Six Sigma & Web 2.

Agenda

Six Sigma Web 2.0 tools

Introduction to Six Sigma

What is Six Sigma?

Organization mapped to six sigma

Company/ Organisation & IT Quality function & Six Sigma

Agenda

brief history Sigma a process performance metric

Six Sigma a process improvement methodology

Six Sigma principles DMAIC & DFSS

Six Sigma a business transformation initiative

A Brief History
1986
Motorola develops Six Sigma as a methodology to improve the quality of its products. Inherits the principles and tools of continuous improvement and SPC (Statistical Process Control) Some large industrial companies adopt Six Sigma as a strategic initiative: ABB (1993), Honeywell (1994), GE (1995) Initial applications of Six Sigma outside production areas. Six Sigma adoption grows thousands of companies in all industries start deploying it.

1990 2000

2000 today A significant number of applications outside production areas

Who is Deploying Six Sigma?

3M Amazon.com American Express Bank of America Baxter Healthcare Black & Decker Boeing Bombardier Carlson Companies Caterpiller CHEP Citigroup CNH Global ComauPico Crane Datacard Corporation Dell Computer Delphi Automotive Delta Airlines Dow Chemical DuPont Dura Automotive Systems Dynamic Controls Limited Eastman Kodak Eaton Corporation Eli Lilly and Company First Data Corporation Ford Motor Company Gateway GenCorp General Electric Gulf States Paper Corporation Hellenic Aerospace Industries Heller Financial Inc. Hewlett Packard Hitachi Honeywell IBM International Paper ITT Industries Jaguar JDS Uniphase Corporation Johnson & Johnson Johnson Controls JP Morgan Chase Kohler Company Lear Corporation LG Electronics Lockheed Martin Mabe Magnetek Maytag Motorola Mount Carmel Health System NCR Corporation NovaStar Mortgage, Inc. Oasis Corporation Owens Corning Pacific Scientific Polaroid PraxAir Raytheon Rohm and Haas Company Samsung Seagate Technology Sear, Roebuck & Company Sonoco Space Systems Loral Starwood Hotels and Resorts Sun Microsystems Tenneco Automotive Texas Instruments Textron Union Pacific Railroad Visteon Corporation Vytra Health Plans Wells Fargo Whirlpool Corporation Xerox Corporation ABB Air France Atlantic Copper Axa BAE Systems Bosch DaimlerChrysler Ericsson GKN Plc Grupo Antoln IMI Norgren Invensys Marconi Nokia Philips Prosegur Roche Diagnostics Siemens Scottish Power Telefnica Volvo

and many more

Benefits
Motorola Allied Signal General Electric Toshiba Dow Dupont American Express Polaroid Ford Telefnica $ 16,000MM since 1986 $ 1,200MM in 2 years $ 2,000MM in 1999 $ 1,000MM in 2001 $ 1,500MM in 5 years $ 700MM in 2000 $ 200MM in 2002 $ 100MM in first year $ 250K / project $ 30MM in first year

Sources: Annual Reports and companies own published data

Agenda
A brief history Sigma a process performance metric

Six Sigma a process improvement methodology

Six Sigma principles DMAIC & DFSS

Six Sigma a business transformation initiative

Sigma a Process Performance Metric

A process sigma may mean:

Its Standard Deviation a measurement of its variability Its Capability to operate within specifications

Sigma Standard Deviation

A process standard deviation (designated by the greek letter sigma) is a measurement of its variability around its average or mean:
Deliveries

s
7 min

6:30 6:40 6:50 7:00 7:10 7:20 7:30

Mean 6:55pm

Sigma Process Capability (I)

A process sigma level defines its capability to operate within specifications, i.e. without defects
The sigma level is related the number of standard deviations that fit between the target and the upper and lower specification limits

Deliveries

3s

Lower Specification Limit

3s

Upper Specification Limit

66,807 DPMO 93.3% quality level

6:45

Target 7:00pm

7:15

Sigma Process Capability (II)

A 6s process operates within specifications in 99.9997% of the instances near perfection. Deliveries

6s

Lower Specification Limit

6s s

Upper Specification Limit

3.4 DPMO 99.9997% quality level

6:45

Mean = Target 7:00pm

7:15

Sigma, DPMO and Quality Levels

Sigma Level 2
3 4 DPMO

% in Spec 69.1
93.3 99.4

308,500
66,800 6,200

5
6

233
3.4

99.98
99.9997

Is 99% Enough?
99% quality (3.8s)
20,000 Unsafe 5,000

99.9997% quality (6s)

7 lost mail articles per hour One minute of unsafe drinking water every 7 months 1.7 incorrect surgical operations per week 1 emergency landing every 5 years at most major airports 68 wrong drug prescriptions each year One hour without electricity every 34 years

lost mail articles in Europe per hour drinking water 15 minutes each day incorrect surgical operations per week

daily emergency landings at most major airports

wrong drug prescriptions each year

200,000 No

electricity for almost 7 hours each month

Hidden Costs and Inefficiencies Credit Notes

Returns Warranties Scrap Lost sales and revenue Unsatisfied and lost customers Inefficiencies Long cycles (production, delivery, collection) Poor asset utilisation Inspections Excess inventories Expedition costs Re-work

Up to 10-15% of the revenue is lost in inefficiencies in a 3 sigma company

Agenda
A brief history Sigma a process performance metric

Six Sigma a process improvement methodology

Six Sigma principles DMAIC & DFSS

Six Sigma a business transformation initiative

Six Sigma Continuous Improvement

Six Sigma is an organised and rigorous methodology for the continuous improvement of all business processes

Three key pillars: Variation Processes

0 25 5060 75 100 125

Customer

Six Sigma Principles Processes

Processes

Six Sigma focuses on process improvement and re-engineering

The Hidden Factory

The Hidden Factory

Scrap Repair

Begin

Control

Control

Control

End

Rework

Review

Scrap

Scrap

Are we adding value?

Six Sigma Principles Customer

Processes Customer

Six Sigma starts with a continuous and comprehensive understanding of the customer needs

Six Sigma and the Customer

Only the customer can establish the requirements, determine what constitutes a defect, and decide whether the process, product or service is acceptable or not.
Customer CTQs
Requirements / Metrics Needs
Lower Limit Upper Limit

Process Capability
What constitutes a defect? Process capability Improvement objectives

Target

Lower Limit

Target

Upper Limit

The Customer at the Center of Six Sigma

Six Sigma starts with the continuous and comprehensive understanding of the customer needs
What does my customer need from our process?

Customer

Who is my customer?

How does our process perform from the customer perspective? How does my customer measure our process?

How would my customer like our process to perform?

How does my customer view our process?

If we are not impacting the customer the effort is useless

Types of Customers and Needs

External Customer
Product/service quality On-time delivery Price Working capital Productivity Recognition Job security

Shareholder

Employee

Community

Safe environment Local development

Six Sigma Principles Variation

Processes Customer Variation

25

5060 75

100

125

We need to understand the process variation in order to understand the process. Reducing variation is the main Six Sigma objective.

Example

European Precision ltd sells mechanical subsystems to a large customer in Germany

The customer requires deliveries in not more than 30 days from order date

The view of the account manager

The results of our division are exceptional: weve reduced the average delivery days to our main customer in Germany to 28, below the 30 days they require. Congratulations for a job well done. We have good chances of getting this years customer service award

What the Customer Sees

March
8 18 31 28 38 15 28 58 20 23 20 26 32 40 29 22 37 41 51 14 29 22 34 23 33 28 32 27 12 21

25

50

Min = 8 Max = 58

April

May

Average

28

25

28

50

The customers feels the variation, not the mean

The Six Sigma Objective

Reduce Variation
Lower Limit Objective Upper Limit

Lower Limit Objective Upper Limit

Center the Process

Lower Limit Objective Upper Limit

Agenda
A brief history Sigma a process performance metric

Six Sigma a process improvement methodology

Six Sigma principles DMAIC & DFSS

Six Sigma a business transformation initiative

DMAIC and DFSS

Six Sigma offers two methodologies

DMAIC

Define, Measure, Analyse, Improve, Control

Analysis and improvement of existing processes

DFSS

Design For Six Sigma

Design of new processes, products and services

Process Improvement DMAIC

Define Define and quantify customers needs and improvement objectives. Measure the process and determine its performance and capability against the customer needs. Analyse the data to identify key process performance drivers. Identify and statistically validate improvement opportunities. Set the appropriate controls to ensure improvements sustainability.
0
Lower Limit

Target

Upper Limit

25

50

75 100

Measure

25

5060 75

100

125

Analyse

B
0 25 5060 75 100 125

Improve

25

5060 75

100

125

Control

New Product and Process Development DFSS

Define
Define the project objectives and the customer (internal and external) needs and requirements.

Measure

Establish and measure the specifications. Benchmark with competitors.

Identify, analyse and evaluate design alternatives to meet customer requirements.

Analyse

Design

Perform a detailed design of the selected alternative.

Optimise the design from a productivity and quality/performance perspective. Verify that the design meets the customer needs and set the appropriate controls to ensure the product, process or service is defect free.

Optimise

Verify

Where can Six Sigma be Applied?

Administrative processes Reduce invoice errors Understand and reduce collection delays and overdues Reduce cycle times Delivery, problem resolution, new product launch, proposal generation, etc Customer service Reduce delivery times and increase their reliability Increase product availability and service levels Asset utilisation Reduce inventories Increase capacity, productivity and efficiency of processes and resources production lines, administrative functions, call centers, etc. New product and service design (DFSS) Product Quality Reliability, duration, cost,

Commercial Sales force effectiveness Price optimisation and control

Six Sigma can be applied to any process that can be measured that is, to ANY process

Agenda
A brief history Sigma a process performance metric

Six Sigma a process improvement methodology

Six Sigma principles DMAIC & DFSS

Six Sigma a business transformation initiative

Cultural Transformation

Business excellence and continuous improvement drive Common language Data based approach to business decision making Obsessive focus on the customer Leadership development platform

Energise and transform the organisation Business execution tool

Web 2.0

Definition

Web 2.0 refers to a perceived second generation of web development and design, that facilitates communication, secure information sharing, interoperability, and collaboration on the world wide web. Web 2.0 concepts have led to the development and evolution of web based communities, hosted services, and applications; such as social networking sites, video sharing sites, wikis, blogs. Examples - Facebook, Orkut, Linkedin, Twitter

Evolution E-mail, instant messaging, hosting your own web pages, software as a service

Collaboration

Webster definition To labor together (from latin word collaborare) To Co operate with an agency or instrumentality with which one is not immediately connected To work jointly with others or together especially in an intellectual endeavor Web 2.0 ----

MS Sharepoint
Pros Strong Microsoft products compatibility (MS Word, Excel, Project, Visio) Good User Interface Document Repository (can store all kinds of documents, no limit to size of document) & Strong version control Cons Limited customize options Expensive Solution Proprietary solution

Wiki
Pros Customizable Flexible formatting Strong Version Control (All changes to Wiki pages are captured) Open Source solution Cons No document repository (2MB limit to upload documents) User Interface Needs technical know how to make complex edits

Webex Connect
Pros Advanced UI Can include other tools (internal browser) Very flexible

Cons Still in Beta Performance issues Scope and functionality yet to be baselined (not clear)

Web 2.0 Tools Comparison chart Wiki vs. Sharepoint vs. Webex Connect
Confluence Wiki Controlled Access Cost to Dept Type Internal/ External Document Management Project & Program Management Operations and Communications Management Collaborative Content Management Best Practices & Repository Library No No Few to many Internal No Yes Yes MS Sharepoint Yes Yes Few to many Internal Yes Yes Yes Webex Connect Yes No Few to many Internal No (partial) No Yes

Yes

No

No

Yes

Yes

Yes

Ease of set up

3/5

3/5

3/5