Introduction to Six Sigma

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.
Topics
 Understanding Six Sigma

 History of Six Sigma

 Six Sigma Methodologies & Tools

 Roles & Responsibilities

 How YOU can use Six Sigma

 What is Six Sigma?
 A philosophy for systematically improving
quality, and therefore efficiency.
 A standard of performance equal to 3.4
defects per million outputs (i.e. near
perfection).
– Most operations are about 2.8 sigma
(100,000 defects / million).
– Very good operations are about 4 sigma
(3,500 defects / million).
 Basics

 A new way of doing business

 Wise application of statistical tools within a
structured methodology
 Repeated application of strategy to individual
projects
 Projects selected that will have a substantial
impact on the ‘bottom line’
 Six Sigma

A scientific and practical method to achieve

improvements in a company

Scientific:
• Structured approach. “Show me
• Assuming quantitative data. the data”
”Show me
the money” Practical:
• Emphasis on financial result.
• Start with the voice of the customer.
 Where can Six Sigma be applied?

Service
Design
Management

Purchase

Administration Six Sigma

Methods Production

IT
Quality
Depart.
HRM M&S
What Is Six Sigma?
• Degree of variation;

Sigma is a letter
in the Greek
• Level of performance in terms of Alphabet
defects;
• Statistical measurement of process
capability;
• Benchmark for comparison;
• Process improvement methodology;
• It is a Goal;
• Strategy for change;
• A commitment to customers to achieve
an acceptable level of performance

8
 Sigma is a measure
of variation
(the data spread)

μ
What does variation mean?
20

 Variation means that a 15

process does not produce 10

the same result (the “Y”) 5

every time. 0

-5

 Some variation will exist in

-10

all processes.

 Variation directly affects customer experiences.

Customers do not feel averages!

Measuring Process Performance
The pizza delivery example. . .
 Customers want 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, right?
– Our customers must be happy with us, right?
How often are we delivering on
time?
Answer: Look at 30 min. or less

the variation!
s

 Managing
0 by10
the average x tell30the whole 40
20doesn’t story. The average
50
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
s
customer
expectations?

0 10 20 x 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 every

cancellations per day. 3 weeks.

 The police make 7 false arrests  There are fewer than 4 false
every 4 minutes. arrests per month.

 In MA, 5,390 newborns are  1 newborn is dropped every 4

dropped each year. years in MA.

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

international long distance calls 2 years to see the same number
are accidentally disconnected. of dropped international calls.
Six Sigma Definitions
• Business Definition
A break through strategy to significantly
improve customer satisfaction and
shareholder value by reducing variability in
every aspect of business.
• Technical Definition
A statistical term signifying 3.4 defects per
million opportunities.

16
Topics
 Understanding Six Sigma

 History of Six Sigma

 Six Sigma Methodologies & Tools

 Roles & Responsibilities

 How YOU can use Six Sigma

 The Six Sigma Evolutionary Timeline

1818: Gauss uses the normal curve 1924: Walter A. Shewhart introduces
to explore the mathematics of error the control chart and the distinction of
analysis for measurement, probability special vs. common cause variation as
analysis, and hypothesis testing. contributors to process problems.

1736: French 1896: Italian sociologist Vilfredo

mathematician Alfredo Pareto introduces the 80/20
Abraham de rule and the Pareto distribution in
Moivre publishes Cours d’Economie Politique.
an article
introducing the
normal curve.
1949: U. S. DOD issues Military
Procedure MIL-P-1629, Procedures
1960: Kaoru Ishikawa
for Performing a Failure Mode Effects
introduces his now famous
and Criticality Analysis.
cause-and-effect diagram.

1941: Alex Osborn, head of 1970s: Dr. Noriaki Kano

BBDO Advertising, fathers a introduces his two-dimensional
widely-adopted set of rules for quality model and the three
“brainstorming”. types of quality.

1986: Bill Smith, a senior

engineer and scientist introduces 1995: Jack Welch
the concept of Six Sigma at launches Six Sigma at GE.
Motorola

1994: Larry Bossidy launches

Six Sigma at Allied Signal.
Six Sigma Companies
Six Sigma and Financial Services
Topics
 Understanding Six Sigma

 History of Six Sigma

 Six Sigma Methodologies & Tools

 Roles & Responsibilities

 How YOU can use Six Sigma

 DMAIC – The Improvement
Methodology
Define Measure Analyze Improve Control
Objective: Objective: Objective: Objective: Objective:
DEFINE the MEASURE current ANALYZE the IMPROVE the CONTROL the
opportunity performance root causes of process to process
problems eliminate root to sustain the gains.
causes

Key Define Tools: Key Measure Key Analyze Key Improve Key Control
• Cost of Poor Tools: Tools: Tools: Tools:
Quality (COPQ) • Critical to Quality • Histograms, • Solution • Control Charts
• Voice of the Requirements Boxplots, Multi- Selection Matrix • Contingency
Stakeholder (CTQs) Vari Charts, etc. • To-Be Process and/or Action
(VOS) • Sample Plan • Hypothesis Tests Map(s) Plan(s)
• Project Charter • Capability • Regression
• As-Is Process Analysis Analysis
Map(s) • Failure Modes
• Primary Metric and Effect
(Y) Analysis (FMEA)
Define – DMAIC Project
What is the project?
$
Project Cost of Voice of
Poor the
Charter Quality Stakeholde
S ta k e h o ld e r s
r

Six Sigma

 What is the problem? The “problem” is the Output (a “Y”

in a math equation Y=f(x1,x2,x3) etc).
 What is the cost of this problem
 Who are the stake holders / decision makers
 Align resources and expectations
 Define – As-Is Process
How does our existing process work?
Move-It! Courier Package Handling
Process
Accounts Accounts
Courier Mail Clerk In-SortClerk In-SortSupervisor Distance FeeClerk WeightFeeClerk Out-SortClerk Out-SortSupervisor
Receivable Clerk Supervisor

Observ e package
weight (1 or 2) on
back of package

Look up
appropriate
Weight Fee and
write in top middle
box on package
back

Add Distance &

Take packages
Weight Fees
f rom Weight Fee
together and write
Clerk Outbox to
in top right box on
A/R Clerk Inbox.
package back

Does EVERYONE Circle Total Fee

and Draw Arrow
f rom total to

agree how the current sender code

Accounting

process works?
Take packages Write Total Fee
f rom A/R Clerk f rom package in
Outbox to appropriate
Accounts Sender column on
Superv isorInbox. Accts. Supv .’s log

Take packages
Draw 5-point Star
f rom Accounts
in upper right
Superv isor
corner of package
Outbox to Out-
f ront
Sort Clerk Inbox.

Define the Non Value Sort packages in

Add steps order of Sender

Code bef ore
placing in outbox
Finalizing

Take packages Add up Total # of Observ e sender

f rom Out-Sort Packages and and receiv er
Clerk Outbox to Total Fees f rom codes and make
Out-Sort log and create entry in Out-Sort
Superv isorInbox. client inv oice Superv isor’s log

Deliv erPackages
Delivery

to customers
according to N, S,
E, W route

Deliv er inv oiceto

client

Submit log to
Submit log to Submit log to
General Manager
General Manager General Manager
at conclusion of
at end of round at end of round
round.
 Define – Customer Requirements
What are the CTQs? What motivates the customer?
Voice of the Customer Key Customer Issue Critical to Quality
SECONDARY RESEARCH
Listening Posts Industry Intel

Market
Data Industry
Benchmarking

Customer
Correspondence
Customer
Service

PRIMARY RESEARCH

Survey
s Survey
s

OTM

Obser-
Focus Groups vations
 Measure – Baselines and
Capability
What is our current level of performance?
Descriptive Statistics
 Sample some data / not all data Variable: 2003 Output

 Current Process actuals measured against Anderson-Darling Normality Test

A-Squared: 0.211
P-Value: 0.854

the Customer expectation Mean

StDev
23.1692
10.2152
Variance 104.349

 What is the chance that we will succeed Skewness

Kurtosis
N
0.238483
0.240771
100
0 10 20 30 40 50

at this level every time? Minimum

1st Quartile
0.2156
16.4134
Median 23.1475
3rd Quartile 29.6100
Maximum 55.2907
Pareto Chart for Txfr Defects 95% Confidence Interval for Mu
95% Confidence Interval for Mu
21.1423 25.1961
19.5 20.5 21.5 22.5 23.5 24.5 25.5 26.5 95% Confidence Interval for Sigma
100 100 8.9690 11.8667
95% Confidence Interval for Median
95% Confidence Interval for Median
80 19.7313 26.0572

60
Percent
Count

50
40

20

0 0
t
un er s
Defect La
te
A mo Oth

Count 79 17 4
Percent 79.0 17.0 4.0
Cum % 79.0 96.0 100.0
Measure – Failures and Risks
Where does our process fail and why?
Subjective opinion mapped into an “objective” risk profile number

Failure Modes and Effects Analysis (FMEA)

Process/Product

Process or
Prepared by: Page ____ of ____
Product Name:

Responsible: FMEA Date (Orig) ______________ (Rev) _____________

Process S O D R S O D R
Step/Part E C E P Actions E C E P
Number Potential Failure Mode Potential Failure Effects V Potential Causes C Current Controls T N Recommended Resp. Actions Taken V C T N

X1 0

0
0

X2
0 0

0 0

X3
0 0

0 0

X4
0 0

0 0

0 0

etc 0

0
0

0 0

0 0

0 0

0 0

0 0

0 0

0 0
Analyze – Potential Root Causes
What affects our process?
Ishikawa Diagram
(Fishbone)

Six Sigma

y = f (x1, x2, x3 . . . xn)

Analyze – Validated Root Causes
What are the key root causes?
Pareto Chart for Txfr Defects

100 100

80

Percent
60
Count

50
40

20

0 0

E x p e r im e n ta l D e s ig n
Defect
Count 79 17 4
Percent 79.0 17.0 4.0
Cum % 79.0 96.0 100.0

Data Regression
Stratification Analysis
Pareto Chart for Amt Defects

15
100

80
Process
Simulatio
Percent

10 60
Count

40
5
20 n
0 0

Defect
Count 12 3 2
Percent 70.6 17.6 11.8
Cum % 70.6 88.2 100.0

Six Sigma

y = f (x1, x2, x3 . . . xn)

Critical Xs
 Improve – Potential Solutions
How can we address the root causes we identified?
 Address the causes, not the symptoms.

Generate

Evaluate
Clarify
Decision
y = f (x1, x2, x3 . . . xn)
Critical Xs

Divergent | Convergent
Improve – Solution Selection
How do we choose the best solution?
Solution Selection Matrix
Qualit
y Solution Sigma Time CBA Other Score

Time Cost

Six Sigma
Solution
Right Wrong
Implementation

Nice
Good

☺ Try
Solution
Implementatio
Bad

Nice n Plan
Idea X
Control – Sustainable Benefits
How do we ”hold the gains” of our new process?
 Some variation is normal and OK
 How High and Low can an “X” go yet not materially impact the “Y”
 Pre-plan approach for control exceptions

Process Control System (Business Process Framework)

Process Owner: Direct Process Customer: Date:
Process Description: CCR:

Flowchart Measuring and Monitoring

Measures
Key Specs
L o a n S e rv ic e (Tools) Responsibility Contingency
C u s to m e r S a le s P r o c e s s in g B ra n c h M a n a g e r
M anager Measure &/or Remarks
Where & (Who) (Quick Fix)
ments Targets
Frequency
P1 - activity 35
duration,
A p p ly fo r
lo a n min. UCL=33.48
Application & Review

R e v ie w
a p p lia t io n f o r
P2 - # of
c o m p le te n e s s
incomplete
1.1

Individual Value
loan
applications
C o m p le te
A p p li c a t i o n
m e e t in g No
C o m p le te ?
in fo r m a t io n
25
Mean=24.35
Processing
1.2
Credit review

15 LCL=15.21
1.3

0 10 20 30
Review
1.4

Observation Number
Disclosure
1.5
DFSS – The Design Methodology
Design for Six Sigma

Define Measure Analyze Develop Verify

 Uses
– Design new processes, products, and/or services from scratch
– Replace old processes where improvement will not suffice
 Differences between DFSS and DMAIC
– Projects typically longer than 4-6 months
– Extensive definition of Customer Requirements (CTQs)
– Heavy emphasis on benchmarking and simulation; less emphasis on baselining
 Key Tools
– Multi-Generational Planning (MGP)
– Quality Function Deployment (QFD)
Topics
 Understanding Six Sigma

 History of Six Sigma

 Six Sigma Methodologies & Tools

 Roles & Responsibilities

 How YOU can use Six Sigma

 Focus of Six Sigma*
 Accelerating fast breakthrough performance
 Significant financial results in 4-8 months
 Ensuring Six Sigma is an extension of the
Corporate culture, not the program of the
month
 Results first, then culture change!

*Adapted from Zinkgraf (1999), Sigma Breakthrough

Technologies Inc., Austin, TX.
Black Belts
 Six Sigma practitioners who are employed by
the company using the Six Sigma methodology
 work full time on the implementation of problem
solving & statistical techniques through projects
selected on business needs
 become recognised ‘Black Belts’ after embarking on
Six Sigma training programme and completion of at
least two projects which have a significant impact on
the ‘bottom-line’
 Black Belt requirements

Black Belt required resources

-Training in statistical methods.
-Time to conduct the project!
-Software to facilitate data analysis.
-Permissions to make required changes!!
-Coaching by a champion – or external support.
 Black Belt role!

In other words the Black Belt is

-Empowered.

-In the sense that it was always meant!

-As the theroists have been saying for years!

Champions or ‘enablers’
 High-level managers who champion Six
Sigma projects
 they have direct support from an executive
management committee
 orchestrate the work of Six Sigma Black
Belts
 provide Black Belts with the necessary
backing at the executive level
Champions Role

• Measure and report Business Impact

• Lead projects overall

• Overcome resistance to Change

• Encourage others to Follow

Green Belts
 Use Six Sigma DMAIC methodology and basic tools to
execute improvements within their existing job
function(s)

 May lead smaller improvement projects within

Business Unit(s)

 Bring knowledge of Six Sigma concepts & tools to

their respective job function(s)

 Undergo 8-11 days of training over 3-6 months

Other Roles

 Subject Matter Experts

– Provide specific process knowledge to Six Sigma teams
– Ad hoc members of Six Sigma project teams

 Financial Controllers
– Ensure validity and reliability of financial figures used
by Six Sigma project teams
– Assist in development of financial components of
initial business case and final cost-benefit analysis
 Positive quotations
 “If you’re an average Black Belt, proponents say you’ll
find ways to save $1 million each year”
 “Raytheon figures it spends 25% of each sales dollar
fixing problems when it operates at four sigma, a lower
level of efficiency. But if it raises its quality and efficiency
to Six Sigma, it would reduce spending on fixes to 1%”
 “The plastics business, through rigorous Six Sigma process
work , added 300 million pounds of new capacity
(equivalent to a ‘free plant’), saved $400 million in
investment and will save another $400 million by 2000”
Negative quotations
 “Because managers’ bonuses are tied to Six
Sigma savings, it causes them to fabricate results
and savings turn out to be phantom”
 “Marketing will always use the number that makes
the company look best …Promises are made to
potential customers around capability statistics
that are not anchored in reality”
 “ Six Sigma will eventually go the way of the
other fads”
Topics
 Understanding Six Sigma

 History of Six Sigma

 Six Sigma Methodologies & Tools

 Roles & Responsibilities

 How WE can use Six Sigma

Six Sigma In
Healthcare
 As a manager it is important that you
recognize your role as a leader for change.
Leaders in Healthcare need to build
relationships and increase collaborative
efforts in their industry.
 Leaders “need to provide an environment
for innovation that allows for new and more
flexible roles and responsibilities for
healthcare workers.”
 Quality of care has become an increasingly more
important metric. Because the care the industry produces
continues to vary, Six Sigma has grown to play a larger
role.
 Six Sigma is a comprehensive management tool whose
success has led to selective adoption in the healthcare
field.
 “Six sigma, as a quality improvement plan, uses data
analysis and other problem solving techniques to evaluate
the ability of a process to perform defect free, where a
defect is anything that results in customer dissatisfaction.”
 The importance of controlling and limiting variance
in healthcare is compounded by the fact that failure
to do so could led to misdiagnosis, malpractice suits
and even death.
 Additionally one aspect that adds to the appeal of
Six Sigma is that of its potential to increase
accountability.
 Accountability coupled with the timely recognition
and resolution of errors increases the desire of
managers to implement a Six Sigma program.
Six Sigma Defined In Context of
Healthcare
Coming To Healthcare
 Quality improvement plan
 Controlling variance is essential
 Increases accountability
 Builds off of current processes
How Six Sigma Can Help?

 First, come up with ideas how Six Sigma could improve

healthcare as a whole
 Next ,think about how Six Sigma principals could help
your Hospital
 Lastly, think of ways that being able to create strong
measures could help you in your job
 In manufacturing it is possible to eliminate nearly
all “human variability”. Automation makes it
possible by allowing for the detailed measurement
of assignable causes of variation.
 “In Healthcare, however, the delivery of care is
largely a human process, and the causes of
variability are often more subtle and difficult to
quantify.”
 This fact doesn’t however need to deter the
healthcare industry from attempting to improve.
 For the longest time a doctor’s success in helping an
expectant mother deliver a baby was measured
mostly by whether or not the mother and child lived
through the ordeal
 Medical science had been making advances that
improved outcomes, but the fact remained that the
death rate for the procedure was extremely high.
Then in the 1930’s Virginia Apgar invented what
obstetricians know today as the Apgar Score.
 It was a point system that assed the health of the
baby (Ex. Two points for vigorous breathing, two
points for moving all its limbs). This measurement
system has played a role in saving countless
thousands of people.
 So it is clear that to improve quality the healthcare
profession doesn't need excuses but rather
ingenious innovators who are willing to take a
unique look at the world.
 Six Sigma could help the healthcare industry deal with
its over utilization and insufficient capacity, by
creating measures that reduce waste, improve outcomes
and decrease the cost of poor quality.
 Healthcare costs can be categorized into three groups:
process costs, costs of quality and costs of poor quality
(which make up 67%, 13% and 20% respectively).
Aggressive Six Sigma programs can help to redesign
processes to limit the costs of poor quality while
improving the patient experience, thus helping to
recover some of the costs of poor quality.
 Six Sigma Application

All or Nothing vs. Contingency

 All or Nothing means that the company either fully
commits to Six Sigma or else it shouldn’t bother
- It offers greater rewards
- But it comes at the cost of greater risk
 Contingency
- Allows a company to tailor its’ own solutions
- If done half-hazard, it can cause more harm than good
 If viewed as a methodology, Six Sigma is a really
versatile tool that can be implemented at any level.
 According to many proponents, if you are going to do
Six Sigma rightly, you will undergo an all
encompassing change and embrace a business
improvement process made up of very separate and
distinct tools and methodologies, most of which existed
prior to the Six Sigma craze.” They go on to contradict
proponents who argue for the whole “enchilada”, by
saying that the enchilada is made up of lots of parts and
if Six Sigma proponents argue that there aren’t other
dishes to be made with the ingredients, they report
“nothing could be farther from the truth”.
 In summary both methods have their upsides and
downsides.
 One way to test the waters for a company to see if it is at a
point where Six Sigma can help is for the company to do a
pilot.
 If a manager or even an employee feels their company could
benefit from Six Sigma they should research the topic in-
depth and implement the principals as best as they can (with
careful notice being paid to keeping track of results).
 These measures will likely help encourage administrators to
better understand how Six Sigma can help the company.
 How It Works

Project types
 Patient Satisfaction
 Safety
 Efficiency
 Outcomes
 Many Others
 Patient Satisfaction: In Healthcare most the
time (if not all) people aren’t really happy
to be in the hospital. It is a rough hoe to row
to delight customers. A project example that
might fall under this heading is room
service. There is an increasing trend in
hospitals to offer room service, and Six
Sigma could be used by a company to
verify the viability and importance of
offering it in a hospital that currently
doesn’t.
 Safety: Safety should be pretty self explanatory, it
would be any and all projects preformed to
enhance patient safety.
– Provide leadership- Make patient safety a top priority
and make it everyone’s responsibility.
– Respect human limits in design processes- avoid
reliance on vigilance and memory.
– Promote effective team functioning- people who must
work together should be trained together.
– Anticipate the unexpected- be proactive and design
for recovery from errors.
– Create a learning environment- ensure no reprisals
for reporting errors.
 Efficiency: Doing more with less, eliminating
waste, taking out unnecessary redundancy. One
example could be improving turnover times in an
ED.
 Outcomes: Projects that improve processes to
allow for quicker healing, or decrease the percent
of reoccurrences. Example: Testing a protocol to
see if it improves clinical outcomes.
 Many Others: These were just some general
ideas for projects but managers can find projects
that incorporate all these project types or are
more unique in nature.
 How It Works
Performance Variables
 Patient Satisfaction
 Service Level
 Service Cost
 Clinical Excellence
 Patient Satisfaction: can be verified through
customer feedback mechanisms. The analysis of this
variable can include survey responses and focus
groups. (Also managers can and should consider
Physician and employee satisfaction because they
influence patient satisfaction.)
 Service Level: this variable should be defined with
help from the customer; to see what they consider
the varying levels of service to be. Then a capability
analysis can be preformed to see what changes can
be made to the steps of care that are encompassed in
the larger project (ex. Triage, Assessment,
Treatment est.).
 Service Cost: being able to itemize and
understand the average cost per procedure; and
calculating employee productivity. This is
accomplished through financial analysis.
 Clinical Excellence: is researching outcomes to
ensure the effectiveness of processes and
procedures. Return rate can be measured along
with measuring how long it takes to administer
critical care in emergencies and a host of other
variables that management can get help
identifying working in collaboration with
medical staff.
How It Works

Physician Engagement
 Why it is essential
 Why so hard to get
– Think differently
– Increases burdens
 How to gain
 Only a handful of process changes can be fully
optimized without physician engagement, and
active management of the role of physicians may
be one of the most vital tasks of senior leaders
 Why so hard to get: Physicians are often biased to
think using more resources produce the best
outcomes
– Think differently: Doctors often don’t understand
systems thinking, or process improvement. They take a
stance that savings need to go to benefit them before
the hospital. Physician's are trained to give directions,
so it is hard for them to work in a team with people
they view as subordinates.
– Increases burdens: Process changes can add to the
already heavy load of doctors. Many times they have
no vested interests in saving the hospital money. Often
times what can mean better processes for the hospital
can increase complexity for physician’s practice.
 How to gain: Educate the physicians so they can
understand why changes are being made. Seek to
build trust, to decrease the combative element
between administrators and doctors. Seek win-win
project where both can benefit, and when not possible
provide a quid pro quo allowing for concessions to be
made to the physician for cooperation or consider
other incentives. Leverage physician influencers to
lead changes (ex. credible doctors or trusted medical
staff) instead of hospital leadership.
 Real World Examples
Organization Project Outcome Achievement
Charleston Area Supply chain for Lower inventory, Improved Saved:
supplier relations $163,410 immediately
Medical Center surgical supplies $841,540 future

Commonwealth Radiology Decreased time between dictation $800,000 savings, 25%

and signature, Improved wait better throughput and
Health Corporation times and staff scheduling eliminated 14 positions

Froedtert Memorial ICU lab times Reduced turnaround times Cut turnaround times
Lutheran Hospital from 52 to 23 minutes
Mount Carmel Medicare+ Choice Redefined coding working- Profit $857,000
Hospital Plan reimbursement aged Medicare recipients

Wellmark Inc. Physician addition Reduced time for adding Savings: $3 million
to managed care physicians to medical plan per year
network
Scottsdale Over crowded ED Improved transfer time Profits: $600,000
Healthcare from ED to inpatient
hospital bed

“Integrating Six Sigma with Total Quality Management: A Case Example for Measuring
Medication Errors”. Journal of Healthcare Management. 48:6 November/December 2003
How to do
 Problem Identification
 Cost of Poor Quality
 Problem Refinement
 Process Understanding
 Potential X to Critical X
 Improvement
Problem Identification
“If it ain’t broke, why fix it
“This is the way we’ve always done it…”
Problem Identification
• First Pass Yield
• Roll Throughput Yield
• Histogram
• Pareto
 Problem Identification
First Pass Yield (FPY):
The probability that 100 Units
any given unit can go
Step 1 Outputs / Inputs
through a system
defect-free without 100 / 100 = 1

rework. 100

Scrap 10 Units Step 2

90 / 100 = .90

90

Scrap 3 Units Step 3

87 / 90 = .96

87

Scrap 2 Units Step 4 85 / 87 = .97

At first glance, the yield would seem to be When in fact the FPY is (1 x .90 x .96 x .97 = .
85% (85/100 but….) 838)
85
Problem Identification
Rolled
100 Units Outputs / Inputs
Throughput
Yield (RTY): Step 1 90 / 100 = .90
The yield of
individual Re-Work
process steps 10 Units 100 Units
multiplied Step 2 97 / 100 = .97
together.
Reflects the
Re-Work
hidden factory 3 Units 100 Units
rework issues
associated with Step 3 98 / 100 = .98
a process.
Re-Work
2 Units 100 Units
Step 4 .90 x .97 x .98 = .855

100 Units
Problem Identification
RTY Examples - Widgets
50

Roll Throughput Yield

Function 1 50/50 = 1
(50-5)/50 = .90
50
(50-10)/50 = .80
Function 2
5
(50-5)/50 = .90
50

Function 3
10
1 x .90 x .80 x .90 = .65

50

Function 4
5
Put another way, this process is operating
50 a 65% efficiency
Problem Identification
RTY Example - Loan Underwriting
50

Roll Throughput Yield

Application 50/50 = 1
(50-7-2)/50 = .82
2 50 7

Fails (43-6)/43 = .86

Underwrite
Underwriting
(43-1-2)/43 = .93
6 43

Complete Full
Paperwork
1 x .82 x .86 x .93 = .66
2 1
43
Decide not to
Close
borrow

42 Put another way, this process is operating

a 66% efficiency
Problem Identification
Histogram – A histogram is a basic graphing tool that displays the
relative frequency or occurrence of continuous data values showing
which values occur most and least frequently. A histogram illustrates the
shape, centering, and spread of data distribution and indicates whether
there are any outliers.

Histogram of Cycle Time

40

30
Frequency

20

10

0 100 200 300 400 500

C8
Problem Identification
Histogram – Can also help us graphically understand the data

Descriptive Statistics
Variable: CT

Anderson-Darling Normality Test

A-Squared: 6.261
P-Value: 0.000

Mean 80.1824
StDev 67.6003
Variance 4569.81
Skewness 2.31712
Kurtosis 8.26356
N 170
25 100 175 250 325 400
Minimum 1.000
1st Quartile 31.000
Median 66.000
3rd Quartile 105.000
95% Confidence Interval for Mu Maximum 444.000
95% Confidence Interval for Mu
69.947 90.417
54 64 74 84 94 95% Confidence Interval for Sigma
61.098 75.664
95% Confidence Interval for Median
95% Confidence Interval for Median
55.753 84.494
Problem Identification
Pareto – The Pareto principle states that 80% of the impact of the
problem will show up in 20% of the causes. A bar chart that displays by
frequency, in descending order, the most important defects.
Pareto Chart for WEB

100
100
80

Percent
60
Count

50
40

20

0 0

Defect
Count 96 15
Percent 86.5 13.5
Cum % 86.5 100.0
Key Lessons Learnt
 Define
– Difficulty in identifying the right project and
defining the scope;
– Difficulty in applying statistical parameters
to Voice of the Customers;
– Trouble with setting the right goals;
 Measure
– Inefficient data gathering;
– Lack of measures;
– Lack of speed in execution;

79
Key Lessons Learnt
 Analyse
– Challenge of identifying best practices
– Overuse of statistical tools/ under use of practical
knowledge
– Challenge of developing hypotheses
 Improve
– Challenge of developing ideas to remove root
causes
– Difficulty of implementing solutions
 Control
– Lack of follow up by Managers/ Process Owners
– Lack of continuous Voice of the Customer
feedback
– Failure to institutionalize continuous improvement.

80
Key Lessons Learnt

 “ Define “ ranked most important step but gets

the lowest resource allocation
 Project scoping and its definition is critical to
its success/ failure;
 “Measure” is considered most difficult step
and also gets the highest resources

Source: Greenwich Associates Study Y 2002

81
How to reduce?
 Problem Identification
 Cost of Poor Quality
 Problem Refinement
 Process Understanding
 Potential X to Critical X
 Improvement
Cost of Poor Quality
COPQ - The cost involved in fulfilling the gap between the desired and
actual product/service quality. It also includes the cost of lost opportunity
due to the loss of resources used in rectifying the defect.

Hard Savings - Six Sigma project benefits that allow you to do the same
amount of business with less employees (cost savings) or handle more
business without adding people (cost avoidance).
Soft Savings - Six Sigma project benefits such as reduced time to market,
cost avoidance, lost profit avoidance, improved employee morale,
enhanced image for the organization and other intangibles may result in
additional savings to your organization, but are harder to quantify.

Examples / Buckets–
Roll Throughput Yield Inefficiencies (GAP between desired result and
current result multiplied by direct costs AND indirect costs in the process).
Cycle Time GAP (stated as a percentage between current results and
desired results) multiplied by direct and indirect costs in the process.
Square Footage opportunity cost, advertising costs, overhead costs, etc…
How to do?
 Problem Identification
 Cost of Poor Quality
 Problem Refinement
 Process Understanding
 Potential X to Critical X
 Improvement
 Problem Refinement
Multi Level Pareto – Logically Break down initial Pareto data into sub-
sets (to help refine area of focus)

Pareto Chart for WEB

100
100
80

Percent
60
Count

50
40

20

0 0 Pareto Chart for Type

Defect
100
Count 96 15 100
Percent 86.5 13.5
80
Cum % 86.5 100.0

Percent
60

Count
50
40

20

0 0

Defect
Count 45 35 13 16
Percent 41.3 32.1 11.9 14.7
Cum % 41.3 73.4 85.3 100.0
Problem Refinement
Problem Statement – A crisp description of what we are trying to solve.
Primary Metric – An objective measurement of what we are attempting
to solve (the “y” in the y = f(x1, x2, x3….) calculation).
Secondary Metric – An objective measurement that ensures that a Six
Sigma Project does not create a new problem as it fixes the primary
problem. For example, a quality metric would be a good secondary
metric for an improve cycle time primary metric.
Problem Refinement
Fish Bone Diagram - A tool used to solve quality problems by
brainstorming causes and logically organizing them by branches. Also
called the Cause & Effect diagram and Ishikawa diagram

Provides tool for exploring cause / effect and 5 whys

How to go for?
 Problem Identification
 Cost of Poor Quality
 Problem Refinement
 Process Understanding
 Potential X to Critical X
 Improvement
Process Understanding
SIPOC – Suppliers, Inputs, Process, Outputs, Customers
You obtain inputs from suppliers, add value through your process, and
provide an output that meets or exceeds your customer's requirements.
Process Understanding
Process Map – should allow people unfamiliar with the process to understand
the interaction of causes during the work-flow. Should outline Value Added
(VA) steps and non-value add (NVA) steps.

Full Form
Control Open
Start Size Sorts Pull & Sort
Receipt / Docs
Extract
Ck / Vouch
Verify

Perfection
Requal Group

No

Yes Prep cks,

Remit
Rulrs route Prep cks Ship to IP
Pass 1 Pass 2
vouch

Vouchers

Key from
Balance
Data Cap image

No
Vouch
OK

Inventory Yes
Prep
Folders / Full Form Ship to
Box QCReview Cust
 Process Understanding

Create daily peak Action

staff need plan Plan
No

Yes Can they Call employee

Add 30% to To Floor
the required make it? (3x)
no.
Operations No Need OJT Yes Make No
Compare to OJT
Re-Tng it?
Check off original Billet rpt
desired
Manually Review
returnee Yes
Update HR Staff
staff & "need No Yes
Billet Request Billet Need re
to retrain" To Floor
-train
list

Add 40% to Call (3x)

Stop!
staff needed
Create Update
Staff No IPS
No
Billet Rev
Do they original Do they No
Send Letters Yes Yes Have we No Yes Have we No Yes Interview / Meet Fleet
Do they want to billet & want to Call Wait Rank as
to desired hired hired New hiring
respond? work this call work this List pre-hire "1 2 3"
staff enough? enough? criteria
peak? uncheck peak?
ed
What if the
HR sends Hire in 1- Yes
returnee is Yes Yes
req for No No 2 order
Start already
staffing (3's are
HR / working here show up No
nos. not Place into Call
Recruit on another Do they Do they orienta
No No placed) dept 3X
program? want to want to tion
Stop! Stop!
Currently stay on the stay on the
send the ltr list list
anyways Wait List Yes

Yes Yes

New &
Other Take off Set 14
Take off Set 14
People IPS month
IPS month
call in system flag (on
system flag (on
IPS?)
IPS?)

schedule Yes No Gen Event Roster

for Reach
rpt in IPS
training

Show No Call Notify

up? 1X HR

Yes
Training Gen rpt for
Ops Kronos
Recruit
Train

No Yes Update
Pass?
IPS
How to go from?
 Problem Identification
 Cost of Poor Quality
 Problem Refinement
 Process Understanding
 Potential X to Critical X
 Improvement
Potential X to Critical X
“Y” is the dependent output of a variable process. In other
words, output is a function of input variables (Y=f(x1, x2,
x3…).
Through hypothesis testing, Six Sigma allows one to
determine which attributes (basic descriptor (generally
limited or binary in nature) for data we gather – ie. day of
the week, shift, supervisor, site location, machine type,
work type, affect the output. For example, statistically,
does one shift make more errors or have a longer cycle
time than another? Do we make more errors on Fridays
than on Mondays? Is one site faster than another? Once we
determine which attributes affect our output, we determine
the degree of impact using Design of Experiment (DOE).
Potential X to Critical X
A Design of Experiment (DOE) is a structured, organized
method for determining the relationship between factors
(Xs) affecting a process and the output of that process (Y).
Not only is the direct affect of an X1 gauged against Y but
also the affect of X1 on X2 against Y is also gauged. In
other words, DOE allows us to determine - does one input
(x1) affect another input (x2) as well as Output (Y).
Potential X to Critical X
DOE Example
Main Effects Plot (data means) for Elapsed
Main Effects Plot –
1.4
Direct impact to Y
1.3
Elapsed

1.2

1.1

1.0
Jams DCDEL SK P2Jam

Interaction Plot (data means) for Elapsed

1.50
Jams
1 1.25
3 1.00

1.50
DCDEL
3 1.25

Interaction Plot –
1 1.00

1.50
SK
Impacts of X’s on 3

1
1.25

1.00

each other P2Jam 1.50

3 1.25

1 1.00
Potential X to Critical X
DOE Optimizer –
Allows us to
statistically predict the
Output (Y) based on
optimizing the inputs
(X) from the Design of
experiment data.
How to ensure?
 Problem Identification
 Cost of Poor Quality
 Problem Refinement
 Process Understanding
 Potential X to Critical X
 Improvement
Improvement
Once we know the degree to which inputs (X) affect our
output (Y), we can explore improvement ideas, focusing
on the cost benefit of a given improvement as it relates
to the degree it will affect the output. In other words, we
generally will not attempt to fix every X, only those that
give us the greatest impact and are financially or
customer justified.
Control
Once improvements are made, the question becomes, are the
improvement consistent with predicted Design of Experiment
results (ie – are they what we expected) and, are they statistically
different than pre-improvement results.

Process Capability Analysis for Sept

LSL USL
Process Data
USL 0.23000
Within
Target *
LSL -1.00000 Overall
Mean -0.02391
Sample N 23
StDev (Within) 0.166425
StDev (Overall) 0.221880

Potential (Within) Capability

Z.Bench 1.53
Z.USL 1.53
Z.LSL 5.87
Cpk 0.51

-1.0 -0.5 0.0 0.5 1.0

Cpm *

Overall Capability Observed Performance Exp. "Within" Performance Exp. "Overall" Performance
Z.Bench 1.14 % < LSL 0.00 % < LSL 0.00 % < LSL 0.00
Z.USL 1.14 % > USL 13.04 % > USL 6.35 % > USL 12.62
Z.LSL 4.40 % Total 13.04 % Total 6.35 % Total 12.62
Ppk 0.38
Control
Control Chart - A graphical tool for monitoring changes that occur
within a process, by distinguishing variation that is inherent in the
process(common cause) from variation that yields a change to the
process(special cause). This change may be a single point or a series
of points in time - each is a signal that something is different from
what was previously observed and measured.
I and MR Chart for Sept

1
Individual Value

0.5 UCL=0.5293

0.0 Mean=0.03
2

-0.5 LCL=-0.4693

Subgroup Sept 13 Sept 20

Date 9/13 9/25
0.7 1
0.6 UCL=0.6134
Moving Range

0.5
0.4
0.3
0.2 R=0.1877
0.1
0.0 LCL=0
How is Six Sigma Different?
 Versatile
 Breakthrough improvements
 Financial results focus
 Process focus
 Structured & disciplined problem solving
methodology using scientific tools and
techniques
 Customer centered
 Involvement of leadership is mandatory.
 Training is mandatory;
 Action learning
 Creating a dedicated organisation for
problem solving.
102
LEAN v/s SIX SIGMA
 Lean and Six Sigma are both planned
change initiatives with objectives to
reduce or eliminate waste, but there the
similarity ends.
LEAN v/s SIX SIGMA
 Six Sigma may be a program but lean is a
philosophy.
 Six Sigma uses a methodology called
DMAIC (determine, measure, analyse,
implement, and control) to identify and
eliminate waste. As a philosophy, lean is all
about continuous improvement through the
elimination of waste.
LEAN v/s SIX SIGMA
People
 Six Sigma is about exclusion. A Six Sigma
team is identified for a specific area or
project.
 Lean is inclusive. Lean teaches us that
success is achieved when the entire value
stream improves, not when one discrete
element of it does.
LEAN v/s SIX SIGMA
Approach to change
 Six Sigma : Change Management.
 Lean : Transformational Change.
Improvement philosophy
 Six Sigma is aimed at specific targets in the value
stream.
 Lean is all about continuous improvement. The
philosophy says there will always be waste to be
extracted from the value stream.
Benefits of Six Sigma

 Generates sustained success

 Sets performance goal for everyone
 Enhances value for customers;
 Accelerates rate of improvement;
 Promotes learning across boundaries;
 Executes strategic change

107
CONCLUSION
The right support
+
The right projects
+
The right people
+
The right tools
+
The right plan
=
The right results
THANK YOU