Six Sigma For System Innovation Dessign 1233779239181412 3

CUSTOMER &S
Cix
OMPETITIVE
SigmaINTELLIGENCE
S S
IX
FOR
IGMA
SYSTEMS INNOVATION & DESIGN
DEPARTMENT
OF STATISTICS
REDGEMAN@UIDAHO.EDU
OFFICE: +1-208-885-4410
Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design
DR. RICK EDGEMAN,
PROFESSOR & CHAIR SIX SIGMA BLACK BELT
Dr. Rick L. Edgeman, University of Idaho
S S
IX
Six Sigma
IGMA
Introduction to Six Sigma

DEPARTMENT
OF STATISTICS
Six Sigma
Often, problems are knots with
many strands, and looking at
those strands can make a problem
seem different.
Mr. Rogers
Six Sigma is
a highly structured strategy for acquiring, assessing, and applying
customer, competitor, and enterprise intelligence for the purposes
of product, system or enterprise innovation and design.
Innovation Algorithm
DMAIC (Define-Measure-Analyze-Improve-Control)
Design for Six Sigma Algorithm
DMADV (Define-Measure-Analyze-Design-Verify)
Makes Integrative Use Of:
Various strategies and tools from Statistics, Quality, Business,
Engineering and ???
Six Sigma
rganizations
SixO
Sigma
GE All 300,000+ GE employees must

be Six Sigma certified. All new GE
products developed using the Design for
Six Sigma (DFSS) approach.
3M New CEO (from GE) requires all
3M employees to become Six Sigma
certified.
Dupont
AlliedSignal
Sun Microsystems
Raytheon
Motorola
Boeing
Lockheed-Martin
Bank-of-America
American Express
HSBC
SAS Institute
Rapidly Increasing Areas of

Application.
Healthcare GE Heathcare - SLC
Financial,
Military NSWC, Pentagon, etc.
Fueled by:
Strategic Contexts.
Notorious bottom-line orientation & results.
Adaptable to multiple bottom lines.
Process orientation: rigorous and systematic
approaches to innovation and design.
Focus on the customer.
Successful track record elsewhere.
Industry Buzz.
While Six& Sigma

is new
at, for example,
3M
its &benefits
others of
Client, Enterprise
Competitive
Intelligence
for Product,
Process
Systemsat
Innovation
& Design
Dr. Rick
L. Edgeman,
of Idaho of US dollars.
these organizations
is measured
inUniversity
the multi-billions
Six Sigma
Quality is a state in which value entitlement is realized for the
customer and provider in every aspect of the business relationship.
Business Quality is highest when the costs are at the absolute

lowest for both the producer & consumer.
Six Sigma provides maximum value to companies in the forms

of increased profits and maximum value to consumers with highquality products and services at the lowest possible cost.
Why is Six
Sigma
Important?
Six Sigma
The
Villain
Cost of Poorly Performing Processes

s level DPMO CP3
2
3
4
5
6
308,537
66,807
6,210
233
3.4
Not Applicable
25%-40% of sales
15%-25% of sales
5%-15% of sales
< 1% of sales
Each sigma shift provides a 10% net income improvement
Sigma (s) is a measure of perfection relating to process

performance capability the bigger the better. A process
operating at a Six Sigma level produces only 3.4 defects
per million opportunities (DPMO) for a defect. Without
dedication of significant and appropriate attention to a
process, most processes in leading companies operate at a
level between 3 and 4 sigma.
Cost of Poorly Performing Processes (CP3)

Six Sigma
Cost of Poorly Performing Processes
The cost to deliver a quality product can account for as much as
40% of the sales price.

For example, a laser jet printer purchased for $1,000 may have
cost the manufacturer $400 in rework just to make sure that you
took home an average-quality product.
For a company whose annual revenues are $100 million and
whose operating income is $10 million, the cost of quality is
roughly 25% of the operating revenue, or $25 million.
If this same company could reduce its cost of achieving quality by
20%, it would increase its operating revenue by $5 million or
50% of the current operating income.
What Does
SixSSigma
Six
igma Tell Us?
and the Hero
We dont know what we dont know.

We cant do what we dont know.
We wont know until we measure.
We dont measure what we dont value.
We dont value what we dont measure.
Typical Results: companies that properly
However, improved profit margins allow companies
implement Six Sigma have seen profit margins grow

20% year after year for each sigma shift (up to about
4.8s to 5.0s. Since most companies start at about 3s,
virtually each employee trained in Six Sigma will return
on average $230,000 per project to the bottom line
until the company reaches 4.7s. After that, the cost
savings are not as dramatic.
to create products & services with added features and
functions that result in greater market share.
Six Sigma
Six Sigma Affects Six Areas Fundamental
to Improving a Companys Value:
1.
2.
3.
4.
5.
6.
Process Improvement
Product & Service Improvement
Investor Relations
Design Methodology
Supplier Improvement
Training & Recruitment
Six Sigma
Six Sigma vs. TQM
TQM Terminology
Six Sigma Improvement

Terminology
Identify the Project

Establish the Cause
Define
Diagnose the Cause
Measure
Analyze
Remedy the Cause
Improve
Hold the Gains
Control
Replicate Results
Nominate New Projects
Replicate
Six Sigma
Values of Six Sigma Organizations
Issue
Classical Focus
Six Sigma Focus
Analytical Perspective
Management
Manufacturability
Variable Search
Process Adjustment
Problems
Problem solving
Analysis
Focus
Behavior
Suppliers
Reasoning
Outlook
Decision Making
Approach
Design
point estimate
cost & time
trial & error
one-factor-at-a-time
tweaking
fixing
expert based
experience
product
reactive
cost
experience based
short-term
intuition
symptomatic
performance
variability
quality & time
robust design
design of experiments
process control charts
prevention
system based
data
process
proactive
relative capability
statistically based
long-term
probability
problematic
producibility
Six Sigma
Values of Six Sigma Organizations
Issue
Classical Focus
Six Sigma Focus
Aim
Organization
Training
Chain-of-command
Direction
Goal setting
People
Control
Improvement
company
authority
luxury
hierarchy
seat-of-the-pants
realistic perception
cost
centralized
automation
customer
learning
necessity
empowered teams
benchmarking/ metrics
reach out & stretch
asset
localized
optimization
Six Sigma
The SIPOC Model
Inputs
Process
Suppliers
Outputs
Customers
Steps
Inform Loop
Six Sigma
Six Sigma COPIS Model
Outputs
Process
Inputs
Suppliers
Customers
Steps
How does Six Sigma Work?
The Voice of the Customer (VOC) is aggressively sought and rigorously

evaluated and used to determine needed outputs and hence the optimal
process configuration needed to yield those outputs and their necessary
inputs for which the best suppliers are identified and allied with.
From Concept to Market: the Voice of the Customer

Six Sigma
Voice of the Customer
Measure
Analyze
Improve
Control
Define
Institutionalization
The DMAIC Model

Six Sigma
Kano Customer Need Model
Dissatisfiers
Those needs that are EXPECTED in a product or

service. These are generally not stated by customers
but are assumed as given. If they are not present, the
customer is dissatisfied.
Satisfiers
Needs that customers SAY THEY WANT. Fulfilling

these needs creates satisfaction.
Exciters /
Delighters
New or Innovative features that customers do not

expect. The presence of such unexpected features leads
to high perceptions of quality.
Six Sigma
Kano Customer Need Model
Delighted
Degree of
Execution
Fully
Implemented
Absent
Disgusted
Stakeholder Satisfaction
Six Sigma
Dimensions of Quality- Garvins Eight
Quality is usually a bundle of characteristics
We need to disaggregate this composite notion
This decomposition will help us to
make our notion of quality more precise
make comparisons possible
facilitate measurement
Only the customer determines the relative

importance of these dimensions
Six Sigma
Garvins Eight Dimensions
Performance
Features
Conformance
Aesthetics
Reliability
Durability
Serviceability
Perceived Quality
Six Sigma
What the Terms Mean (1)
PERFORMANCE
Primary operating characteristics of a product
FEATURES
bells & whistles
secondary characteristics that supplement the basic functioning
CONFORMANCE
degree to which product meets pre-established standards
(meeting specs)
Six Sigma
RELIABILITY
Probability of product remaining functional over a
specified period of time
DURABILITY
amount of use one gets out of a product before it
physically deteriorates
SERVICEABILITY
speed and ease of repairs (or resolution of problems)
Six Sigma
ASTHETICS
look, feel, and sound of a product
reflects individual preferences
PERCEIVED QUALITY
perceptions of quality based on other cues and indirect
measures
reputation or affiliation often key
Six Sigma
Competing on Quality
It is not often feasible to pursue all 8 dimensions

Trade-offs are necessary
Quality niches can be defined and defended
A firm can define what quality means for its
product
Must focus on the right quality measure: those
one(s) that matter to the consumer
Six Sigma
Dimensions of Service Quality
RELIABILITY: consistency, error-free dependability

RESPONSIVENESS: willingness to help the customer
TANGIBLES: environment for the service presented
COMPETENCE: the right skills and knowledge required
Six Sigma
Service Quality (cont.)
COURTESY: suppliers behavior

SECURITY: freedom from danger or risk
ACCESS: ease of making contact
COMMUNICATION: understandable to the customer
EMPATHY: adopting the customers viewpoint
Six Sigma
Aggregation
Often need to reduce the number of
dimensions. Reduced list is:
Reliability
Responsiveness
Empathy
Tangibles
Assurance
Six Sigma
Breakthrough Strategy
Six Sigma Road Map: R DMAIC SI

Stage
Identification
Characterization
Optimization
Institutionalization
Breakthrough
Strategy Phase
Objective
Recognize
Identify Key Business
Define
Issues
Measure
Understand Current
Analyze
Performance Levels
Improve
Achieve Breakthrough
Control
Improvement
Standardize
Transform How Day-to
Integrate
Day Business is
Conducted
Six Sigma
Define
Six Sigma: How Do We Innovate?

Define the problem and customer
requirements.
easure defect rates and document

Measure M
the process in its current incarnation.
Control
Analyze process data and determine

the capability of the process.
Improve the process and remove

defect causes.
Control process performance and

Improve
Analyze
ensure that defects do not recur.
Common sense doesnt mean commonly done or when done, done well.
Six Sigma Innovation
the DMAIC Algorithm
Dr. Rick L. Edgeman, &
University of Idaho
Six Sigma
Six Sigma from the GE Perspective
Six Sigma is a highly disciplined process that helps a company focus on developing
and delivering near-perfect products and services. Why sigma? The word is a
statistical term that measures how far a given process deviates from perfection.
The central idea behind Six Sigma is that if you can measure how many
defects you have in a process, you can systematically determine how to
eliminate those and approach zero defects.
Six Sigma has changed the DNA at GE it is the way that GE works in
Everything that GE does and in every product GE designs.
What is Six Sigma? The Roadmap to Customer Improvement
www.ge.com/sixsigma/makingcustomers.html
Six Sigma
Design for Six Sigma
Applications of Six Sigma that focus on the design or significant
redesign of products and services and their enabling processes so that
from the beginning customer needs and expectations are fulfilled
are known as Design for Six Sigma or DFSS.
The focal aim of DFSS is to create designs that are resource efficient,
capable of exceptionally high yields, and are robust to process
variations. This aim leads to the DFSS algorithm
Define-Measure-Analyze-Design-Verify (DMADV).
Six Sigma
Define
Six Sigma: How Do We Design?
Define customer requirements and
goals for the process, product or service.
Verify
easure and match performance

Measure M
to customer requirements.
Analyze and assess the design for

the process, product or service.
Design and implement the array of

new processes required for the new
process, product or service.
Design
Analyze
Verify results and maintain

performance.
All new products at GE are designed using a DFSS algorithm.
Design for Six Sigma (DFSS)
Six Sigma
Design for Six Sigma at GE:
DFSS is changing GE. With it GE can build on all of its capabilities and take
all of its product and process designs to a new level of world-class
performance and quality.
The essence of DFSS is predicting design quality up front and driving quality
measurement and predictability improvement during the early design phasesa much more effective and less expensive way to get to Six Sigma quality
than trying to fix problems further down the road.
What We Do. GE Corporate Research and Development
Formerly posted at: www.crd.ge.com/whatwedo/sixsigma.html
Six Sigma
Another View of Design for Six Sigma:
DFSS is the change in the product design organization from a deterministic to a
probabilistic culture. Our people were trained to incorporate statistical analysis of
failure modes, both in products and processes. They began to incorporate design
changes that modify & eliminate design features with a probability of failure within a
predefined range of operating environments and conditions. The design organization
changed from a factor-of-safety mentality to one in which there was a quantitative
assessment of design risk. Four elements of design are most critical to the effort:
Design for producibility (design for manufacturing and assembly);
Design for Reliability;
Design for Performance (technical requirements); and
Design for Maintainability.
Design for Six Sigma: 15 Lessons Learned,
Quality Progress, Vol. 35, No. 1, pp. 33-42, January 2002.
Six Sigma
Improvement & Innovation Focuses on high priority
problems in business processes. This uses the DMAIC methodology:
Define, Measure, Analyze, Improve, and Control.
DesignDesign For Six Sigma (DFSS) addresses new or

fundamentally poor processes. The methodology is called the DMADV
or DMADOV model: Define, Measure, Analyze, Design, Optimize,
and Verify.
Business Process Management aids in definition and

management of operations and activities in terms of core and enabling
processes. The resulting process management systems provide a
foundation of process definition and baseline data for all process design
and improvement activities.
Six Sigma
Six Sigma Strategy & Methods
Appendix 1: Corporate Leadership
Six Sigma
Six Sigma Strategy & Methods
Appendix 2: People of Six Sigma
S S
IX
Six Sigma
IGMA
a highly structured strategy for acquiring, assessing, and

applying customer, competitor, and enterprise
intelligence for the purposes of product, system or
enterprise innovation and design.
DEPARTMENT
OF STATISTICS
S S
IX
Six Sigma
IGMA
End of Session
DEPARTMENT
OF STATISTICS

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CUSTOMER &S

SYSTEMS INNOVATION & DESIGN

Introduction to Six Sigma

GE All 300,000+ GE employees must

Rapidly Increasing Areas of

While Six& Sigma

Business Quality is highest when the costs are at the absolute

Six Sigma provides maximum value to companies in the forms

Cost of Poorly Performing Processes

Each sigma shift provides a 10% net income improvement

Sigma (s) is a measure of perfection relating to process

Cost of Poorly Performing Processes (CP3)

40% of the sales price.

We dont know what we dont know.

Typical Results: companies that properly

However, improved profit margins allow companies

implement Six Sigma have seen profit margins grow

Six Sigma Improvement

Identify the Project

Diagnose the Cause

Remedy the Cause

Hold the Gains

Six Sigma Focus

Six Sigma Focus

How does Six Sigma Work?

The Voice of the Customer (VOC) is aggressively sought and rigorously

From Concept to Market: the Voice of the Customer

The DMAIC Model

Those needs that are EXPECTED in a product or

Needs that customers SAY THEY WANT. Fulfilling

New or Innovative features that customers do not

Only the customer determines the relative

Garvins Eight Dimensions

It is not often feasible to pursue all 8 dimensions

RELIABILITY: consistency, error-free dependability

COURTESY: suppliers behavior

Six Sigma Road Map: R DMAIC SI

Identify Key Business

Transform How Day-to

Six Sigma: How Do We Innovate?

easure defect rates and document

Analyze process data and determine

Improve the process and remove

Control process performance and

ensure that defects do not recur.

Six Sigma Innovation

the DMAIC Algorithm

Six Sigma: How Do We Design?

Define customer requirements and

goals for the process, product or service.

easure and match performance

Analyze and assess the design for

Design and implement the array of

Verify results and maintain

All new products at GE are designed using a DFSS algorithm.

Design for Six Sigma (DFSS)

DesignDesign For Six Sigma (DFSS) addresses new or

Business Process Management aids in definition and

a highly structured strategy for acquiring, assessing, and

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