six sigma 1 intro

8/10/2019 Six Sigma 1 Intro

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Upendra Kachru SIX SIGMA

Introduction to Six Sigma


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Whats in a name?

Sigma is the Greek letter representing the standard deviation of apopulation of data.

Sigma is a measure

of variation (the data spread) variation


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What does variation mean?

Variation means that a

process does not produce

the same result (the Y)

every time.

Variation exists in everything. Even the best machine cannot make

every unit exactly the same. Some variation will exist.

Variation directly affects customer experiences.

Customers do not feel averages!

-10

-5

0

5

10

15

20


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Reduce Variation to Improve

Performance

Put another way, Sigma level measures how often we meet (or failto meet) the requirement(s) of our customer(s).

s

x

30 min. or less

0 10 20 30 40 50

How many standard

deviations can you

fit within customer

expectations?


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Process Performance: ExampleThe pizza delivery example. . .

Customers want their pizzadelivered fast!

Guarantee = 30 minutes or less

What if we measured performance and found an averagedelivery time of 23.5 minutes?

On-time performance is great, right?

Our customers must be happy with us, right?


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How often are we delivering on time?

Managing by the average doesnt tell the whole story. The average andthe variation togethershow whats happening.

s

x

30 min. or less

0 10 20 30 40 50

Answer: Look at

the variation!


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Improved capability to reduce processvar iation and defects, becomes a

necessity, due to the need of :

Improved designs

Lower costs

Better performance

All of this leads to the ability to operate

to a tight tolerance, without producing

defects and becomes a major advantage

to the organization.

Improve Process Variation & Defect Rates


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What is Six Sigma

Six Sigma is a highly disciplined approach, which

relies heavily on statistical tools, used to reduce

process variations to such a great extent that the level

of defects is reduced to less than 3.4 per millionprocess, product, or service opportunities.


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What is Six Sigma - Example?The wait time is 7.5 minutes. The standard deviation of the

process is 1 min. Then six sigma from the centerline is 1.5minutes (in the negative direction and 13.5 minutes (in the

positive direction). The customer wait time should not

exceed 13.5 minutes 2 times in a billion opportunities.

xx1.5 13.57.5

Centerline


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Six Sigma is not

In the example, we said the customer wait time should not

exceed 13.5 minutes 2 times in a billion opportunities. Butthe accepted error rate in Six Sigma is 3.4 defects in a

million opportunities. Why the difference?

s

1.5 Sigma

In Six Sigma, the long termmean is shifted by 1.5 Sigma.

This is because external failure

rates seem to be consistently

higher than expected when

measured by internal estimates.


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Six Sigma is.

In other words, 4.5 standard deviations is used as an

acceptable measure of performance and this comes to 3.4

defects in a million opportunities. Though the derivation is

arbitrary, it is the accepted norm.


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Six-Sigma Metrics Defectany mistake or error that is passed on to a customer

Defects per unit (DPU) = number of defects discovered number of units produced

Defects per million opportunities (DPMO) = DPU 1,000,000 opportunities for error


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Comparing on a Sigma Scale

In a world at 3 sigma. . .

There are 964 flight cancellationsper day in India.

The police make 7 false arrestsevery 4 minutes.

In Calcutta Hospital, 5,390newborns die each year.

In one hour, 47,283 international

long distance calls areaccidentally disconnected.

In a world at 6 sigma. . .

1 is cancelled every 3 weeks inIndia.

There are fewer than 4 falsearrests per month.

1 newborn dies every 4 yearsin Calcutta Hospital.

It would take more than

2 years to see the same numberof dropped international calls.


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Example of a Six Sigma Scale

Say, Indian Railways runs 14,444 trains everyday.Passengers expect the trains to be on time. For the trains to

be time everyday the number of opportunities are:

14,444 x 365 = 5,272,060

At Six Sigma level (3.4 defects per million opportunities)Indian Railways will have to meet the standard:

(5,272,060/100,000) x 3.4 = 18

Therefore, no more than 18 trains can be late during annually

for Indian Railways to meet Six Sigma standards.


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Calculating on Sigma Scale

At Yes Bank customers expect that they should get acomplete set of documents within 3 days of their

submitting their application to open an account.

Management considers that if a customer gets his/her

documents after 3 days, it is a defect.

At the main branch of the bank, a total of 5000 accounts

were opened in the last three months. Data shows that in

the case of 125 accounts the target was missed. What is

the quality level?


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T

heSigmaScale


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Calculating on Sigma Scale

The level of defects per million can be calculated as follows:DPMO = (125/5000) = 25000

Sigma Calculator

The level of defects corresponds to a sigma level of 3.46.


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Up the Sigma Scale

Sigma % Good % Bad DPMO

1 30.9% 69.1% 691,462

2 69.1% 30.9% 308,538

3 93.3% 6.7% 66,8074 99.38% 0.62% 6,210

5 99.977% 0.023% 233

6 99.9997% 0.00034% 3.4

World-class

Minimum

Acceptable

Quality

Level

DPMO Si R l i hi


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1,000,000

100,000

10,000

1,000

100

10

1

2 3 4 5 6 7

d

p

m

o

66807 *

6210

233

3.4*

DPMO to Sigma Relationship

Sigma

*6 Sigma is not twice as good as 3 Sigma, it is almost

20,000 times better

Sigma Ranges


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Upendra Kachru SIX SIGMAUpendra Kachru

Sigma Ranges

The y axis, representing DPMO is logarithmically scaled. As the

sigma level is increased, the defects per million level decreaseexponentially. For example, moving from 3 Sigma to 4 Sigma DPMO

drops from 67,000 to 6500, then to just over 200 at 5 Sigma.


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Cost of Quality at Different Sigma Levels

The cost of quality can be measured for any organization using

established criteria and categories of cost. In the figure the y axisrepresents the cost of quality as a percentage of sale. For a 2 Sigma

organization, nearly 50% of sales is spent on non-value adding

activities.


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Cost of Quality at Different Sigma Levels

At 3 or 4 Sigma, where most organizations operate, it spends 15 to

25% on quality related activities. Some of the costs are: qualitydepartments, customer complaint departments, returns, and warranty

repairs etc. Rule of thumb: An error that costs Re.1 will require Rs. 10

to detect in-house and Rs. 100 if the customer detects it.

C t f Q lit t Diff t Si


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Cost of Quality at Different Sigma

Levels

As the organization moves to 5 Sigma, its quality

costs drop to about 5%. And at Six Sigma it drops

to 12 % and customer satisfaction increases.

Th Si Si E l ti Ti li


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The Six Sigma Evolutionary Timeline

1736: French

mathematicianAbraham de

Moivre publishesan articleintroducing the

normal curve.

1896: Italian sociologist Vilfredo

Alfredo Pareto introduces the 80/20rule and the Pareto distribution in

Cours dEconomie Politique.

1924: Walter A. Shewhart introduces

the control chart and the distinction ofspecial vs. common cause variation as

contributors to process problems.

1941: Alex Osborn, head ofBBDO Advertising, fathers a

widely-adopted set of rules forbrainstorming.

1949: U. S. DOD issues Military

Procedure MIL-P-1629, Proceduresfor Performing a Failure Mode Effects

and Criticality Analysis.

1960: Kaoru Ishikawa

introduces his now famouscause-and-effect diagram.

1818: Gauss uses the normal curve

to explore the mathematics of erroranalysis for measurement, probabilityanalysis, and hypothesis testing.

1970s: Dr. Noriaki Kanointroduces his two-dimensional

quality model and the threetypes of quality.

1986: Bill Smith, a senior

engineer and scientist introducesthe concept of Six Sigma at

Motorola

1994: Larry Bossidy launches

Six Sigma at Allied Signal.

1995: Jack Welchlaunches Six Sigma at GE.

1798: Eli Whitneyintroduces the concept

of interchangeable partsand Go gauges.


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Major Contributions to Six Sigma

1. Create Constancy of Purpose for Improvement of Product and

Service

2. Adopt the New Philosophy

3. Cease Dependence on Mass Inspection for Quality Control

4. End the Practice of Awarding Business on Price Tag Alone

5. Constantly and Forever Improve the System of Production and

Service

6. Institute More Thorough, Better Job-Related Training

7. Institute Leadership

Demings 14 Points


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8. Drive Out Fear

9. Break Down Barriers Between Departments

10. Eliminate Slogans, Exhortations, and Targets of the Work Force

11. Eliminate Work Standards on the Factory Floor

12. Remove Barriers that Rob People of Pride of Workmanship

13. Institute a Vigorous Program of Education and Self-Improvement

14. Put Everybody in the Organization to Work to Accomplish the

Transformation


Demings 14 Points (contd.)


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Phillip Crosby

FOUR ABSOLUTES OF QUALITY MANAGEMENT

Definition of Quality: Conformance toRequirements

System: Prevention

Performance Standard: Zero Defects

Measurement: Cost of Quality



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Crosbys 14 Steps

1. Management Commitment

2. Quality Improvement Team

3. Quality Measurement

4. Cost of Quality Evaluation5. Quality Awareness

6. Corrective Action

7. Zero Defects Planning

8. Quality Education

9. Zero Defects Day

10. Goal Setting

11. Error Cause Removal12. Recognition

13. Quality Councils

14. Do It All Over Again



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Genichi Taguchi

Four-time winner of the Deming Award

Joined ECL in 1949 with the charge to improve efficiency of

R & D activities. Cultivated the application of designedexperiments.

Advocates a three-stage process design model:1. System Design

2. Parameter Design

3. Tolerance Design

Quality Loss Function

Signal-to-Noise Ratio




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Joseph Juran


Definition of Quality:Fitness for Use

O h M j C ib i Si Si


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Other Major Contributions to Six Sigma

M t l d Si Si


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Motorola and Six Sigma

Motorola was greatly impacted by the quality improvements

in foreign products. Under the leadership and support of BobGalvin, the companys zeal for quality improvement

flourished.

Stealing the best practices from the best companies (known

as the bandit project) was Motorolas attempt at turningaround the pocket pager business in the early 1980s.

Process Variation & Defect Rates


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CenterProcess

ReduceSpread

Off-Target Too Much Variation

CenteredOn-Target

Process Variation & Defect Rates

Bill Smith, leading the Motorola team, realized that there are

two things that can occur as a result of variation:

The process is "off-center." This means that the output from the

process is missing the target.

The process has too much spread. This means that there is a wide

variance in the output from the process.


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Upendra Kachru SIX SIGMAUpendra Kachru

Process Capability

As the objective was to understand customer

requi rements and reduce process variation and defects,

Bill Smith and other Motorola executives combined

the concepts of process capability and

product specifications

to arrive at the Six Sigma Framework.

Six Sigma - Process Capability and


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Six Sigma Process Capability and

Product Specifications

Six Sigma marries the concepts of process capability andproduct specifications.

Process capability (Cp) is a technique to find out the measurable

property of a process to a specification.

Process capability index (Cpk) is the measure of process

capability. It shows how closely a process is able to produce the

output to its overall specifications.

M t l d Si Si


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Motorola and Six Sigma 3 Sigma ( Process capability of 1 CPK ) - if the process

(lorry) slightly varies then the scrap or damage will occur

6 Sigma ( Process capability of 2 CPK ) - if the process

(lorry) varies, there will be no scrap or damage

Curbs= required

process tolerances

CPK of 2

(6 sigma)

CPK of 1

(3 sigma)

Example


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ExampleFood served at a restaurant should be between 38C and 49C when it

is delivered to the customer. The process used to keep the food at thecorrect temperature has a process standard deviation of 2C and the

mean value for these temperature is 23. What is the process capability

of the process?

Given:

USL (Upper Specification Limit) =49C LSL (Lower Specification Limit) =39C

Standard Deviation =2C

Mean = 23

To Find:

Process Capability & Process Capability Index

Solution


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Solution

Process Capability :

Process Capability = (49 - 39) / (6 * 2)= 10 / 12

= 0.833

Process Capability Index :

Solution 1

(USL-mean/ 3*std.Dev) = (49 - 23) / (3 * 2)

= 4.33

Solution 2

(mean-LSL/3*std.Dev) = (23 - 39) / (3 * 2)

= 2.66

Now, find the minimum value.

Process Capability Index = min (Solution 1, Solution 2)= min (4.33 , 2.66)

= 2.66

M t l d Si Si


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Cp and Cpkmeasurements were used to measure

process performance. The calculation for capability was

defects per million opportunities (DPMO).

Traditionally, processes aimed for process capability of3 to 4 sigma (Cpk=1.0 to 1.33 or 93% to 99.3%

acceptable).

The customer received 6200 defective product permillion at best. The process was failing the customerexpectations



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4 Sigma Process Capability 99.38% Current Standard

6 Sigma Process Capability 99.99966% World-Class

Long-Term Yield

3 Sigma Process Capability 93.32% Historical Standard

The companys approach was based on a comparison of process

performance and product specification, and aggressive efforts to drive

down defects.

Processes now aimed for 6 sigma (Cpk=2).The customer would receive 3.4 defective product per million.



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To ensure widespread acceptance, the challenge was to make their

people understand that significant opportunities could be identified inthe DPMO formula, and customers ever changing expectations must

be considered.

It was also important to understand that a companywide mindset of

continuous improvement was as important as targeting a specific

quality level, such as 3.4 DPMO.

In 1991 Motorola certified its first 'Black Belt' Six Sigma experts,

which indicates the beginnings of the formalisation of the accredited

training of Six Sigma methods.



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As a result of winning the Baldrige Award in 1988, Motorola was

compelled to share its quality practices with others. AlliedSignal wasone of the first companies to adopt and use the methodology in 1991.

IBM and other companies adopted the concepts of Six Sigma and

shared the new methodology and philosophy with their suppliers,

engineers and managers.

There have been many modifications to the original measures. Some

add an additional I emphasizing implementation of the identified

solutions; or a trailing L to emphasize the need to leverage the

results across the organization.

Others Follow


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Others Follow

In 1995, Larry Bossidy, AlliedSignals CEO,introduced the concept of Six Sigma to Jack

Welch, CEO of General Electric. Welch took the

methodology, made it a corporate requirement and

firmly deployed it throughout his organization

with great intensity and significant success. Hisresults are well documented, and the rest is history.

Six Sigma Companies


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Some Six Sigma Indian Companies


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Some Six Sigma Indian Companies

Historical Developments


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Historical Developments

Six Sigma is


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Six-Sigma is a philosophy:

........Of breakthrough improvement

Six Sigma is


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Six Sigma is

Management mandated and directed improvement

program focused on breakthroughsin financial

performance and customer satisfaction

A systematic project based method for process and

product improvement

A statistical measure indicating the number of standard

deviations within customer expectations.

A performance goal, representing 3.4 defects for every

million opportunities to make one.

Six Sigma is. . .


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Six Sigma is. . .

A Greek symbol for measuring performance variation

A approach using series of tools and methods used toimprove or design products, processes, and/or services.

Uses Champions, Black Belts and Green Belts to facilitate

change

A disciplined, fact-based approach to managing a business

and its processes.

A metric for evaluating performance quality

A standard of excellence

Six-Sigma Quality


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g Q y

Ensuring that process variation is half the design tolerance (Cp =

2.0) while allowing the mean to shift as much as 1.5 standarddeviations, resulting in at most 3.4 DPMO.

Six Sigma & Other Approaches


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Six Sigma & Other Approaches

There are many approaches to excellence in addition to Six

Sigma : Total Quality Management

Kaizen

Toyota Production System

Total Productive Maintenance Theory of Constraints

Lean Production

Six Sigma has some overlap with all these approaches. It is

particularly close to TQM and sometimes considered as aspecific approach of TQM.

Six Sigma & TQM


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S S g & Q

In some aspects of quality improvement, TQM and Six Sigma share thesame philosophy of how to assist organizations to accomplish Total

Quality. They both emphasize the importance of top-management

support and leadership. Both approaches make it clear that continuous

quality improvement is critical to long-term business success.

However, why has the popularity of TQM waned while Six Sigma'spopularity continues to grow in the past decade?

Six Sigma & TQM


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g QThe differences between TQM and Six Sigma are summarized below:

TQM Six Sigma

A functional specialty within the

organization.

An infrastructure of dedicated change agents. Focuses on

cross-functional value delivery streams rather than

functional division of labour.

Focuses on quality. Focuses on strategic goals and applies them to cost,

schedule and other key business metrics.

Motivated by quality idealism. Driven by tangible benefit far a major stockholder group

(customers, shareholders, and employees).

Loosely monitors progress toward goals. Ensures that the investment produces the expected return.

People are engaged in routine duties

(Planning, improvement, and control).

Slack resources are created to change key business

processes and the organization itself.

Emphasizes problem solving. Emphasizes breakthrough rates of

improvement.

Focuses on standard performance, e.g.

ISO 9000.

Focuses on world class performance, e.g., 3.4 PPM error

rate.

Six Sigma & TQM


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TQM Six Sigma

Quality is a permanent, full-time job. Career

path is in the quality profession.

Six Sigma job is temporary. Six Sigma is a

stepping-stone; career path leads elsewhere.

Provides a vast set of tools and techniques

with no clear framework for using them

effectively.

Provides a selected subset of tools and techniques

and a clearly defined framework for using them to

achieve results (DMAIC).

Goals are developed by quality department

based on quality criteria and the assumption

that what is good for quality is good for the

organization.

Goals flow down from customers and senior

leadership's strategic objectives. Goals and metrics

are reviewed at the enterprise level to assure that

local sub-optimization does not occur.

Developed by technical personnel. Developed by CEOs.

Focuses on long-term results. Expected

payoff is not well-defined.

Six Sigma looks for a mix of short-term and long-

term results, as dictated by business demands.

Six Sigma & TQM


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TQM Six Sigma

A functional specialty within the

organization.

An infrastructure of dedicated change agents. Focuses on

cross-functional value delivery streams rather than

functional division of labour.

Focuses on quality. Focuses on strategic goals and applies them to cost,

schedule and other key business metrics.

Motivated by quality idealism. Driven by tangible benefit far a major stockholder group

(customers, shareholders, and employees).

Loosely monitors progress toward goals. Ensures that the investment produces the expected return.

People are engaged in routine duties

(Planning, improvement, and control).

Slack resources are created to change key business

processes and the organization itself.

Emphasizes problem solving. Emphasizes breakthrough rates of

improvement.

Focuses on standard performance, e.g.

ISO 9000.

Focuses on world class performance, e.g., 3.4 PPM error

rate.

Six Sigma & TQM


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TQM Six Sigma

Quality is a permanent, full-time job. Career

path is in the quality profession.

Six Sigma job is temporary. Six Sigma is a

stepping-stone; career path leads elsewhere.

Provides a vast set of tools and techniques

with no clear framework for using them

effectively.

Provides a selected subset of tools and techniques

and a clearly defined framework for using them to

achieve results (DMAIC).

Goals are developed by quality department

based on quality criteria and the assumption

that what is good for quality is good for the

organization.

Goals flow down from customers and senior

leadership's strategic objectives. Goals and metrics

are reviewed at the enterprise level to assure that

local sub-optimization does not occur.

Developed by technical personnel. Developed by CEOs.

Focuses on long-term results. Expected

payoff is not well-defined.

Six Sigma looks for a mix of short-term and long-

term results, as dictated by business demands.

Six Sigma & TQM


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g Q

Key differences between TQM and Six Sigma can be summarized as:Project Focus and Duration: Six Sigma deployment revolves around Six Sigma

projects that concentrate on one or more key areas: cost, schedule and quality.

The duration is specified, normally three to six months time frame.

Organizational Support and Infrastructure: The deployment is led by

executive staff, who use Six Sigma to further strategic goals and objectives. It is

championed by mid and upper level leaders and the project is led by a black belt

Clear and Consistent Methodology: Standard methodology has been developed

for Six Sigma projects, i.e. DMAIC.

Top down Training: Deployment starts at the top with training of key

management personnel.

Summary


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y

The major differences in Six Sigma as compared to other

approaches: Project based improvement approach

Clear and direct linkage of projects to financial benefits

Projects sponsored by Senior Management

Careful selection of the best people to learn and implement Six

Sigma

Uses statistical tools to identify problems and find their solutions

Comprehensive training in Six Sigma (statistical) tools.


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C l i c k t o e d i t c o m p a n y s l o g a n .

six sigma 1 intro

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