S.PREEETHI VARSHNEY
B.PRAVIN KUMAR M.B.A 2ND YEAR
1
DEFINITION: “A rigorous and disciplined methodology that utilizes data and statistical analysis to measure and improve a company’s operational performance, practices and systems. Six Sigma identifies and prevents defects in manufacturing and service-related processes. In many organizations, it simply means a measure of quality that strives for near perfection.” What is Six Sigma Quality? • • • • • Originated at Motorola in the early 80’s Helped Motorola win the 1988 MBNQA Is a methodology for disciplined quality improvement Juran principles apply Doesn’t use “Quality” in the name With the inclusion of Six Sigma into a sound business system, the major ingredients of a Total Quality Management System are usually in place • • • Uses a modified Deming Wheel (PDCA). Six Sigma’s goal is the near elimination of defects from any process, product, or service. The numerical goal is 3.467 defects per million opportunities.
Statistical Six Sigma Definition What does it mean to be "Six Sigma"? Six Sigma at many organizations simply means a measure of quality that strives for near perfection. But the statistical implications of a Six Sigma program go well beyond the qualitative eradication of customer-perceptible defects. It's a methodology that is well rooted in mathematics and statistics. The objective of Six Sigma Quality is to reduce process output variation so that on a long term basis, which is the customer's aggregate experience
2
with our process over time, this will result in no more than 3.4 defect Parts Per Million (PPM) opportunities (or 3.4 Defects Per Million Opportunities – DPMO). For a process with only one specification limit (Upper or Lower), this results in six process standard deviations between the mean of the process and the customer's specification limit (hence, 6 Sigma). For a process with two specification limits (Upper and Lower), this translates to slightly more than six process standard deviations between the mean and each specification limit such that the total defect rate corresponds to equivalent of six process standard deviations.
Many processes are prone to being influenced by special and/or assignable causes that impact the overall performance of the process relative to the customer's specification. That is, the overall performance of our process as the customer views it might be 3.4 DPMO (corresponding to Long Term performance of 4.5 Sigma). However, our process could indeed be capable of producing a near perfect output (Short Term capability – also known as process entitlement – of 6 Sigma). The difference between the "best" a process can be, measured by Short Term process capability, and the customer's aggregate experience (Long Term capability) is known as Shift depicted as Zshift or ? . For a "typical" process, the value of shift is 1.5; shift therefore, when one hears about "6 Sigma," inherent in that statement is that the short term capability of the process is 6, the long term capability is
3
4.5 (3.4 DPMO – what the customer sees) with an assumed shift of 1.5. Typically, when reference is given using DPMO, it denotes the Long Term capability of the process, which is the customer's experience. The role of the Six Sigma professional is to quantify the process performance (Short Term and Long Term capability) and based on the true process entitlement and process shift, establish the right strategy to reach the established performance objective As the process sigma value increases from zero to six, the variation of the process around the mean value decreases. With a high enough value of process sigma, the process approaches zero variation and is known as 'zero defects.' Six Sigma at many organizations simply means a measure of quality that strives for near perfection. Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects (driving towards six standard deviations between the mean and the nearest specification limit) in any process -- from manufacturing to transactional and from product to service. The statistical representation of Six Sigma describes quantitatively how a process is performing. To achieve Six Sigma, a process must not produce more than 3.4 defects per million opportunities. A Six Sigma defect is defined as anything outside of customer specifications. A Six Sigma opportunity is then the total quantity of chances for a defect. Process sigma can easily be calculated using a Six Sigma calculator. The fundamental objective of the Six Sigma methodology is the
implementation of a measurement-based strategy that focuses on process improvement and variation reduction through the application of Six Sigma improvement projects. This is accomplished through the use of two Six Sigma sub-methodologies: DMAIC and DMADV. The Six Sigma DMAIC process (define, measure, analyze, improve, control) is an improvement
4
system for existing processes falling below specification and looking for incremental improvement. The Six Sigma DMADV process (define, measure, analyze, design, verify) is an improvement system used to develop new processes or products at Six Sigma quality levels. It can also be employed if a current process requires more than just incremental improvement. Both Six Sigma processes are executed by Six Sigma Green Belts and Six Sigma Black Belts, and are overseen by Six Sigma Master Black Belts. TOOLS OF SIX SIGMA The tools are applied within a simple performance improvement model known as DMAIC, or Define-Measure-Analyze-Improve-Control. DMAIC can be described as follows: Define, identify, prioritize, and select the right projects. Measure the characteristics parameters. key and product process
Analyze and identify process determinants. Improve performance. and
the
key
optimize
Control to hold the gains. D Define the goals of the improvement activity. At the top level the goals will be the strategic objectives of the organization, such as a higher ROI or market share. At the operations level, a goal might be to increase the throughput of a production department. At the project level goals might be to reduce the defect level and increase
5
throughput. Apply data mining methods to identify potential improvement opportunities. M Measure the existing system. Establish valid and reliable metrics to help monitor progress towards the goal(s) defined at the previous step. Begin by determining the current baseline. Use exploratory A and descriptive data analysis to help you understand the data. Analyze the system to identify ways to eliminate the gap between the current performance of the system or process and the desired I goal. Apply statistical tools to guide the analysis. Improve the system. Be creative in finding new ways to do things better, cheaper, or faster. Use project management and other planning and management tools to implement the new approach. C Use statistical methods to validate the improvement. Control the new system. Institutionalize the improved system by modifying procedures, compensation MRP, budgets, and incentive systems, policies, other operating instructions and
management systems. You may wish to utilize systems such as ISO 9000 to assure that documentation is correct. Implementation of Six Sigma After over two decades of experience with quality improvement, there is now a solid body of scientific research regarding the experience of thousands of companies implementing major programs such as Six Sigma. Researchers have found that successful deployment of Six Sigma involves focusing on a small number of high-leverage items. The steps required to successfully implement Six Sigma are well-documented. 1. Successful performance improvement must begin with senior leadership. Start by providing senior leadership with training in the principles and tools they need to prepare their organization for success. Using their newly acquired knowledge, senior leaders direct the development of a management infrastructure to support Six Sigma. Simultaneously, steps
6
are taken to "soft-wire" the organization and to cultivate an environment for innovation and creativity. This involves reducing levels of organizational hierarchy, removing procedural barriers to experimentation and change, and a variety of other changes designed to make it easier to try new things without fear of reprisal. 2. Systems are developed for establishing close communication with customers, employees, and suppliers. This includes developing rigorous methods of obtaining and evaluating customer, employee and supplier input. Base line studies are conducted to determine the starting point and to identify cultural, policy, and procedural obstacles to success. 3. Training needs are rigorously assessed. Remedial skills education is provided to assure that adequate levels of literacy and numeracy are possessed by all employees. Top-to-bottom training is conducted in systems improvement tools, techniques, and philosophies. 4. A framework for continuous process improvement is developed, along with a system of indicators for monitoring progress and success. Six Sigma metrics focus on the organization's strategic goals, drivers, and key business processes. 5. Business processes to be improved are chosen by management, and by people with intimate process knowledge at all levels of the organization. Six Sigma projects are conducted to improve business performance linked to measurable financial results. This requires knowledge of the organization's constraints. Although the approach is simple, it is by no means easy. But the results justify the effort expended. Research has shown that firms that successfully implement Six Sigma perform better in virtually every
7
business category, including return on sales, return on investment, employment growth, and share price increase. MUMBAI’S AMAZING DABBAWALLAS A Six Sigma means the accuracy rate is 99.999 per cent, which otherwise means that for an office-goers engaging a dabbawala for a monthly fee of something between Rs 150 to Rs 300, the chances of missing a day's home-made lunch is just one in six thousand. More than 175,000 or 200,000 lunches get moved every day by an estimated 4,500 to 5,000 dabbawalas, all with an extremely small nominal fee and with utmost punctuality. According to a recent survey, there is only one mistake in every 6,000,000 deliveries. The American business magazine Forbes gave a Six Sigma performance rating for the precision of dabbawalas. The BBC has produced a documentary on dabbawalas, and Prince Charles, during his visit to India, visited them (he had to fit in with their schedule, since their timing was too precise to permit any flexibility). Owing to the tremendous publicity, some of the dabbawalas were invited to give guest lectures in top business schools of India, which is very unusual. Most remarkably, the success of the dabbawala trade has involved no modern high technology. The main reason for their popularity could be the Indian people's aversion to fast food outlets and their love of home-made food.
8
Low-tech and lean (Dabbawala in action) Although the service remains essentially low-tech, with the barefoot delivery boys as the prime movers, the dabbawalas have started to embrace technology, and now allow booking for delivery through SMS. A web site, mydabbawala.com, has also been added to allow for on-line booking, in order to keep up with the times. An on-line poll on the web site ensures that customer feedback is given pride of place. The success of the system depends on teamwork and time management that would be the envy of a modern manager. Such is the dedication and commitment of the barely literate and barefoot delivery boys (there are only a few delivery women) who form links in the extensive delivery chain, that there is no system of documentation at all. A simple colour coding system doubles as an ID system for the destination and recipient. layers is There of are no elaborate dabbawala management required to
either — just three layers. Each also contribute a minimum capital in kind, in the shape of two bicycles, a wooden crate for the tiffins, white cotton kurta-pyjamas, and the white trademark Gandhi topi (cap). The return on capital is ensured by monthly division of the earnings of each unit.
9
Six Sigma rating A few years ago, US business magazine Forbes gave Mumbai’s dabbawallas a Six Sigma performance rating, or a 99.999999 percentage of correctness which means one error in six million transactions. Six sigma can provide cost savings and increased customer satisfaction to a wide variety of financial institutions.
Pitfalls of Six Sigma
Like any tool, six sigma can be used inappropriately. To the man with a hammer, everything appears to be a nail. ? Defining metrics from producer’s perspective ? Concentrating on the product, not the process ? Unreliable testing process ? Insufficient volumes for meaningful statistics 10
? Measuring unimportant things
11
doc_286093841.doc
B.PRAVIN KUMAR M.B.A 2ND YEAR
1
DEFINITION: “A rigorous and disciplined methodology that utilizes data and statistical analysis to measure and improve a company’s operational performance, practices and systems. Six Sigma identifies and prevents defects in manufacturing and service-related processes. In many organizations, it simply means a measure of quality that strives for near perfection.” What is Six Sigma Quality? • • • • • Originated at Motorola in the early 80’s Helped Motorola win the 1988 MBNQA Is a methodology for disciplined quality improvement Juran principles apply Doesn’t use “Quality” in the name With the inclusion of Six Sigma into a sound business system, the major ingredients of a Total Quality Management System are usually in place • • • Uses a modified Deming Wheel (PDCA). Six Sigma’s goal is the near elimination of defects from any process, product, or service. The numerical goal is 3.467 defects per million opportunities.
Statistical Six Sigma Definition What does it mean to be "Six Sigma"? Six Sigma at many organizations simply means a measure of quality that strives for near perfection. But the statistical implications of a Six Sigma program go well beyond the qualitative eradication of customer-perceptible defects. It's a methodology that is well rooted in mathematics and statistics. The objective of Six Sigma Quality is to reduce process output variation so that on a long term basis, which is the customer's aggregate experience
2
with our process over time, this will result in no more than 3.4 defect Parts Per Million (PPM) opportunities (or 3.4 Defects Per Million Opportunities – DPMO). For a process with only one specification limit (Upper or Lower), this results in six process standard deviations between the mean of the process and the customer's specification limit (hence, 6 Sigma). For a process with two specification limits (Upper and Lower), this translates to slightly more than six process standard deviations between the mean and each specification limit such that the total defect rate corresponds to equivalent of six process standard deviations.
Many processes are prone to being influenced by special and/or assignable causes that impact the overall performance of the process relative to the customer's specification. That is, the overall performance of our process as the customer views it might be 3.4 DPMO (corresponding to Long Term performance of 4.5 Sigma). However, our process could indeed be capable of producing a near perfect output (Short Term capability – also known as process entitlement – of 6 Sigma). The difference between the "best" a process can be, measured by Short Term process capability, and the customer's aggregate experience (Long Term capability) is known as Shift depicted as Zshift or ? . For a "typical" process, the value of shift is 1.5; shift therefore, when one hears about "6 Sigma," inherent in that statement is that the short term capability of the process is 6, the long term capability is
3
4.5 (3.4 DPMO – what the customer sees) with an assumed shift of 1.5. Typically, when reference is given using DPMO, it denotes the Long Term capability of the process, which is the customer's experience. The role of the Six Sigma professional is to quantify the process performance (Short Term and Long Term capability) and based on the true process entitlement and process shift, establish the right strategy to reach the established performance objective As the process sigma value increases from zero to six, the variation of the process around the mean value decreases. With a high enough value of process sigma, the process approaches zero variation and is known as 'zero defects.' Six Sigma at many organizations simply means a measure of quality that strives for near perfection. Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects (driving towards six standard deviations between the mean and the nearest specification limit) in any process -- from manufacturing to transactional and from product to service. The statistical representation of Six Sigma describes quantitatively how a process is performing. To achieve Six Sigma, a process must not produce more than 3.4 defects per million opportunities. A Six Sigma defect is defined as anything outside of customer specifications. A Six Sigma opportunity is then the total quantity of chances for a defect. Process sigma can easily be calculated using a Six Sigma calculator. The fundamental objective of the Six Sigma methodology is the
implementation of a measurement-based strategy that focuses on process improvement and variation reduction through the application of Six Sigma improvement projects. This is accomplished through the use of two Six Sigma sub-methodologies: DMAIC and DMADV. The Six Sigma DMAIC process (define, measure, analyze, improve, control) is an improvement
4
system for existing processes falling below specification and looking for incremental improvement. The Six Sigma DMADV process (define, measure, analyze, design, verify) is an improvement system used to develop new processes or products at Six Sigma quality levels. It can also be employed if a current process requires more than just incremental improvement. Both Six Sigma processes are executed by Six Sigma Green Belts and Six Sigma Black Belts, and are overseen by Six Sigma Master Black Belts. TOOLS OF SIX SIGMA The tools are applied within a simple performance improvement model known as DMAIC, or Define-Measure-Analyze-Improve-Control. DMAIC can be described as follows: Define, identify, prioritize, and select the right projects. Measure the characteristics parameters. key and product process
Analyze and identify process determinants. Improve performance. and
the
key
optimize
Control to hold the gains. D Define the goals of the improvement activity. At the top level the goals will be the strategic objectives of the organization, such as a higher ROI or market share. At the operations level, a goal might be to increase the throughput of a production department. At the project level goals might be to reduce the defect level and increase
5
throughput. Apply data mining methods to identify potential improvement opportunities. M Measure the existing system. Establish valid and reliable metrics to help monitor progress towards the goal(s) defined at the previous step. Begin by determining the current baseline. Use exploratory A and descriptive data analysis to help you understand the data. Analyze the system to identify ways to eliminate the gap between the current performance of the system or process and the desired I goal. Apply statistical tools to guide the analysis. Improve the system. Be creative in finding new ways to do things better, cheaper, or faster. Use project management and other planning and management tools to implement the new approach. C Use statistical methods to validate the improvement. Control the new system. Institutionalize the improved system by modifying procedures, compensation MRP, budgets, and incentive systems, policies, other operating instructions and
management systems. You may wish to utilize systems such as ISO 9000 to assure that documentation is correct. Implementation of Six Sigma After over two decades of experience with quality improvement, there is now a solid body of scientific research regarding the experience of thousands of companies implementing major programs such as Six Sigma. Researchers have found that successful deployment of Six Sigma involves focusing on a small number of high-leverage items. The steps required to successfully implement Six Sigma are well-documented. 1. Successful performance improvement must begin with senior leadership. Start by providing senior leadership with training in the principles and tools they need to prepare their organization for success. Using their newly acquired knowledge, senior leaders direct the development of a management infrastructure to support Six Sigma. Simultaneously, steps
6
are taken to "soft-wire" the organization and to cultivate an environment for innovation and creativity. This involves reducing levels of organizational hierarchy, removing procedural barriers to experimentation and change, and a variety of other changes designed to make it easier to try new things without fear of reprisal. 2. Systems are developed for establishing close communication with customers, employees, and suppliers. This includes developing rigorous methods of obtaining and evaluating customer, employee and supplier input. Base line studies are conducted to determine the starting point and to identify cultural, policy, and procedural obstacles to success. 3. Training needs are rigorously assessed. Remedial skills education is provided to assure that adequate levels of literacy and numeracy are possessed by all employees. Top-to-bottom training is conducted in systems improvement tools, techniques, and philosophies. 4. A framework for continuous process improvement is developed, along with a system of indicators for monitoring progress and success. Six Sigma metrics focus on the organization's strategic goals, drivers, and key business processes. 5. Business processes to be improved are chosen by management, and by people with intimate process knowledge at all levels of the organization. Six Sigma projects are conducted to improve business performance linked to measurable financial results. This requires knowledge of the organization's constraints. Although the approach is simple, it is by no means easy. But the results justify the effort expended. Research has shown that firms that successfully implement Six Sigma perform better in virtually every
7
business category, including return on sales, return on investment, employment growth, and share price increase. MUMBAI’S AMAZING DABBAWALLAS A Six Sigma means the accuracy rate is 99.999 per cent, which otherwise means that for an office-goers engaging a dabbawala for a monthly fee of something between Rs 150 to Rs 300, the chances of missing a day's home-made lunch is just one in six thousand. More than 175,000 or 200,000 lunches get moved every day by an estimated 4,500 to 5,000 dabbawalas, all with an extremely small nominal fee and with utmost punctuality. According to a recent survey, there is only one mistake in every 6,000,000 deliveries. The American business magazine Forbes gave a Six Sigma performance rating for the precision of dabbawalas. The BBC has produced a documentary on dabbawalas, and Prince Charles, during his visit to India, visited them (he had to fit in with their schedule, since their timing was too precise to permit any flexibility). Owing to the tremendous publicity, some of the dabbawalas were invited to give guest lectures in top business schools of India, which is very unusual. Most remarkably, the success of the dabbawala trade has involved no modern high technology. The main reason for their popularity could be the Indian people's aversion to fast food outlets and their love of home-made food.
8
Low-tech and lean (Dabbawala in action) Although the service remains essentially low-tech, with the barefoot delivery boys as the prime movers, the dabbawalas have started to embrace technology, and now allow booking for delivery through SMS. A web site, mydabbawala.com, has also been added to allow for on-line booking, in order to keep up with the times. An on-line poll on the web site ensures that customer feedback is given pride of place. The success of the system depends on teamwork and time management that would be the envy of a modern manager. Such is the dedication and commitment of the barely literate and barefoot delivery boys (there are only a few delivery women) who form links in the extensive delivery chain, that there is no system of documentation at all. A simple colour coding system doubles as an ID system for the destination and recipient. layers is There of are no elaborate dabbawala management required to
either — just three layers. Each also contribute a minimum capital in kind, in the shape of two bicycles, a wooden crate for the tiffins, white cotton kurta-pyjamas, and the white trademark Gandhi topi (cap). The return on capital is ensured by monthly division of the earnings of each unit.
9
Six Sigma rating A few years ago, US business magazine Forbes gave Mumbai’s dabbawallas a Six Sigma performance rating, or a 99.999999 percentage of correctness which means one error in six million transactions. Six sigma can provide cost savings and increased customer satisfaction to a wide variety of financial institutions.
Pitfalls of Six Sigma
Like any tool, six sigma can be used inappropriately. To the man with a hammer, everything appears to be a nail. ? Defining metrics from producer’s perspective ? Concentrating on the product, not the process ? Unreliable testing process ? Insufficient volumes for meaningful statistics 10
? Measuring unimportant things
11
doc_286093841.doc