ACKNOWLEDGEMENT

It gives me great pleasure in presenting my project work on SIX SIGMA. I, the students of PGP/SS/2007-09, IIPM-HYDERABAD successfully completed my project and would like to thank Prof. Chandan for his timely encouragement, guidance and support.

PREFACE
The primary objective of this report is to provide the readers the insight into the SIX SIGMA. I hope that the report has made the text interesting and lucid. In writing this report, I have benefited immensely by referring to many publications and articles. I express my gratitude to all such authors and publishers. Any suggestions to improve this report in contents or in style are always welcome and will be appreciated and acknowledged.

DECLARATION
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I would like to categorically mention that the work here has neither been purchased nor acquired by any other unfair means. However, for the purpose of the project, information already compiled in many sources has been utilized.

(Soumya Pesist)

CONTENTS
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INTRODUCTION HISTORY ORIGIN THE TERM SIX SIGMA THE 1.5 SIGMA DRIFT DIGITAL SIX SIGMA SIX SIGMA WHAT IS SIX SIGMA? WHAT IS THE SIX SIGMA PHILOSOPHY? METHODOLOGY CERTIFICATION WHAT IS PMBOK? THE MANY FACETS OF SIX SIGMA WHICH BUSINESS FUNCTION NEEDS IT? SIX SIGMA & LEADERSHIP MORE ABOUT SIX SIGMA

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INTRODUCTION

Six Sigma is by far the most successful Management Approach that has delivered results. Simply defined, Six Sigma is a powerful management approach that delivers breakthrough improvements in profitability and productivity. The following points illustrate how Six Sigma is different from other management approaches. The key differences lie in

Roadmap - While other philosophies talk about concepts, standards and ideas, Six Sigma provides a Roadmap (A step by step method to achieve desired results).

Laser Focus - The Six Sigma projects are identified with respect to business deliverables (i.e. impact on productivity, profitability and customer satisfaction).

Brings out what is not obvious - The ideal Six Sigma projects are those that do not have obvious (or common sense) solutions and need digging beneath the visible scenario.

Proven Record - The number of Indian and Multinational companies that announced big benefits through Six Sigma approach (after the initiators Motorola and GE announced mind boggling success figures) is impressive by any standards.

HISTORY
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Since the 1920's the word 'sigma' has been used by mathematicians and engineers as a symbol for a unit of measurement in product quality variation. (Note it's sigma with a smalls because in this context sigma is a generic unit of measurement.) In the mid-1980's engineers in Motorola Inc in the USA used 'Six Sigma' an informal name for an in-house initiative for reducing defects in production processes, because it represented a suitably high level of quality. In the late-1980's following the success of the above initiative, Motorola extended the Six Sigma methods to its critical business processes, and significantly Six Sigma became a formalized inhouse 'branded' name for a performance improvement methodology, i.e., beyond purely 'defect reduction', in Motorola Inc. In 1991 Motorola certified its first 'Black Belt' Six Sigma experts, which indicates the beginnings of the formalization of the accredited training of Six Sigma methods. In 1991 also, Allied Signal, (a large avionics company which merged with Honeywell in 1999), adopted the Six Sigma methods, and claimed significant improvements and cost savings within six months. It seems that Allied Signal's new CEO Lawrence Bossidy learned of Motorola's work with Six Sigma and so approached Motorola's CEO Bob Galvin to learn how it could be used in Allied Signal. In 1995, General Electric's CEO Jack Welch (Welch knew Bossidy since Bossidy once worked for Welch at GE, and Welch was impressed by Bossidy's achievements using Six Sigma) decided to implement Six Sigma in GE, and by 1998 GE claimed that Six Sigma had generated over three-quarters of a billion dollars of cost savings. (Source: George Eckes' book, The Six Sigma Revolution.) By the mid-1990's Six Sigma had developed into a transferable 'branded' corporate management initiative and methodology, notably in General Electric and other large manufacturing corporations, but also in organizations outside the manufacturing sector. By the year 2000, Six Sigma was effectively established as an industry in its own right, involving the training, consultancy and implementation of Six Sigma methodology in all sorts of organizations around the world. That is to say, in a little over ten years, Six Sigma quickly became not only a hugely popular methodology used by many corporations for quality and process improvement, Six Sigma also became the subject of many and various training and consultancy products and services around which developed very many Six Sigma support organizations.

ORIGIN
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Bill Smith did not really "invent" Six Sigma in the 1980s; rather, he applied methodologies that had been available since the 1920s developed by luminaries like Shewhart, Deming, Juran, Ishikawa, Ohno, Shingo, Taguchi and Shainin. All tools used in Six Sigma programs are actually a subset of the quality engineering discipline and can be considered a part of the ASQ Certified Quality Engineer body of knowledge. The goal of Six Sigma, then, is to use the old tools in concert, for a greater effect than a sum-of-parts approach. The use of "Black Belts" as itinerant change agents is controversial as it has created a cottage industry of training and certification. This relieves management of accountability for change; pre-Six Sigma implementations, exemplified by the Toyota Production System and Japan's industrial ascension, simply used the technical talent at handDesign, Manufacturing and Quality Engineers, Toolmakers, Maintenance and Production workersto optimize the processes. The expansion of the various "Belts" to include "Green Belt", "Master Black Belt" and "Gold Belt" is commonly seen as a parallel to the various "Belt Factories" that exist in martial arts.

THE TERM SIX SIGMA

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Sigma (the lower-case Greek letter ) is used to represent standard deviation (a measure of variation) of a population (lower-case 's', is an estimate, based on a sample). The term "six sigma process" comes from the notion that if one has six standard deviations between the mean of a process and the nearest specification limit, there will be practically no items that fail to meet the specifications. This is the basis of the Process Capability Study, often used by quality professionals. The term "Six Sigma" has its roots in this tool, rather than in simple process standard deviation, which is also measured in sigmas. Criticism of the tool itself, and the way that the term was derived from the tool, often sparks criticism of Six Sigma. The widely accepted definition of a six sigma process is one that produces 3.4 defective parts per million opportunities (DPMO). A process that is normally distributed will have 3.4 parts per million beyond a point that is 4.5 standard deviations above or below the mean (one-sided Capability Study). This implies that 3.4 DPMO corresponds to 4.5 sigmas, not six as the process name would imply. This can be confirmed by running on QuikSigma or Minitab a Capability Study on data with a mean of 0, a standard deviation of 1, and an upper specification limit of 4.5. The 1.5 sigmas added to the name Six Sigma are arbitrary and they are called "1.5 sigma shift" (SBTI Black Belt material, ca 1998). Dr. Donald Wheeler dismisses the 1.5 sigma shift as "goofy". In a Capability Study, sigma refers to the number of standard deviations between the process mean and the nearest specification limit, rather than the standard deviation of the process, which is also measured in "sigmas". As process standard deviation goes up, or the mean of the process moves away from the center of the tolerance, the Process Capability sigma number goes down, because fewer standard deviations will then fit between the mean and the nearest specification limit .The notion that, in the long term, processes usually do not perform as well as they do in the short term is correct. That requires that Process Capability sigma based on long term data is less than or equal to an estimate based on short term sigma. However, the original use of the 1.5 sigma shift is as shown above, and implicitly assumes the opposite. As sample size increases, the error in the estimate of standard deviation converges much more slowly than the estimate of the mean (see confidence interval). Even with a few dozen samples, the estimate of standard deviation often drags an alarming amount of uncertainty into the Capability Study calculations. It follows that estimates of defect rates can be very greatly influenced by uncertainty in the estimate of standard deviation, and that the defective parts per million estimates produced by Capability Studies often ought not to be taken too literally. Estimates for the number of defective parts per million produced also depends on knowing something about the shape of the distribution from which the samples are drawn. Unfortunately, there are no means for proving that data belong to any particular distribution. One can only assume normality, based on finding no evidence to the contrary. Estimating defective parts per million down into the 100s or 10s of units based on such an assumption is wishful thinking, since actual defects are often deviations from normality, which have been assumed not to exist.

THE 1.5 SIGMA DRIFT

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The 1.5 drift is the drift of a process mean, which is assumed to occur in all processes. If a product is manufactured to a target of 100 mm using a process capable of delivering = 1 mm performance, over time a 1.5 drift may cause the long term process mean to range from 98.5 to 101.5 mm. This could be of significance to customers. The 1.5 shift was introduced by Mikel Harry. Harry referred to a paper about tolerancing, the overall error in an assembly is affected by the errors in components, written in 1975 by Evans, "Statistical Tolerancing: The State of the Art. Shifts and Drifts". Evans refers to a paper by Bender in 1962, "Benderizing Tolerances A Simple Practical Probability Method for Handling Tolerances for Limit Stack Ups". He looked at the classical situation with a stack of disks and how the overall error in the size of the stack, relates to errors in the individual disks. Based on "probability, approximations and experience", Bender suggests:

A run chart depicting a +1.5 drift in a 6 process. USL and LSL are the upper and lower specification limits and UNL and LNL are the upper and lower natural tolerance limits. Harry then took this a step further. Supposing that there is a process in which 5 samples are taken every half hour and plotted on a control chart, Harry considered the "instantaneous" initial 5 samples as being "short term" (Harry's n=5) and the samples throughout the day as being "long term" (Harry's g=50 points). Due to the random variation in the first 5 points, the mean of the initial sample is different to the overall mean. Harry derived a relationship between the short term and long term capability, using the equation above, to produce a capability shift or "Z shift"
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of 1.5. Over time, the original meaning of "short term" and "long term" has been changed to result in "long term" drifting means. Harry has clung tenaciously to the "1.5" but over the years, its derivation has been modified. In a recent note from Harry, "We employed the value of 1.5 since no other empirical information was available at the time of reporting." In other words, 1.5 has now become an empirical rather than theoretical value. Harry further softened this by stating "... the 1.5 constant would not be needed as an approximation". Interestingly, 1.5 is exactly one half of the commonly accepted natural tolerance limits of 3. Despite this, industry is resigned to the belief that it is impossible to keep processes on target and that process means will inevitably drift by 1.5. In other words, if a process has a target value of 0.0, specification limits at 6, and natural tolerance limits of 3, over the long term the mean may drift to +1.5 (or -1.5). In truth, any process where the mean changes by 1.5, or any other statistically significant amount, is not in statistical control. Such a change can often be detected by a trend on a control chart. A process that is not in control is not predictable. It may begin to produce defects, no matter where specification limits have been set.

DIGITAL SIX SIGMA

In an effort to permanently minimize variation, Motorola has evolved the Six Sigma methodology to use information systems tools to make business improvements absolutely permanent. Motorola calls this effort Digital Six Sigma.

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SIX SIGMA - WHAT IS SIX SIGMA?

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 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. According to the Six Sigma Academy, Black Belts save companies approximately $230,000 per project and can complete four to 6 projects per year. 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. GE first began Six Sigma in 1995 after Motorola and Allied Signal blazed the Six Sigma trail. Since then, thousands of companies around the world have discovered the far reaching benefits of Six Sigma.

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WHAT IS THE SIX SIGMA PHILOSOPHY?

We dont know what we dont know. * If we cant measure it, we really dont know much about it. * If we dont know much about it, we cant control it. * If we cant control it, we are at the mercy of chance.

METHODOLOGY
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DMAIC
Basic methodology consists of the following five steps: Define the process improvement goals that are consistent with customer demands and enterprise strategy. Measure the current process and collect relevant data for future comparison. Analyze to verify relationship and causality of factors. Determine what the relationship is, and attempt to ensure that all factors have been considered. Improve or optimize the process based upon the analysis using techniques like Design of Experiments. Control to ensure that any variances are corrected before they result in defects. Set up pilot runs to establish process capability, transition to production and thereafter continuously measure the process and institute control mechanisms.

DMADV
Basic methodology consists of the following five steps:
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Define the goals of the design activity that are consistent with customer demands and enterprise strategy. Measure and identify CTQs (critical to qualities), product capabilities, production process capability, and risk assessments. Analyze to develop and design alternatives, create 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 production process and handover to process owners.

CERTIFICATIONS

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Six Sigma identifies several key roles for its successful implementation.

Executive Leadership includes CEO and other key top management team members. They are responsible for setting up a vision for Six Sigma implementation. They also empower the other role holders with the freedom and resources to explore new ideas for breakthrough improvements. Champions are responsible for the Six Sigma implementation across the organization in an integrated manner. The Executive Leadership draws them from the upper management. Champions also act as mentors to Black Belts. At GE this level of certification is now called "Quality Leader". Master Black Belts, identified by champions, act as in-house expert coaches for the organization on Six Sigma. They devote 100% of their time to Six Sigma. They assist champions and guide Black Belts and Green Belts. Apart from the usual rigor of statistics, their time is spent on ensuring integrated deployment of Six Sigma across various functions and departments. Experts This level of skill is used primarily within Aerospace and Defense Business Sectors. Experts work across company boundaries, improving services, processes, and products for their suppliers, their entire campuses, and for their customers. Raytheon Incorporated was one of the first companies to introduce Experts to their organizations. At Raytheon, Experts work not only across multiple sites, but across business divisions, incorporating lessons learned throughout the company. Black Belts operate under Master Black Belts to apply Six Sigma methodology to specific projects. They devote 100% of their time to Six Sigma. They primarily focus on Six Sigma project execution, whereas Champions and Master Black Belts focus on identifying projects/functions for Six Sigma. 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.
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Yellow Belts are employees who have been trained in Six Sigma techniques as part of a corporate-wide initiative, but have not completed a Six Sigma project and are not expected to actively engage in quality improvement activities

In many recent programs, Green Belts and Black Belts are empowered to initiate, expand, and lead projects in their area of responsibility. The roles as defined above, therefore, conform to the older Mikel Harry/Richard Schroeder model, which is not universally accepted.

WHAT IS PMBOK?
PMBOK is the bible for Project Management. It stands for Project Management Body of Knowledge (PMBOK). There are nine knowledge areas defined in PMBOK which are as follows

Project Integration Management Project Scope Management Project Cost Management Project Time Management Project Risk Management Project Quality Management Project HR Management Project Communication Management Project Procurement Management Each Knowledge area has further Processes. There are a total of 44 processes. Each process has following three important parts. o Inputs o Tools & Techniques o Outputs

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THE MANY FACETS OF SIX SIGMA

Metric Benchmark Vision Philosophy Method Tool Symbol Goal Value
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WHICH BUSINESS FUNCTION NEEDS IT?

As long as there is a process that produces an output, whether it is a manufactured product, data, an invoice, etc, we can apply the Six Sigma Breakthrough Strategy. For these processes to perform to a customer standard they require correct inputs!!!

SIX SIGMA & LEADERSHIP

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Six Sigma only works when Leadership is Passionate about excellence and willing to change. Fundamentals of Leadership Challenge the process Inspire a shared vision Enable others to act Model the way Encourage the heart

Six Sigma is a catalyst for leaders

MORE ABOUT SIX SIGMA

Six Sigma Was Developed at Motorola in the 1980s As a Method to Improve Process Quality. It Was First Used to Improve Manufacturing Process Capability and Then Migrated to Business Processes Capability Companies That Have Deployed Six Sigma: Bank of America, Motorola, GE, IBM, Kodak and Many More The Basic Premise Is, All Processes Have Variation. Variation Is the Enemy.

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