Six Sigma Basics (PowerPoint) by dkallgren

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									Six Sigma

Process Sigma
• • • • • DPO DPMO Defect % Yield % Process Sigma

Balanced Scorecard



Helpful Strengths


Harmful Weaknesses Manpower Shortages Age of Equipment


Reputation Employee Expertise

Opportunities External Larger Market Share New Product/Service

Threats New Competition General Economy

Balanced Scorecard
• • • • Vision Mission Strategy Where Does That Leave Six Sigma?

Balanced Scorecard
Robert S. Kaplan and David P. Norton 1992: Harvard Business Review



Six Sigma Business Scorecard
Business Performance Index Six Sigma Business Scorecard Praveen Gupta No. Measurement Description 1 # Emp. Recog. 2 Profitability 3 Rate of Imp. 4 Recom./Emp. 5 Spend/Sales 6 Supp. Defect 7 Cycle Variance 8 Process Defect 9 New Business 10 Cust. Satisfaction Corporate Wellness DPU DPMO Sigma Category Significance Performance Rating LNP 15 0.5 LNP 15 0.75 MAI 20 0.6 EAI 10 0.6 PSM 5 0.8 PSM 5 0.6 OPE 5 0.6 OPE 5 0.8 SND 10 0.9 SAG 10 0.8 Index 7.5 11.25 12 6 4 3 3 4 9 8 67.75 0.3893 25.956 3.44

Clarifying and Translating the Vision and Strategy

Communicating and Linking

Balanced Scorecard

Strategic Feedback and Learning

Planning and Target Setting

Output as a Function of Input
• If you can agree that you can view work as processes that can be defined, measured, analyzed, improved, and controlled. That processes require inputs and produce outputs.
– Then

• If you can control the inputs, you will control the outputs. • Y=f(x) concept

• Y equals Output • X equals Input • Equation States Output is a function of input
– You get out what you put in……

• Need to Define the Y’s and decide the x’s • Examples:
– Y(operating margins)=f(revenue, product cost, and business cost) – Y(cash flow)=f(profits, working capital) – Y(revenue)=f(volume, average selling price, discounts) – Y(profits)=f(mfg. yields, cost of poor quality, cost of goods sold, invoice to cash, supplier cost variances

Six Sigma Organization The Full Blown Version
• Executive Six Sigma Council-Strategic Leadership, Assures Progress, Cultural Transformation. • Director-Manages infrastructure and resources. • Master Black Belt-Change agent, deployment of discipline across the enterprise. • Black Belt-Technical Expert, Leads Projects, Consultant to Functional Areas, Coaches Green Belts. Recommends Green Belts for Projects.

Six Sigma Green Belt
• Project Originator-Recommends Six Sigma Projects in their respective areas • Project Leader-Leads local improvement projects. • Part-Time- Will devote 20%-30% of week on Six Sigma Projects • Applies formal data analysis approaches to projects. Practices DMAIC. Serves as local Champion (ie Department, Facility)

• Types of Projects:
– Ones involving a Process.
• What is a Process ? • Any activity (activities) that will transform an input into an output and create value for a stakeholder.

– Input through the Process creates the Output – Does not work on non-process activites:
• R&D, Pure Creativity, unstructured Play, Love, etc…

– Six Sigma works through Projects

• How do you find a project?
• • • • • • • • • • Manufacturing Defect Reduction Cycle Time Reduction Cost Reduction Inventory Reduction Product Development and Introduction Labor Reduction Increased Utilization of Resources Product Sales Improvement Capacity Improvements Delivery Improvements


All critical characteristics (Y) are driven by factors(x) which are “upstream” from the results….Attempting to manage results (Y) only causes increased costs due to rework, test and inspection… Understanding and controlling the causative factors (x) is the real key to high quality at low cost...

• A common and relatively easy method to “put projects on the table” is through Brainstorming.
– Each member of the team proposes a project with no discussion, no opinions until each member “passes” – Use the Nominal Group Technique (NGT) to rank:
• Each member secretly ranks proposals , rankings are totaled. (Four ideas A-D, A=4, B=3, etc)

• Six Sigma Projects work through Teams • Critical to Projects, Process, Methodology • Can Plan an entire course of study around team structures, team dynamics. • Green Belts take responsibility for Team Management • The success or failure of the project can rely on how well team functions.

• Bottom Line:
– Team Management can be rewarding, profitable, and has the ability to get things done quickly. – They can also drive you nuts:
• Preparation is Key: Be organized before you start any team session. • Understand your members’ motives

– Advice: Choose Members Wisely (volunteers)
• If you have someone just totally disruptive, then get them off the team.

Team Member Selections
• Who to have on Team, What Makes for Good Team Member ????
– Desire to be on Team – Can Listen to Others – Can be Objective – Can Compromise – Can Express Opinion, Make an Argument

Team Members
• Data Driven
– Not willing to take stand unless facts, backed by data, are present.

• Detailed Driven
– When working through process, must get to details, root cause.

• Focused Driven
– Not easily side-track by “noise” or outside interference.

• Supplier –Input-Process-Output-Customer
– Focus on the X’s that move the Y – Allows Team to narrow focus – SIPOC.xls

• Steps for Construction (Pyzdek Method)
– Focused Brainstorming with people who know the process. – Set separate sheets, flip charts, etc. with the SIPOC Headings – Create simple high level process map. Keep visible. – List Suppliers, Inputs, Process Steps, Outputs, and Customers on each sheet then combine. – Can create SIPOC for Problems or Ideal.

Voice of the Customer
• Know WHO or WHAT is Customer
– Included in Project Charter

• How to Obtain Voice of Customer (VOC)
– Ask Them: Surveys, Focus Groups, Letters, Comment Cards – Don’t “sugar coat” negatives.

Critical to Quality
• Purpose is to identify Customer Needs • Start with VOC: Actual customer statements that reflect their perception of an attribute of a product or service, or experience with delivery, or interaction with a business process. • Next: Determine Key Customer Issues: Concerns, Values, Expectations • Finally: List the specific, precise, and measureable expectations that a customer has regarding a product or service • Critical to Quality (CTQ) is a “drill-down” process starting with a top down approach. • CT Trees or a Simplified CE (Cause and Effect Matrix)

CTQ Tree Example
Flowdown or Tree starts with Complex Level (A) and moves to Element Level (C) getting more specific at each level. A






Operational Definitions
• An operational definition is used to provide specific meaning to terms • To eliminate ambiguity • Needs to include an agreed upon measurement method and acceptance criteria • Consider the Following Terms:

Operational Definitions
• • • • • • • Clean Flat On-Time Defective Good Quality Complete Qualified or Certified

Operational Definitions
• Be Specific • Include Quantitative Measures as well as Qualitative • Eliminate the “wiggle room”. • Test for Operational Definition:
– Give instructions to child. They are experts at finding ambiguity in instructions. – So are some suppliers

Selecting Methodologies
• Methodology:
– Set of guidelines or principles that can be tailored and applied to a specific situation

• Could be a “To Do” List • Can Use
– Specific Approach (DMAIC) – Templates – Forms – Checklists

Common Methodologies
• Analytical/Conceptual Modeling of a Theory
– Investigate concepts and develop a model to understand some portion of a process (Describe conceptually how delays can occur).

• Survey
– Asking people same questions about an activity, plan, value, etc. (Determine how many customers are happy or unhappy about business).

Common Methodologies
• Descriptive Case Study
– In-depth investigation of a project, explaining the hows and whys of interests (recounting how a project occurred).

• Economic Case Study
– Same as Descriptive Case Study with economics of project added (Costs, Benefits of Project).

Common Methodologies
• Historical Tracing
– Trace forward based on what happened in past or trace backward using results and determining causes which have occurred in the past (We’ve always done it this way, or The last time this happened approach).

• Expert Judgment (or Position Judgment)
– Informed judgment to make assessments (Wise Man or I’m the Boss).

Common Methodologies
• Economic and Statistical Analysis
– Using tools of statistics, analyze functional relationships between phenomena to forecast effects; descriptive and inferential (Adding backup data and analysis to a project and predicting quantitatively the outcome).

Common vs. Special Causes
• Understanding Control
– Does not mean there is no variation, but that the variation can be predicted. All predictions have risk.

• Common (Chance)
– Cause is any unknown, random cause of variation. Usually small, coming from many sources and is predictable within limits.

Common vs. Special Causes
• Special (Assignable) Cause
– Cause of variation that is not part of the constant system

• Common vs. Special Causes form the basis for understanding Statistical Process Control (SPC).
– Using statistical methods to identify the special causes of variation in a process.

Common vs. Special Causes
• Variation
– If Common: Leave to Chance – If Special: Identify and Eliminate

Common vs. Special Causes
• Variation
– If Common: Leave to Chance – If Special: Identify and Eliminate Statistics Means Never Having to Say You’re Certain

Measures and Savings
• Top Level-Balanced Scorecard
– Financial (State of Revenues, Expenses, Profits) – Internal Processes (What Must Business be really good at performing) – Customer (What are keys: Pricing? Delivery? Quality ?) – Innovation and Learning (Activities to Sustain Organization)

• Usually performed by Senior Mgrs., Champions, and Master Black Belts

Measures and Savings
• Projects
– Net Present Value – Internal Rate of Return – Pareto Priority Index (PPI)
• PPI equals Savings multiplied by probability of success divided by cost multiplied by time to completion

– Cost of Quality
• Prevention, Appraisal, Internal Failures, External Failures

• Key Deliverables/Accomplishments
– Team Selection – Project Selection (with Justification/Data) – Project Charter (Specific with Operational Definitions, Measures for Success)
• How Project with meet Critical to Customer Needs (Internal and/or External)

– Action Plan for remaining Phases

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