GLOBAL JOURNAL OF FINANCE & MANAGEMENT (GJFM) ISSN: 0975 6477 Volume 4, Number 8 (2012)

Gaining Competitive Advantage Through Six Sigma

Aseem Kirtiman Chauhan Department. Of Mechanical Engineering
Lingayas University Faridabad, India Guide: Dr. (Mrs.) Mitu Matta Associate Professor, Lingayas University Faridabad, India
Abstract - The Six Sigma has penetrated into most sectors
of todays business world. The Six Sigma approach can improve the Quality and profitability by removing the cause of defects and variability in manufacturing and business process. Six Sigma is perhaps the most widely-accepted initiative by all the broad range of organizations. The DMAIC (Define Measure-Analyze-Improve-Control) approach is followed here to solve the problem of management. The DMADV (Define Measure Analyze Design Verify) is used in product design improvement. Both of these procedures are developed in the classic Plan Do Check Act (PDCA) cycle. This paper focuses on the following areas: (1) Introduction to Six Sigma (2) Methodologies and Strategies of Six Sigma (3) The Applicability of Six Sigma to Automotive and Manufacturing Industries. (4) A Case Study of a Manufacturing Company which is supposed to field retrofit a large number of its machines. The purpose of this paper is to review the effects of six sigma approach with the help of a case study to improve quality and profitability. Six Sigma is generally described as a metric, a mindset & a methodology for strategic management and process improvement. Six Sigma provides an effective mechanism to focus on customer requirements, through improvement of process quality. Keywords: Six Sigma, DMAIC, DMADV, PDCA, Quality Management

defect is defined as any process output that does not meet customer specifications, or that could lead to creating an output that does not meet customer specifications. In 1970s Motorola discovered a connection between increases in quality and decreases in costs of production. At that time, the prevailing view was that quality costs extra money. Six Sigma was heavily inspired by the quality improvement methodologies, such as quality control, Total Quality Management (TQM), and Zero Defects. [3] Six Sigma Features:

A clear focus on achieving measurable and quantifiable financial returns from any Six Sigma project. An increased emphasis on strong and passionate management leadership and support. A special infrastructure to lead and implement the Six Sigma approach. A clear commitment to make decisions on the basis of verifiable data and statistical methods, rather than assumptions and guesswork.

II. METHODOLOGY OF SIX SIGMA

Six Sigma has been defined as the statistical unit of measurement, a sigma that measures the capability of the process to achieve a defect free performance. Six Sigma has the ability to produce products and services with only 3.4 defects per million, which is a world class performance. Six Sigma has also been described as a high performance data driven approach in analyzing the root causes of business problems and solving them. Six Sigma has two key methodologies inspired by Demings Plan-Do-Check-Act Cycle. [4]

I. INTRODUCTION
Six Sigma is a business management strategy, originally developed by Motorola in 1986.[1] Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects and minimizing variability in manufacturing and business processes. It uses a set of quality management methods, including statistical methods, and creates a special infrastructure of people within the organization who are experts in these methods. Each Six Sigma project carried out within an organization follows a defined sequence of steps and has quantified financial targets. The term Six Sigma originated from terminology associated with manufacturing, specifically terms associated with statistical modeling of manufacturing processes. The maturity of a manufacturing process can be described by a sigma rating indicating its yield or the percentage of defect-free products it creates.[2] A six sigma process is one in which 99.99966% of the products manufactured are statistically expected to be free of defects (3.4 defects per million). Six Sigma originated as a set of practices designed to improve manufacturing processes and eliminate defects, but its application was subsequently extended to other types of business processes as well. In Six Sigma, a

1) DMAIC (Define-Measure-Analyze-ImproveControl) DMAIC is used for projects aimed at improving an existing business process. The DMAIC project methodology has the following five phases:
(i) (ii) (iii)

Define the problem, the voice of the customer, and the project goals. Measure key aspects of the current process and collect relevant data. Analyze the data to investigate and verify cause-and-effect relationships. Determine what the relationships are, and attempt to ensure that all factors

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GLOBAL JOURNAL OF FINANCE & MANAGEMENT (GJFM) ISSN: 0975 6477 Volume 4, Number 8 (2012)
have been considered. Seek out root cause of the defect under investigation. Improve or optimize the current process based upon data analysis. Set up pilot runs to establish process capability. Control the future state process to ensure that any deviations from target are corrected before they result in defects. Implement control systems such as statistical process control, production boards, visual workplaces, and continuously monitor the process. Belt system DMAIC process Change management tools Failure mode and effects analysis Regression analysis Analysis of means and variances Hypothesis testing Root cause analysis Process mapping

(iv)

(v)

TABLE II. STRATEGIES, TOOLS, TECHNIQUES & PRINCIPLES

IV. QUALITY APPROACHES AND MODELS

Six Sigma revolves around a few key concepts given in table III.[10]
Keys Critical to Quality Details Attributes most important to the customer Defect Failing to deliver what the customer wants Process Capability What your process can deliver Variation What the customer sees and feels Stable Operations Ensuring consistent, predictable processes to improve Design for Six Sigma Designing to meet customer needs and process capability Table III. Key Concepts

2) DMADV (Define-Measure-Analyze-DesignVerify) or DFSS (Design for Six Sigma) It is used for projects aimed at creating new product or process designs. The project methodology has the following five phases: (i) 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.

(ii)

(iii)

(iv)

DFSS (Design for six sigma) - DFSS is a systematic methodology utilizing tools, training and measurements to enable the organization to design products and processes that meet customer expectations and can be produced at Six Sigma quality levels. The goal of DFSS is to achieve minimum defect rates, six sigma level, and maximum possible impact during the development stage of the products. [11]

(v)

III. SIX SIGMA STRATEGIES

Six sigma is a systematic, data-driven approach using define, measure, analysis, improve, and control (DMAIC) process and utilizing design for six sigma method (DFSS). The fundamental principle of six sigma is to take an organization to an improved level of sigma capability through the rigorous application of statistical tools and techniques. It generally applies to problems common to production. Table-II summarizes six sigma strategies, tools, techniques, and principles.[9] Strategies and Principles Tools and Techniques Project management Statistical process control Data-based decision Process capability analysis making Knowledge discovery Measurement system analysis Process control planning Design of experiments Data c tools and techniques Variability reduction Robust design Quality function deployment There are many elements which contribute in success of a six sigma programs. Few essential elements for successful implementation of six sigma program are:

Figure I: Design for Six Sigma

V. IMPLEMENTATION OF SIX SIGMA

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GLOBAL JOURNAL OF FINANCE & MANAGEMENT (GJFM) ISSN: 0975 6477 Volume 4, Number 8 (2012)
1. Consistent and visible leadership involvement. 2. A measurement system to track progress, providing accountability for the initiative. 3. Internal and external benchmarking of the organizations products, services, and processes. You must find out where you really are. 4. Setting challenging stretch goals that focus your employees on changing the process, not just tweaking it. 5. Educating and informing every member of your organization about the Six Sigma methodology. 6. Developing the infrastructure to support change throughout your organization. 7. Working to create a cause, not just a business success.
Create mechanisms to prevent failures at each stage Improve overall process stability & control

Industry Engineering Parts Manufacturing

VI. SIX SIGMA APPLICABILITY

Six Sigma is a Industry Independent methodology and has been successfully applied across:

(i)

(ii)

(iii)

Manufacturing Industry including Automotive, Aerospace, Health Equipment, FMCG, Electronic Goods, Continuous Process Industries, Textiles, etc. Service Industry including Telecom, Banking and Financial Services, Health Care, Hotels, IT, ITES, KPOs, Airlines, Cargo movement, Support Services, HR services, Marketing Services, etc. R &D organisations or in R & D functions of various organisations.

Examples of Six Sigma Applicability Reduce Manufacturing cycle time (time of order to delivery) Improve Customer Service performance scores Reduce or optimize inventory levels Reduce scrap or cost of poor quality Reduce warranty costs Reduce rejections due to design errors Improve parts design process to meet specification 100% of times Improve parts reliability by identifying & optimizing critical factors that ensure reliability Table IV Six Sigma Applicability

VII. CASE STUDY

A manufacturer had a contract to field retrofit a large number of its machines for a particular customer. The field retrofits were running very late and over budget. Using six sigma methods, we were able to analyze the primary root causes of the problems and implement corrective actions. After our intervention, the field retrofits were completed ahead of schedule and under budget. Labour hours per site were reduced more than 21%, saving the manufacturer significant money and allowing them to retain a good relationship with their customer. Step 1: Define Problem Statement: Field retrofit for initial customer sites is exceeding the allowable time frame and the budgeted labor hours expected for project completion. No systematic data has been collected on time per task, but general perception is that the overage is inescapable and that the actual time required to perform the tasks was underestimated during the budgeting and planning process. Business Case: Failure to complete all field retrofit activities within budgeted labor hours will result in increased labor costs above budget. Failure to complete all field retrofit activities within allotted schedule will result in increased costs due to contractual lateness penalties, additional labor costs above budget, and negative impact on the relationship and potential future business with this customer. Key Measurements The average total man-hours per unit was reported at 90.15 total man-hours, exceeding the original budgeted and contractually specified 72 man-hours per unit by 18.15 man-hours. Step 2: Measure Forms were developed and implemented to capture the average man-hours per task. Field Service Teams began

Application of Six Sigma approach in Automotive & Manufacturing Companies:[12]

Industry Automotives Examples of Six Sigma Applicability Enhancing Supplier Quality Improving Safety & Reliability of Finished Vehicles Reducing Manufacturing defects at each stage Using Design FMEA to understand and prevent any possible design failures Reducing variation in all the critical parameters that impact the finished product Improving the overall Incoming Material Quality or parts Quality Optimizing Inventory levels for all major parts Reducing time to manufacture Reducing Design defects Reducing Supplier Lead time Improving First time yield and efficiency of each step in the Manufacturing assembly line. Examples of Six Sigma Applicability Improving overall Yield of each shift Reduce scrap or supplied materials Reduce the Process failures or breakdowns Increase Plant capacity utilization Improve Operator Productivity Reduce time to restart the process after failure

Industry Continuous Process Plants

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GLOBAL JOURNAL OF FINANCE & MANAGEMENT (GJFM) ISSN: 0975 6477 Volume 4, Number 8 (2012)
reporting on time per task. Data was gathered and reviewed, as per graph shown in Figure 2.

Install Pinch

Temperature

New Control

Front Chute

Recessed

Silencer

E - Stop

Thermistor

Remove

Compactor

Pneumatic

Hinges on

Spacer on

Interlocks

Fan Acess

12 10 8 6 4 2 0

Average Time

ELE Code

Interior Lights

TASKS
Figure 2: Baseline Time By Task (Source: Aspira Consulting , Wexford)

Step 3: Analyze The data was reviewed and analyzed. A Cause and Effect diagram was developed to identify potential causes of excessive time spent at each site (shown in Figure 3). An on-site evaluation of tasks and job site conditions was conducted. Through a combination of

reviewed data and onsite evaluation it was identified that although a documented retrofit process existed, it was not being systematically followed. Different teams were performing the same tasks in different ways. Additionally, there were significant differences in efficiency between the most efficient and least efficient teams.

Figure 3: Cause and Effect Diagram

Step 4: Improve Based on our analysis of the data collected, we identified that the original general perception that the tasks could not be completed more efficiently, and that this was basically a problem of under-budgeting, was in fact not accurate. We concluded that the single action which would deliver the largest impact in terms of man-hour reductions on site would be systematized training of the field technicians to ensure that they all followed the same, standardized, efficient process at each site. Therefore, we arranged for all field service technicians to undergo standardized training at their in house facilities during the regularly scheduled seasonal shutdown of their customers facilities. This training encompassed classroom training on system operation, retrofit tasks by task, reporting requirements, practical training on the inhouse test unit, and additional training for industrial equipment certification. The training conducted in house had a significant positive impact on the time to complete a unit. Pre-training and Post-training average times were compared, and of the 35 tasks reported, 26 (74.28%) of these had a reduction in the average time for completion following the in-house training conducted with the field service technicians. Prior to conducting the training the average total man-hours per unit was reported at 90.15 total man-hours. Following training the total average man-hours per unit was reported at 70.87 (1.13 below the

budgeted per unit hours), a reduction of 19.28 man-hours per unit, resulting in a 21.39% reduction in man-hours per unit.

Average Number of Hours

100 80 60 40 20 0 Pre - training Post - training

Figure 4: Labor Hour Decrease after Intervention (Source: Aspira Consulting , Wexford)

Step 5: Control To ensure the gains in efficiencies made continued to be realized, we implemented controls to monitor continuing training and implementation. Each field technician was issued a checklist for each site, and was required to mark off each step as it was completed, including noting the time required to complete that step. These checklists were transmitted daily back to headquarters, and all data

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Film Sensor

GLOBAL JOURNAL OF FINANCE & MANAGEMENT (GJFM) ISSN: 0975 6477 Volume 4, Number 8 (2012)
was summarized and monitored to ensure continued efficiency.

IX. CONCLUSION
This manufacturer was able to successfully deliver on time and under budget for its customer thanks to the six sigma analysis we performed and the steps we took to correct the largest source of inefficiency. It should be noted that multiple sources of inefficiency and nonvalue-added activities were identified in the course of this analysis; however the manufacturer was able to achieve their desired results and deliver their retrofits on time and under budget by taking corrective action on only the largest identified root cause. Thus, we can conclude that Six Sigma is a very important approach for increasing the profitability and quality of Industries and in the present era it has found its applicability over a wide range of industries. For a business the Sigma Capability is a metric that indicates how well the process is being performed. It focuses on reducing process variation, cantering the process and on optimizing the process. Various approaches to six sigma have been applied to increase the overall performance of different business sectors. Effective six sigma principles and practices are more likely to succeed by refining the organizational culture continuously.

References

[1] Tennant, Geoff (2001). SIX SIGMA: SPC and TQM in Manufacturing and Services. Gower Publishing, Ltd.. p. 6.ISBN 0-566-08374-4. [2] Antony, Jiju. "Pros and cons of Six Sigma: an academic perspective",2008. [3] Montgomery, Douglas C. (2009). Statistical Quality Control: A Modern Introduction (6 ed.). Hoboken, New Jersey: John Wiley & Sons. p. 23. ISBN 978-0-470-23397-9. [4] Hongbo Wang, A Review of Six Sigma Approach: Methodology, Implantation and Future Research, 2008. [5] "Five Whys Technique". Asian Development Bank. February 2009. [6] Dunn, William N. "Public Policy Analysis: an Introduction." Longman (2009) [7] "SIPOC (Suppliers, Inputs, Process, Outputs, Customers) Diagram". Milwaukee, Wisconsin: American Society for Quality. [8] Lin Man-shan, Cai Chun-xing, Li Jin-hong, Realization & Research of a Six-Sigma-based project management & analysis system,2009. [9] Young Hoon Kwak, Frank T. Anbari Benfits, obstacles, and future of six sigma approach, 2006. [10] Miroslav RUSKO & Ruzena KRALIKOVA, Application of six sigma method to EMS design, 2011. [11] De Feo, Bar EI Creating strategic change more more efficiently with a new design for six sigma process, 2002. [12] Brue. G. Six Sigma for small Business, Entrepreneur Media, Madison , 2006.

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