Six Sigma

Introduction
 Six-sigma (6σ) is a process improvement methodology
developed at Motorola in the 1980’s to reduce defects in
its processes.
 Its goal was to minimize the defect rate to 3.4 defects per
million opportunities (DPMO); this is a virtually defect free
environment.
 The roots of Six Sigma can be traced back to Carl
Frederick Gauss, who introduced the concept of the
normal curve.
 6σ as a measurement standard in product variation can
be traced back to the 1920's when Walter Shewhart
showed that three sigma from the mean is the point where
a process requires correction.
 Many measurement standards (process capability, Zero
Defects, etc.) later came on the scene, but the credit of 2
"6σ" goes to a Motorola engineer named Bill Smith.
What is Six Sigma
 Six Sigma is a disciplined, data-driven approach and
methodology for eliminating defects in any process -- from
manufacturing to transactional and from product to service.
 To achieve Six Sigma, a process must not produce more

than 3.4 defects per million opportunities.

 A Six Sigma opportunity is then the total quantity of chances

for a defect.
 General Electric, one of the most successful companies

implementing Six Sigma, has estimated benefits on the order

of $10 billion during the first five years of implementation.
Six Sigma is. . .
 A performance goal, representing 3.4 defects for
every million opportunities to make one.

 A series of tools and methods used to improve or

design products, processes, and/or services.

 A statistical measure indicating the number of

standard deviations within customer expectations.

 A disciplined, fact-based approach to managing a

business and its processes.

 A means to promote greater awareness of customer

needs, performance measurement, and business
improvement.
 Process Vs. Customer
LSL USL

Defects Acceptable Defects

Customer Requirement

Process Performance

Process Performance and Customer Requirement Often Do Not Match

Fig. Process output represented by a
normal distribution
6σ capability, an average of 0.0034 defect per product unit (3.4ppm) is
expected instead of the
2.7 defects expected with 3σ capability.
6σ Measurement

Industrial Engg. & Management, 1/e, 9

Pravin Kumar, Pearson Education
Difference Between 3 σ and 6
σ Processes

Industrial Engg. & Management, 1/e, 10

Pravin Kumar, Pearson Education
Relationship Between 6 σ
limits and Specification Limits

Industrial Engg. & Management, 1/e, 11

Pravin Kumar, Pearson Education
6σ Process

 DMAIC (Define, Measure, Analyze, Improve, and

Control) and
 DMADV (Define, Measure, Analyze, Design, and
Verify).

12
DMAIC (Define, Measure,
Analyze, Improve, and Control)
 Define
Define the problem, process, and project goals. The
problem should be clearly established in quantitative
terms i.e. it should not be defined in vague terms. The
description of the problem should include the issues
related to feeling of customers and/or business as well
as how long the issue has existed.
 Measure
Measure the current process or performance. Measure
and collect data that will determine the factors that have
influence over the outcome of the process or procedure.
13
DMAIC (Cont…)
 Analyze
Analyze the current performance to isolate the problem.
Through analysis (both statistical and qualitatively),
begin to formulate and test hypotheses about the root
cause of the problem.
 Improve
Improve the problem by selecting a solution. Based on
the identified root cause in the prior step, directly
address the cause with an improvement. Brainstorm
potential solutions, prioritize them based on customer
requirements, make a selection, and test to see if the
solution resolves the problem.

14
DMAIC (Cont…)
 Control
This is the last step in DMAIC model. After the new
process is designed, the organization replaces the old
process with the new one. The team closely monitors the
working of the new process and ensures that there are
no problems in the new process. They monitor the
performance of the new process and ensure that
products manufactured are defect free.

15
Six-Sigma Belts
 Yellow Belt: This is the lowest level in six-sigma. The person
trained at this level holds the responsibility of smaller process
improvement but is not in-charge of a team under him.
 Green Belt: Green belt is the next level of expertise in six-
sigma processes. Usually, the person trained or certified with
this level gets an opportunity to head and lead the project
 Black Belt: At this level the person in-charge needs to be
responsible in six-sigma implementation at all levels. He has
many teams under him and he guides them and trains them
to achieve the goals successfully.
 Master Black Belt: This is the highest level and the expert is
the mentor of black belts. He is the trainer, the teacher and
the person who is responsible for implementation of six-
sigma processes at all levels. He is the head and leads many
projects at a time.
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Limitations/Drawbacks of 6σ
 System interaction is not considered; this is an
uncoordinated projects.
 Processes are improved independently.
 There is lack of consideration for human factors.
 Significant infrastructure investment is required.
 This is complicated for some tasks.
 The goal of Six Sigma (3.4 defects per million
opportunities) is absolute but this is not always an
appropriate goal and does not need to be adhered to
rigorously.
 It is only about quality.

17
Six Sigma Methods
 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 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.
 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.
 Measuring Process
Performance
 The pizza
Customers wantdelivery example. . .
their pizza
delivered fast!

 Guarantee = “30 minutes or less”

 What if we measured performance and found an

average delivery time of 23.5 minutes?
 On-time performance is great?
 Our customers must be happy with us?
How often are we delivering on
time?
Answer: Look at 30 min. or less
the variation!
s

x
0 10 20 30 tell the whole
 Managing by the average doesn’t 40 50 The
story.
average and the variation together show what’s happening.
Reduce Variation to Improve
Performance
How many standard 30 min. or less
deviations can you
“fit” within
customer s

expectations?

x
0 10 20 30 40 50

 Sigma level measures how often we meet (or fail to

meet) the requirement(s) of our customer(s).
 Managing 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% 66,807
4 99.38% 0.62% 6,210
5 99.977% 0.023% 233
6 99.9997% 0.00034% 3.4
Examples of the Sigma Scale
In a world at 3 sigma. . . In a world at 6 sigma. . .

 There are 964 U.S. flight  1 U.S. flight is cancelled

cancellations per day. every 3 weeks.

 The police make 7 false  There are fewer than 4 false

arrests every 4 minutes. arrests per month.

 In one hour, 47,283  It would take more than

international long distance 2 years to see the same
calls are accidentally number of dropped
disconnected. international calls.
Six Sigma Companies
Six Sigma and Financial
Services
Six Sigma DMAIC
 DMAIC
 Define the project goals and customer (internal and
external) deliverables
 Measure the process to determine current performance
 Analyze and determine the root cause(s) of the defects
 Improve the process by eliminating defects
 Control future process performance
 When To Use DMAIC
 The DMAIC methodology, instead of the DMADV
methodology, should be used when a product or process is
in existence at your company but is not meeting customer
specification or is not performing adequately.
 DMAIC

Define

Measure

Analyze

Improve

Control

The Six Sigma Projects are Completed By Following A 5 Phase Approach

Six Sigma DMADV
 DMADV
 Define the project goals and customer (internal and external)
deliverables
 Measure and determine customer needs and specifications
 Analyze the process options to meet the customer needs
 Design (detailed) the process to meet the customer needs
 Verify the design performance and ability to meet customer
needs
 When To Use DMADV
 A product or process is not in existence at your company and
one needs to be developed
 The existing product or process exists and has been optimized
(using either DMAIC or not) and still doesn't meet the level of
customer specification or six sigma level
DMAIC / DMADV
 The Similarities of DMAIC and DMADV
 Six Sigma methodologies used to drive defects to less than
3.4 per million opportunities.
 Data intensive solution approaches. Intuition has no place
in Six Sigma.
 Implemented by Green Belts, Black Belts and Master Black
Belts.
 Ways to help meet the business/financial bottom-line
numbers.
 Implemented with the support of a champion and process
owner
Six Sigma DMAIC Roadmap
D - Define Phase:
 Define Customers and Requirements (CTQs-
Critical to Customer))
 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
Six Sigma DMAIC Roadmap
M - Measure Phase:
 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
Six Sigma DMAIC Roadmap
A - Analyze Phase:
 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
Six Sigma DMAIC Roadmap
I - Improve Phase:
 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
Six Sigma DMAIC Roadmap
 C - Control Phase:
 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
 Six Sigma Tool Box
Define Measure Analyze Improve Control

Benchmarking Value Stream Fishbone Modeling SPC Charts

Map Diagrams
Process Flow Cause & Effect FMEA Tolerance Performance
Mapping Control Metrics
Flow charts Defect Metrics Root Cause Defect Control Multiple
Analysis Regression

Project Charter Statistical ANOVA Design Train

as a Team Analysis Changes
Set Up a Plan Data Collection Cause & Effect Piloting
& Guidelines Diagram
Run Charts,
for Team
Time Series
Chars, Time
Value Charts,
Pareto Charts
Review Sampling Scatter Plots Best Practices
Existing Data
SIPOC
35
 The Players
 ProjectChampions;
 Master Black Belts;

 Black Belts;

 Green Belts;

 Yellow Belts
The Players – Project
Champions
Project Champions are involved in:
 selecting projects;

 identifying Black and Green Belt candidates;

 Set improvement targets

 Provide resources;

 Review the projects on regular basis and

 Remove any road blocks to programs success.

 The Players – Master Black
Belts
Master Black Belts are:
 Technical leaders of Six Sigma;

 Serve as instructors for Black & Green Belts;

 Provide ongoing coaching and support to

project teams to assure the appropriate

application of statistics;
 Provide assistance to Project Champions;

 Deploy Six Sigma program.

 The Players – Black Belts
Black Belts are:
 Backbone of Six Sigma deployment;
 Highly qualified;

 Lead teams;

 Attack chronic problems;

 Manage projects;

 “ Drive “ teams for solutions that work;

 Responsible for bottom line results.

 The Players – Green Belts
Green Belts:
 Provide team support to Black Belts;

 Assist in data collection, input;

 Analyse data using software;

 Prepare reports for management.

 The Players – Yellow Belts
Yellow Belts:
 Represent large percentage of work force;

 Trained with basic skills;

 Assist GB & BB on large projects;

 Assist in build and sustain Six Sigma

culture
Six Sigma Deployment
 For Define and Measurement phases:
 Step 1:
 Self-assessment of the organization and share the results

with the top management and employees

 Step 2:
 Re-evaluate all of the strategies and strategic objectives of

the organization and identify new strategic objectives

 Step 3:
 Identify all the organization’s core processes and support

processes
 Build strategy map to help communicate the strategy
Kaplan and Norton's Balanced
score card
 Building a strategy map
encompassing Kaplan
and Norton's Balanced
score card spanning
the four perspectives.
 The four perspectives:
 Financial
 Customer
 Internal
 Learning
The Four Perspectives
A Six Sigma Case Study -
Tutorial for IT Call Center
 Benchmarking:
 Industry data was purchased from a
clearinghouse that gathers a number of measures
about customer satisfaction and call center
technical and business performance.
 Comparing their company to the benchmark
average and to a select best-in-class group.
 We can find that customer satisfaction with their
support services was just average or a bit below.
(see the following slides.)
Figure 1: Customer Satisfaction for
the Company, 2001-2003
Figure 2: Customer Satisfaction
for Average Companies, 2001-2003
Figure 3: Customer Satisfaction
for Best-in-Class Companies,
2001-2003
A Six Sigma Case Study -
Tutorial for IT Call Center
 By analyzing the
customer satisfaction
data, we can find that
Customer Satisfaction
has positive influence
to New Account
Growth.
A Six Sigma Case Study -
Tutorial for IT Call Center
 Transfer = Average number of
transfers (to different agents
and help systems) during a
service call.
Wait Time = Average wait
time during a service call.
Service = Average service
time during the call (the time
spent getting the answer to the
question, problem solving
advice, etc.).

 From the regression model, we

can find that the longer the
wait time, transfer time and
service, the lower the
customer satisfaction.
A Six Sigma Case Study -
Tutorial for IT Call Center
 From the data that gathered
from industry, we found that
the call center’s waiting time
is lower than industry
average; thus, there is
space for improvement and
it will help reduce the cost
and increase customer
satisfaction.

 From the data, we can find

that the call center’s cost is
higher than average, so this
project is doable.
Define Phase
 D1. Project Charter:
 Problem Statement: "Competitors are growing their levels of satisfaction
with support customers, and they are growing their businesses while
reducing support costs per call. Our support costs per call have been level or
rising over the past 18 months, and our customer satisfaction ratings are at
or below average. Unless we stop – or better, reverse this trend – we are
likely to see compounded business erosion over the next 18 months."

 Business Case: "Increasing our new business growth from 1 percent to 4

percent (or better) would increase our gross revenues by about $3 million. If
we can do this without increasing our support costs per call, we should be
able to realize a net gain of at least $2 million."

 Goal Statement: "Increase the call center's industry-measured customer

satisfaction rating from its current level (75 percent) to the target level (85
percent) by end of the fourth quarter without increasing support costs."
Define Phase
 D2. Customer Requirements
 A SIPOC table (Suppliers, Inputs, Process,
Outputs and Customers) develops a detailed view
of all the important customers, their requirements,
and the related process step and supplier
dependencies.
 Voice-of-Customer (VOC) Interviews: Group
interview the representative samples of the
company's customers.
 Summarizing Customer Requirements
SIPOC / COPIS Table – Captures
Important Information About
Customer-Process Dependencies
Define Phase

 D3. High Level Process Map:

 The process map will be helpful during the Measure
phase, as the project team considers how and
where to gather data that will shed light on the root
cause of the issues most pertinent to the project's
goals.
Measure Phase
 M1. Refine the Project Y(s)
 During this step the team considered exactly how the
project Y(s) would be defined and measured:

Y(s) Measurement

Primary Customer 1. By industry standard monthly survey

Satisfaction 2. The project will require additional, more
frequent, case-by-case customer
satisfaction data. A measurement system
that tracks with the industry survey will be
devised and validated.
Secondary Supprt Cost The staff time connected with each call:
(Per Call) - Call answering and discussion
- Case research
- Callback time
will be loaded with a distribution of
benefits and infrastructure costs to
compute overall support cost per call.
Measure Phase
 M2. Define Performance Standards for the Y(s)

Measure Current Baseline Target

Primary Customer Satisfaction 70-80% Satisfied 85% Satisfied

(Per Collins Industry
Assessment)

Secondary Support Cost Per Call $40 $32

Measure Phase
 M3.Identify Segmentation Factors for Data
Collection Plan
 How is Y naturally segmented
 What factors may be driving the Y(s)?
 Y-to-x tree
 cause-and-effect diagrams
 cause-and-effect matrices
Measure Phase
 M4. Apply Measurement Systems Analysis (MSA)
 Questions Usually Posed for Measurement Systems:
Measure Phase
 M5. Collect the Data: A plan was formulated
to gather data from the past year's database.
 M6. Describe and Display Variation in

Current Performance
 How is the Y Distributed?
 Variation above and below the chart's control
limits suggested that there were "special causes"
in play – worth understanding in more detail by
the team in the Analyze phase.
Analyze Phase
 A1. Measure Process Capability: Before segmenting
the data and "peeling the onion" to look for root
causes and drivers, the current performance is
compared to standards (established in step M2 of
the Measure phase).

 A2. Refine Improvement Goals: If the capability

assessment shows a significant departure from
expectations, some adjustment to the project goals
may need to be considered.
Analyze Phase
 A3:Identify Significant Data Segments and
Patterns:
 By segmenting the Y data based on the factors
(x's) identified during the Measure phase – the
team looks for patterns that shed light on what
may be causing or driving the observed Y
variation.
Analyze Phase
 A4: Identify (Refined/More Detailed List of) Possible
x's
 Collecting the findings that came out of A3, the team posed
strongest in the form of "why" questions:
 Why do Problems and Changes cost more than other call
types?
 Why are calls processed on Mondays and Fridays more
expensive?
 Why do transfer rates differ by call type? (higher on
Problems and Changes, lower on others)
 Why are wait times higher on Mondays and Fridays and on
Week 13 of each quarter?
Analyze Phase

 A5: Identify and Verify the Critical x's

 To sort out the real drivers from the "likely suspects"
list built in A4, there is generally a shift from
graphical analysis to statistical analysis.
Analyze Phase
 A6: Refine the Financial Benefit Forecast
 Given the "short list" of the real driving x's, the
financial model forecasting "how much
improvement?" may need to be adjusted.
Improve Phase
 I1. Identify Solution Alternatives to Address
Critical x's:
 Consider solution alternatives from the possibilities
identified earlier and decide which ones are worth pursuing
further.
Driving Xs (from Analyze phase) Solution Alternatives

Staffing + Add staff Mondays and Fridays, reduce staff on

Sundays
+ Develop staffing model
+ Create on-call list to fill-in for absentees

Web Service Percentage + Focus on services that can be done best on the Web
+ Define and communicate the value prop to customers
+ Evaluate incentives to move traffic to the Web

Transfers and Callbacks + Improve call center processes to reduce transfers and
callbacks
without impacting customer satisfaction
Improve Phase
 I2. Verify the
Relationships Between
x's and Y(s)
 What are the dynamics
connecting the process
x's with the critical
outputs
 Use regression analysis
to verify the relationships
Improve Phase
 I3. Select and Tune the Solution
 Using predicted performance and net value, decide what is the
best solution alternative.

 Based on everything the team had learned, it recommended:

 Start with Staffing (the "quick fix”). This should be a first step, with the
hope that it can be supplanted as the solution elements in other
recommendations reduce staff needs.
 Web Service Percent. Begin right away tracking the call volume and
customer satisfaction with this service mode.
 Transfer and Callback reduction. Start right away. This is a "no
brainer" net benefit that should work well in parallel with the first two
solution elements.
Improve Phase
 I4. Pilot / Implement Solution:
 If possible, pilot the solution to demonstrate results and to verify no
unintended side effects.
 Preparation and deployment steps for putting the pilot solution in place.
 Measures in place to track results and to detect unintended side effects.
 Awareness of people issues.
 Measure and compare the improvement of the solution
Control Phase
 C1. Develop Control Plan
 The Control plans addressed two views
 Management control: It often focus on the Y(s) or
outcomes of the process and often some of the x's as
well
 Operational control: It concerned with the x's that
are predictive of outcome Y(s).
 Operational control information included both controllable
and "noise" variables
 Operational control information was provided more
frequently than management control information
Control Phase
 C2. Determine Improved Process Capability
 Use the same measures from Define and
Measure in order to provide comparability and
monitor impact in a consistent way.

 C3. Implement Process Control

 Create, modify and use data collection systems
and output reports or dashboards consistent with
the control plan.
Control Phase
 C4. Close Project
 Prepare the implementation plan, transfer control
to operations, conduct project post-mortem, and
archive project results.
THANKS