Six Sigma – A Strategy for Achieving World Class Performance

What is Sigma (σ)?

• A term used in statistics to represent standard deviation, an indicator of the degree of variation in a set of a process

What is Six Sigma (6σ)?

• A statistical concept that measures a process in terms of defects – at the six sigma level, there 3.4 defects per million opportunities.
• A philosophy and a goal : as perfect as practically possible
• A methodology and a symbol of quality

Sigma Level:
Short-term sigma levels correspond to the following long-term DPMO values (one-sided):

• 1 sigma = 690,000 DPMO = 31% efficiency
• 2 sigma = 308,000 DPMO = 69.2% efficiency
• 3 sigma = 66,800 DPMO = 93.32% efficiency
• 4 sigma = 6,210 DPMO = 99.379% efficiency
• 5 sigma = 230 DPMO = 99.977% efficiency
• 6 sigma = 3.4 DPMO = 99.9997% efficiency

These figures assume that the process mean will shift by 1.5 sigma towards the side with the critical specification limit some time after the initial study determining the short-term sigma level. The figure given for 1 sigma, for example, assumes that the long-term process mean will be 0.5 sigma beyond the specification limit, rather than 1 sigma within it, as it was in the short-term study.

Why not Four Sigma or 99.379 % ?

• Every hour the postal service would lose 20,000 pieces of mail
• Every day our drinking water would be unsafe for almost 15 minutes
• Every week there would be 5,000 surgical operations that go wrong in some way
• Every month we would be without electricity for almost seven hours

Why Six Sigma:

• Money
• Quality
• Customer Satisfaction
• Competitive Advantage
• Growth
• Employee Pride

Some Success Stories:

• At GE, Six Sigma added more than $ 2 billion to the bottom line in 1999 alone
• Motorola saved more than $ 15 billion in the first 10 years of its Six Sigma effort
• AlliedSignal reports saving $ 1,5 billion through Six Sigma.

"Six Sigma is about practices that help you eliminate defects and always deliver products and services that meet customer specifications"

Cost of Poor Quality:

1. What is cost of scrap?
2. What is cost of rework?
3. What is cost of excessive cycle times and delays?
4. What is cost of business lost because customers are dissatisfied with your products or services?
5. What is cost of opportunities lost because you didn’t have time or the resources to take advantage of them?

Critical-to-Quality (CTQ):
Elements of a process that significantly affect the output of that process. Identifying these elements is figuring out how to make improvements that can dramatically reduce costs and enhance quality.

Six Sigma Phases:

D M A I C : Define -> Measure -> Analyze -> Improve -> Control

DEFINE: Define the project goals and customer (internal and external) deliverables

• Define Customers and Requirements (CTQs)
• Develop Problem Statement, Goals and Benefits
• Identify Champion, Process Owner and Team
• Define Resources
• Evaluate Key Organizational Support
• Develop Project Plan and Milestones
• Develop High Level Process Map

Deliverables :
Fully trained team is formed, supported, and committed to work on improvement project.
Team charter developed, customers identified and high impact characteristics (CTQs) defined, business process mapped.

Checkpoints for Readiness
Team Readiness :
Team is sponsored by a champion or business leader.
Team formed and team leaders assigned.
Improvement team members fully trained on Six Sigma and DMAIC.

Team Charter :
Completed project management charter, including business case, problem and goal statements, project scope, milestones, roles and responsibilities, communication plan.

Customers
Customer(s) identified and segmented according to their different needs and requirements.
Data collected and displayed to better understand customer(s) critical needs and requirements.

Business Process Mapping
Completed, verified, and validated high-level 'as is' (not 'should be' or 'could be') business process map.
Completed SIPOC representation, describing the Suppliers, Inputs, Process, Outputs, and Customers.

MEASURE: Measure the process to determine current performance

• Define Defect, Opportunity, Unit and Metrics
• Detailed Process Map of Appropriate Areas
• Develop Data Collection Plan
• Validate the Measurement System
• Collect the Data
• Begin Developing Y=f(x) Relationship
• Determine Process Capability and Sigma Baseline

Deliverables :
Key measures identified, data collection planned and executed, process variation displayed and communicated, performance baselined, sigma level calculated.

Checkpoints for Readiness
Key Measures Identified
Key measures identified and agreed upon.
High impact defects defined and identified in the business process.

Data Collection Planned and Executed
Solid data collection plan established that includes measurement systems analysis.
Data collected on key measures that were identified.

Process Variation Displayed/Communicated
Process variation components displayed/communicated using suitable charts, graphs, plots.
Long term and short term variability accounted for.

Performance Baseline/Sigma Calculation
Measure baseline process performance (capability, yield, sigma level).

ANALYZE: Analyze and determine the root cause(s) of the defects

• Define Performance Objectives
• Identify Value/Non-Value Added Process Steps
• Identify Sources of Variation
• Determine Root Cause(s)
• Determine Vital Few x's, Y=f(x) Relationship

Deliverables :
Data and process analysis, root cause analysis, quantifying the gap/opportunity.

Checkpoints for Readiness
Data and Process Analysis
Identify gaps between current performance and the goal performance.

Root Cause Analysis
Generate list of possible causes (sources of variation).
Segment and stratify possible causes (sources of variation).
Prioritize list of 'vital few' causes (key sources of variation).
Verify and quantify the root causes of variation.

Quantifying the Gap/Opportunity
Determine the performance gap.
Display and communicate the gap/opportunity in financial terms.

IMPROVE: Improve the process by eliminating defects

• Perform Design of Experiments
• Develop Potential Solutions
• Define Operating Tolerances of Potential System
• Assess Failure Modes of Potential Solutions
• Validate Potential Improvement by Pilot Studies
• Correct/Re-Evaluate Potential Solution

Deliverables :
Generate (and test) possible solutions, select the best solutions, design implementation plan.

Checkpoints for Readiness
Generating (and Testing) Possible Solutions
Possible solutions generated and tested.

Selecting The Best Solution(s)
Optimal solution selected based on testing and analysis.
New and improved process ('should be') maps developed.
Cost/benefit analysis of optimal solution(s).
Small-scale pilot for proposed improvement(s).
Pilot data collected and analyzed.
Improved process ('should be') maps modified based on pilot data and analysis.
Project impact on utilizing the best solution(s).

Designing Implementation Plan
Solution implementation plan established, including schedule/work breakdown structure, resources, risk management plan, cost/budget, and control plan.
Contingency plan established.

CONTROL: Control future process performance

• Define and Validate Monitoring and Control System
• Develop Standards and Procedures
• Implement Statistical Process Control
• Determine Process Capability
• Develop Transfer Plan, Handoff to Process Owner
• Verify Benefits, Cost Savings/Avoidance, Profit Growth
• Close Project, Finalize Documentation
• Communicate to Business, Celebrate

Deliverables :
Documented and implemented monitoring plan, standardized process, documented procedures, response plan established and deployed, transfer of ownership (project closure).

Checkpoints for Readiness
Monitoring Plan
Control plan in place for sustaining improvements (short and long-term).

Process Standardization
New process steps, standards, and documentation are ingrained into normal operations.

Documented Procedures
Operating procedures are consistent.
Knowledge gained on process is shared and institutionalized.

Response Plan
Response plans established, understood, and deployed.

Transfer of Ownership (Project Closure)
Transfer ownership and knowledge to process owner and process team tasked with the responsibilities.

DMADV: Define -> Measure -> Analyze -> Design -> Verify

The basic method consists of the following five steps:

* Define design goals that are consistent with customer demands and the enterprise strategy.
* Measure and identify CTQs (characteristics that are Critical To Quality), product capabilities, production process capability, and risks.
* Analyze to develop and design alternatives, create a high-level design and evaluate design capability to select the best design.
* Design details, optimize the design, and plan for design verification. This phase may require simulations.
* Verify the design, set up pilot runs, implement the production process and hand it over to the process owners.

DMADV is also known as DFSS, an abbreviation of "Design For Six Sigma"

Tools and Roles for Six Sigma:

Process Maping:

• Creating flowcharts of the step in a process – operations, decision points, delays, movements, handoffs, rework, loops, and controls or inspections.
• process map is illustrated description of how a process work.

Design of Experiments (DOE):

• DOE is a structured, organized method for determining the relationship between factors (Xs) affecting a process and the output of that process (Y).

XY Matrix:

• A group of rows and columns, with one set of increments marked along the X (horizontal) axis and another set of increments marked along the Y (vertical) axis.
• The purpose of using XY matrix is to study and understand the relationship between what you are putting into a process and what your customer is getting out of it.
• The XY matrix allows the team to identify gaps, areas for improvement.

Measurement System Analysis:

• The goal of this tool is to ensure that your measurement system is statically confident – that it’s both accurate and precise each and every time it is used.
• Undertaken during Measure phase, your MSA determines whether or not you can take a certain measurement and repeat or reproduce it among different people who take the same measurement.

Process Capability Tool:

• Process capability tool is the measure of a process being able to meet specification requirements and fulfill customer CTQ needs on a long term basis.

Hypothesis Testing:

• Investigating a theory about the suspected cause (s) of a particular effect in a process to determine if it is correct.
• It’s a compass that points you directly to the vital few factors that are most affecting your process.

Failure Mode Effect Analysis:

• The manner in which a part or process can fail to meet a specification, creating a defect or non-conformance, and the impact on the customer if that failure mode is not prevented or corrected.

Control Plan:

• A detailed assessment and guide for maintaining all the positive changes you, your black belt, and the project team have made.
• It ensures that all your analysis and efforts stay in effect and that you have information at your disposal to prevent backsliding or a return to less than optimal performance standard.

Key Roles for Six Sigma:

Executive Leadership: Includes CEO and other key top management team members. They are responsible for setting up a vision for Six Sigma implementation.

Champions: Are responsible for the Six Sigma implementation across the organization in an integrated manner. Champions also act as mentor to Black Belts.

Master Black Belts: dentified by champions, act as in-house expert coach for the organization on Six Sigma. They devote 100% of their time to Six Sigma.

Black Belts: Operate under Master Black Belts to apply Six Sigma methodology to specific projects. They primarily focus on Six Sigma project execution.

Green Belts: Are the employees who take up Six Sigma implementation along with their other job responsibilities. They operate under the guidance of Black Belts and support them in achieving the overall results.


Six Sigma Do's:

• Do communicate the commitment company-wide
• Do demonstrate the commitment of company leaders
• Do empower your key human resources
• Do provide on-site mentoring for black belts
• Do be patient at the inception of you six Sigma initiative
• Do claim and advertise early “wins”
  
• Do benchmark
  
• Do establish project baseline and
  

Criticism:

Six Sigma has made a huge impact on industry and is widely employed as a business strategy for achieving and sustaining operational and service excellence. However, there have also been various criticisms of Six Sigma.

Lack of originality:

Noted quality expert Joseph M. Juran has described Six Sigma as "a basic version of quality improvement," stating that "[t]here is nothing new there. It includes what we used to call facilitators. They've adopted more flamboyant terms, like belts with different colors. I think that concept has merit to set apart, to create specialists who can be very helpful. Again, that's not a new idea. The American Society for Quality long ago established certificates, such as for reliability engineers."

Role of consultants:

The use of "Black Belts" as itinerant change agents is controversial as it has created a cottage industry of training and certification. Critics argue there is overselling of Six Sigma by too great a number of consulting firms, many of which claim expertise in Six Sigma when they only have a rudimentary understanding of the tools and techniques involved.

The expansion of the various "Belts" to include "Green Belts," "Master Black Belts" and "Gold Belts" is commonly seen as a parallel to the various "belt factories" that exist in martial arts.

Potential negative effects:

A Fortune article stated that "of 58 large companies that have announced Six Sigma programs, 91 percent have trailed the S&P 500 since." The statement is attributed to "an analysis by Charles Holland of consulting firm Qualpro (which espouses a competing quality-improvement process)." The gist of the article is that Six Sigma is effective at what it is intended to do, but that it is "narrowly designed to fix an existing process" and does not help in "coming up with new products or disruptive technologies." Many of these claims have been argued as being in error or ill-informed.

A Business Week article says that James McNerney's introduction of Six Sigma at 3M may have had the effect of stifling creativity. It cites two Wharton School professors who say that Six Sigma leads to incremental innovation at the expense of blue-sky work. This phenomenon is further explored in the book, Going Lean, which provides data to show that Ford's "6 Sigma" program did little to change its fortunes.

Based on arbitrary standards:

While 3.4 defects per million opportunities might work well for certain products/processes, it might not be ideal or cost-effective for others. A pacemaker process might need higher standards, for example, whereas a direct mail advertising campaign might need lower ones. The basis and justification for choosing 6 as the number of standard deviations is not clearly explained. In addition, the Six Sigma model assumes that the process data always conform to the normal distribution. The calculation of defect rates for situations where the normal distribution model does not apply is not properly addressed in the current Six Sigma literature.

Criticism of the 1.5 sigma shift:

Because of its arbitrary nature, the 1.5 sigma shift has been dismissed as "goofy" by the statistician Donald J. Wheeler. Its universal applicability is seen as doubtful.

The 1.5 sigma shift has also been contentious because it results in stated "sigma levels" that reflect short-term rather than long-term performance: a process that has long-term defect levels corresponding to 4.5 sigma performance is, by Six Sigma convention, described as a "6 sigma process." The accepted Six Sigma scoring system thus cannot be equated to actual normal distribution probabilities for the stated number of standard deviations, and this has been a key bone of contention about how Six Sigma measures are defined. The fact that it is rarely explained that a "6 sigma" process will have long-term defect rates corresponding to 4.5 sigma performance rather than actual 6 sigma performance has led several commentators to express the opinion that Six Sigma is a confidence trick.

~SA