SIXSIGMA

An IntroductionAn IntroductionLSSU - IABLSSU - IAB

30 January 200230 January 2002

creating value for our customers

creating value for our customers

SIXSIGMA

What is it?What is it?

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SIXSIGMA

““Six Sigma”Six Sigma”: What is it?: What is it?

““A comprehensive and flexible system for A comprehensive and flexible system for achieving, sustaining and maximizing business achieving, sustaining and maximizing business success. Six Sigma is uniquely driven by close success. Six Sigma is uniquely driven by close understanding of customer needs, disciplined use understanding of customer needs, disciplined use of facts, data and statistical analysis, and diligent of facts, data and statistical analysis, and diligent attention to managing, improving and reinventing attention to managing, improving and reinventing business processes.”business processes.”

-- The Six Sigma Way, by Pande, Newman and Cavanaugh

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Six SigmaSix Sigma: What is it?: What is it?

Specifically –

• Customer-focused, fact and data-based decision making driving out waste and defects which creates value for our customers.

It is just NOT Supply Chain or Manufacturing

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SIXSIGMA

• A A cultureculture that rapidly drives our key activities* to that rapidly drives our key activities* to be defect free 999,997 times out of 1,000,000.be defect free 999,997 times out of 1,000,000.

• < 3.4 defects per million opportunities.< 3.4 defects per million opportunities.

* Valued by or critical to our customer.

Six SigmaSix Sigma: What is it?: What is it?

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Sigma - the lower case Greek letter that denotes a statistical unit of measurement used to define the standard deviation of a population. It measures the variability or spread of the data.

What is Sigma?What is Sigma?

SIXSIGMA

Cure Time of Silicone Sealant

Nu

mb

er o

f S

amp

les

Lower Specification Limit (LSL)

Upper Specification Limit (USL)

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Upper Specification Limit (USL)

Lower Specification Limit (LSL)

x

x

Lower Specification Limit (LSL)

Upper Specification Limit (USL)

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Upper Specification Limit (USL)

Lower Specification Limit (LSL)

x

SIXSIGMA

Putting Six Sigma in Perspective!Putting Six Sigma in Perspective!

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If you played 100 rounds of golf per year, and played at:

• 2 sigma - you'd miss 6 putts per round• 3 sigma - you'd miss 1 putt per round• 4 sigma - you'd miss 1 putt every 9 rounds• 5 sigma - you'd miss 1 putt every 2.33 years• 6 sigma - you'd miss 1 putt every 163 years!

 

SIXSIGMA

Putting Six Sigma in Perspective!Putting Six Sigma in Perspective!

• 20,000 lost articles of mail 20,000 lost articles of mail every hour.every hour.

• Power outages seven hours Power outages seven hours each month.each month. . .

• 5,000 incorrect surgical procedures 5,000 incorrect surgical procedures each weekeach week for a major healthcare provider.for a major healthcare provider.

• Unsafe drinking water nine minutes Unsafe drinking water nine minutes every day.every day.

• Two long / short airport landings Two long / short airport landings every dayevery day. .

FourFour Sigma Sigma quality ( quality (6210 DPMO)6210 DPMO) means… means…99.370% right…but…..99.370% right…but…..

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Putting Six Sigma in Perspective!Putting Six Sigma in Perspective!

• Airline passenger safety ~ 8.2 Airline passenger safety ~ 8.2 – Currently at 2.6 DPMO (incidents per million Currently at 2.6 DPMO (incidents per million

takeoffs and landings).takeoffs and landings).

• Airline baggage handling ~ 3 Airline baggage handling ~ 3

SixSix Sigma Sigma quality ( quality (< 3.4 DPMO).< 3.4 DPMO).

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Impact of Six SigmaImpact of Six Sigma

The Cost of Poor Quality

Sigma Level Defects per Million Opportunities Cost of Poor Quality

2 398,537 (Noncompetitive Companies) Not applicable3 66,807 25-40% of sales4 6,210 (Industry Average) 15-25% of sales5 233 5-15% of sales6 3.4 (World Class) < 1% of sales

Each sigma shift provides a net income improvement which equals 10% of sales.

Six Sigma, by Harry and Schroeder, p. 17

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• 1987 Motorola introduced Quality Program now known as Six 1987 Motorola introduced Quality Program now known as Six SigmaSigma..

• Allied Signal picked it up.Allied Signal picked it up. • G.E. Success….G.E. Success….

– Capital ServicesCapital Services– Medical Systems (CAT Scan)Medical Systems (CAT Scan)

• Dozens of others…...Dozens of others…...– Learned the hLearned the highest ighest qquality uality pproducer is also the roducer is also the llowest owest ccost ost pproducer.roducer.– Learned customer loyalty Learned customer loyalty of a Six Sigma company is of a Six Sigma company is ~3X~3X that that

of the of the average average companycompany..

It all began at…..Motorola…not G.E.It all began at…..Motorola…not G.E.

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Who else is doing Six Sigma?Who else is doing Six Sigma?

• Avery DennisonAvery Dennison

• DowDow

• DuPontDuPont

• FoxboroFoxboro

• SonySony

• Deere & Co. Deere & Co. (John Deere)(John Deere)

• DelphiDelphi

• Allied SignalAllied Signal

• FordFord

• Johnson & JohnsonJohnson & Johnson• CaterpillarCaterpillar• Lockheed MartinLockheed Martin• IBMIBM• CitiGroup CitiGroup

(Visa/MasterCard)(Visa/MasterCard)• GG..EE..• J.P. MorganJ.P. Morgan• ServiceMasterServiceMaster

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How does Six Sigma work?How does Six Sigma work?Why is it different?Why is it different?

Top down, executive led. Customer focused (VOC). Project oriented

• Led by “Black Belts”.• 3-5 months long.• Ave. yearly impact $150-250K/project.• Consistent methodology.

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Process

ControlsX4, X5, X6…

X1

X2

X3

Output YCritical to Customer

Six Sigma

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What is the “Methodology”?What is the “Methodology”?

DDefineefine

MMeasureeasure

AAnalyzenalyze

IImprovemprove

CControlontrol

D M A I C

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• What are the “The Tools”?What are the “The Tools”?

Six Sigma is a Six Sigma is a disciplinediscipline using these tools: using these tools:

– 7 Tools of Quality7 Tools of Quality– Advanced analysis tools (Design of Experiment, Advanced analysis tools (Design of Experiment,

Linear Regression, etc.)Linear Regression, etc.)

– Re-engineeringRe-engineering

– Lean manufacturingLean manufacturing

– Supply chain improvementsSupply chain improvements

– Design for Six Sigma (DFSS)Design for Six Sigma (DFSS)

– For development of new products, new For development of new products, new services, new processes, and new workflows.services, new processes, and new workflows.

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Who are the other “Key Players”?Who are the other “Key Players”?

• Senior ChampionSenior Champion – Owns Six Sigma for the Business. – Owns Six Sigma for the Business.• ChampionChampion – Identifies – Identifies and resources and resources projectprojects.s.• Master Master BBlack lack BBeltelt – Serves as coach – Serves as coach to the Black Belt and project team. to the Black Belt and project team.• Black Black BBeltelt – Leads the project team, full time – Leads the project team, full time.. • Green Green BBeltselts – Team members (part-time) from the organization sponsoring the – Team members (part-time) from the organization sponsoring the

projectproject• Project SponsorsProject Sponsors – Team leaders. – Team leaders.• Process OwnersProcess Owners – Owns the process / workflow. – Owns the process / workflow.• Executive Six Sigma Steering CommitteeExecutive Six Sigma Steering Committee – Oversees progress, resolves issues, – Oversees progress, resolves issues,

ensures success enterprise-wide.ensures success enterprise-wide.

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Summary “take aways”Summary “take aways” Customer focused….Driven by the Voice of the Customer.Customer focused….Driven by the Voice of the Customer. Strong top management leadership, commitment, and involvement. Very Key!Strong top management leadership, commitment, and involvement. Very Key! Project orientation with measurable financial results.Project orientation with measurable financial results. Consistent methodology for all work. Consistent methodology for all work. Time driven.Time driven. Time driven….more accountable. Time driven….more accountable. • Six Sigma - is a Six Sigma - is a disciplinediscipline not an “add on” or “program”. not an “add on” or “program”.

- - NOTNOT a supply chain/manufacturing activity. a supply chain/manufacturing activity.- - No new toolsNo new tools….new ways to apply them!….new ways to apply them!

• GoalsGoals– Value for the Customer (i.e. no defects or waste & low cost)Value for the Customer (i.e. no defects or waste & low cost)– Improved productivity = profitability.Improved productivity = profitability.– Customer success and satisfaction + Profitability = GrowthCustomer success and satisfaction + Profitability = Growth

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SIXSIGMAcreating value for our customers

References……

• The Six Sigma Way (ISBN 0-07-135806-4) by Pande, Neuman, and Cavanaugh

• The Power of Six Sigma (ISBN 0-7931-4434-5) by Subir Chowdhury

• Six Sigma (ISBN 0-385-49437-8) by Harry and Schroeder.

• The Six Sigma Handbook (ISBN 0-07-137233-4) by Pyzdek is more technical and becoming the 'handbook' for Black Belts.

You can get them through Amazon, http://www.amazon.com/ in a couple of days.

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References……

Also...you might consider:

•www.6-sigma.com

•www.sixsigma.co.uk

•www.sixsigmasystems.com

•www.isixsigma.com