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Six Sigma Green Belt Certification Workshop

LECTURE 4: Organization Drivers and Metrics

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ASQ Body of Knowledge I.A.2

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I. Overview: Six Sigma and the Organization

A. Six Sigma and organization goals
2. Organization Drivers and Metrics

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Business Performance Measures

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The metrics chosen by organization:

Reflects its business strategy and,
Determines its success to a large extend.
Often organization uses piles of metrics.
Need to Select of appropriate Key Performance Indicators (KPIs) for
measuring the success.

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Key Performance Indicators

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Key Performance Indicators (KPIs) are:

Both financial and non financial matrices
Reflects an organizations key business drivers.
Also known as critical success factors (CSFs).
For effective monitoring, KPIs should be defined in:
Measurable quantitative terms.
Process related measures.
Strategy related measures.
Time bounded
Progressive organization adopts Balance Scorecard approach to select
KPIs to monitor results at all levels.

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Balance Scorecard

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Balance score card separates organization metrics into 4 perspectives:

Return on investment
Return on capital
Return on equity
Economic value added

Absentee rate
Employee satisfaction
Turnover rate
Internal promotion rates

Financial
Perspective

Learning and
Growth
Perspective

Customer
Perspective

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Internal Process
Perspective

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Defect rates
Cycle times
Throughput rates
Quality
Timely delivery

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Satisfaction levels
Retention rates
Referral rates
Quality
On time delivery

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How Good is 99% Accuracy?

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99.99966% Good

99% Good

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20,000 lost articles of mail per hour

7 lost articles of mail per hour

Unsafe drinking water 15 minutes/day

Unsafe drinking water for 1 min in 7 months

5000 incorrect surgical operation/week

1.7 incorrect surgical operations/week

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2 short/long landings at major airports/day

1 short or long landing in five years

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No electricity for almost 7 hours /month

No electricity for 1 hour in 34 years.

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Six Sigma as Metric

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Accuracy of 99% means 10000 defects in 10 lac opportunities.

Unimaginable for companies that strive for growth.

For a process that operates at Six Sigma Capability:

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Only 3.4 defects in 10 lac opportunities

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Accuracy 99.99966%

Table depicts DPMO and related quality % for processes operating at

different sigma levels

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Sigma Level ()

Accuracy %

DPMO

30.23

697700

69.13

308700

93.32

66,800

99.379

6,210

99.9767

233

99.99966

3.4

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