discipline
Develop and deploy
implementation plan

Solution
Selection Matrix
Solutio
n

Qualit
y

Time

CB
A

Oth
er

Solution
Implementatio
n Plan
Solution
Right
Wrong
Implementation
Bad
Good

QFD/House of Quality

Ti
me

Cost

Key Improve Tools

Solution Selection Matrix
To-Be Process Map(s)

Sigm
a

Nice
Try

Nice
Idea

Sco
re

CONTROL SUSTAINABLE BENEFITS

Control the improvements to keep the process on the new course.

Prevent reverting back to the "old way"

Require the development, documentation and implementation of

an ongoing monitoring plan
Institutionalize the improvements through the modification of
systems and structures (staffing, training, incentives)

Key Control Tools

Control Charts
Contingency and/or Action Plan(s)
35

Individual Value

UCL=33.48

25

Mean=24.35

LCL=15.21

15
0

10

20

Observation Number

30

DFSS THE DESIGN METHODOLOGY

DESIGN FOR SIX SIGMA

Define Measure Analyze Design

Verify

DMADV

Uses

Design new processes, products, and/or services from scratch

Replace old processes where improvement will not suffice

Differences between DFSS and DMAIC

Projects typically longer than 4-6 months

Extensive definition of Customer Requirements (CTQs)
Heavy emphasis on benchmarking and simulation; less emphasis on
baselining

Key Tools

Multi-Generational Planning (MGP)

Quality Function Deployment (QFD)

DMADV - DMAIC
Existing Processes

New Processes
Verify

Define

Design

Measure

Analyze

Control

Define

Improve

Measure

Analyze

48

COMPUTING THE CP VALUE AT COCOA FIZZ: 3 BOTTLING MACHINES ARE

BEING EVALUATED FOR POSSIBLE USE AT THE FIZZ PLANT. THE MACHINES
MUST BE CAPABLE OF MEETING THE DESIGN SPECIFICATION OF 15.816.2 OZ. WITH AT LEAST A PROCESS CAPABILITY INDEX OF 1.0 (CP1)

The table below shows the information

gathered from production runs on each
machine. Are they all acceptable?

Solution:

Machine A

USL LSL
.4

1.33
6
6(.05)
Machine B
Cp

Machin
e

USLLSL

.05

.4

.3

.1

.4

.6

.2

.4

1.2

Cp=

Machine C

Cp=

49

COMPUTING THE CPK VALUE AT COCOA

FIZZ

Design specifications call for a

target value of 16.0 0.2 OZ.
(USL = 16.2 & LSL = 15.8)
Observed process output has now
shifted and has a of 15.9 and a
of 0.1 oz.

16.2 15.9 15.9 15.8

,
3(.1)
3(.1)

Cpk is less than 1, revealing that

.1
the Cpk
process
is.33not capable
.3
Cpk min

50