003 Six Sigma Overview 060503

Six Sigma Training
6 Sigma Overview
Copyright 2000-2002 Sigma Breakthrough Technologies, Inc. Used with permission. Copyright 2002 Cummins, Inc. All Rights Reserved
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Revision: 2002-02 Effective Date: 7/2002
Objectives * What Is 6 Sigma ?
Why Are We Doing 6 Sigma ?
How Are We Deploying 6 Sigma ?
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What is Sigma ( )?
q q
Sigma is a letter in the Greek Alphabet Sigma is a symbol which shows the degree of variation in a process (standard deviation)
How close are you meeting your target?
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What is Sigma ( )?
q
The goal of a Six Sigma process is to:

Minimize variation Center the process, such that the center of the value delivered is at least six standard deviations away from what is considered non acceptable. or the upper or lower customer specification.
The degree of variation in a process that is acceptable depends on knowing the target.
Do you know where your target is?

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Demings Philosophy On Processes
85% of the reasons for failure to meet customer requirements are related to deficiencies in systems and processesrather than the employee. The role of management is to change the process rather than badgering individuals to do better.
- W. Edwards Deming
Six Sigma Focuses On Change

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What is Six Sigma?

q
Simple: Simple

Eliminate variation and defects Eliminate the opportunity for variation and defects Eliminate non-value added activities Vision Metric (Standard of measurement) Benchmark Philosophy Method Tool for: > Customer focus > Breakthrough/Continuous improvement > People Involvement Aggressive Goals
Complex

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Six Sigma Focus

Improving performance by flawless execution Achieving rapid breakthrough improvement Applying advanced breakthrough tools that work Making a positive and deep cultural change
Getting Real Financial Results
Passion + Execution = Fast and Lasting Results

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Changing The Decision Making Processes

Decision Making Growth Path Types of Problems You Will Normally Solve Simple
1. Intuition, gut feel, I think .. 2. We have Raw Data and look at it 3. We make graphs / charts of the data 4. We use advanced statistical tools to evaluate the data
Complex
How Many Times Have Your Heard This ?

I Think The Problem Is

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What is Six Sigma ?

2 3 4 5 6
% Non-Defective
2 3 4 5 6
95.46 99.73 99.9937 99.999943 99.9999998
% NonDefective
69.1% 93.32% 99.379% 99.9767% 99.99966%
2 3 4 5 6
PPM 308,537 66,807 6,210 233 3.4

Defects per Million Opportunity
WITH 1.5 SHIFT
Process Capability
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The Sound of Six Sigma

q q q
Close your eyes and listen First will be the sound of 6 Sigma (3.4 ppm) Next will be the sound of 4 Sigma (6,210 ppm)
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Practical Meaning
99% Good (4S) Postal System 20,000 Lost Articles Of Mail / Hr 7 Lost Articles / Hr 99.99966% Good (6S)
Airline System Two Short/Long Landings / Day 1 Short / Long Per 5 Years
Medical Profession 200,000 Wrong Drug Prescriptions / Year
68 Wrong Drug Prescriptions/ Year

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What Does 6 Sigma Mean In Your Daily Life?
PPM
Prescription Writing Tax Advice Restaurant Bills 1,000,000 Payroll Processing
100,000 10,000 1,000 100 10
Baggage Handling Best in Class Airline Safety Rate

1 2 3 4 5 6 7
Sigma Level
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Business Metrics
USA Today Medical Article September 22, 1997
Number of antibiotic prescriptions issued in 1996: 282,631,000

JAMA reported that 21% of all antibiotic prescriptions written were to treat colds, bronchitis, and respiratory infections...
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Business Metrics
USA Today Medical Article September 22, 1997
Number of antibiotics prescriptions issued in 1996: 282,631,000

JAMA reported that 21% of all antibiotic prescriptions written were to treat colds, bronchitis, and respiratory infections... even though more than 90% of such infections are caused by viruses, which are immune to antibiotics. 53,000,000 defective prescriptions = 2.4
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Business Metrics Tranquilizers / Anti-Anxiety Medications: 76,370,000 Sleeping Pills / Sedatives: 23,681,000 Anti-Obesity Drugs: 23,596,000
Sources: IMS America, Plymouth Meeting, PA.
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Business Metrics Instructors Note: Despite being less than 3 sigma, we are happy to report Doctors are operating with very profitable returns. This only proves . . . You dont have to be 6 Sigma to make money.
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The Inspection Exercise

Count the number of times the 6th letter of the alphabet appears in the following text: The necessity of training farm hands for the first class farms in the fatherly handling of farm live stock is foremost in the eyes of the farm owners. Since the forefathers of the farm owners trained the farm hands for first class farms in the fatherly handling of farm live stock, the farm owners felt they should carry on with the family tradition of training farm hands of the first class farmers in the fatherly handling of farm live stock because they believe it is the basis of good fundamental farm management.
Copyright 2000-2002 Sigma Breakthrough Technologies, Inc. Used with permission. Copyright 2002 Cummins, Inc. All Rights Reserved Revision: 2002-02 Effective Date: 7/2002
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Reality of Escaping Defects

Escaping Defects
Escaping Defects
Total Defects/Unit No matter how good your inspection and test processes are, the more defects you create, the more defects escape to the customer
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The Inspection Exercise

Now count the number of times the 6th letter of the alphabet appears in the following text: The necessity in training hired hands in the strange handling of valuable live stock in premier operations is a priority in the eyes of the operations owners. Since the ancestors of the owners trained the hired hands in premier operations in the strange handling of valuable live stock, the operations owners thought they should carry on with the happy tradition of training hired hands in the premier operations in the strange handling of valuable live stock because they believe it is the basis of good basic operations management.
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Defects and the Hidden Factory

Each defect must be detected, repaired and placed back in the process. Each defect costs time and money.
Inputs Operation Rework
Hidden Factory
Inspect
OK
First Time Yield
90% Customer Quality
NOT OK
Yield After Inspection or Test
Scrap
Time, cost, people
Manufacturing Variation Causes A "Hidden Factory" Increased Cost - Lost Capacity

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Rolled Yield Versus First Time Yield

Inputs Operation Rework
Hidden Factory
Inspect
OK
First Time Yield
Scrap
NOT OK
Yield After Inspection or Test
90% Customer Quality
Process
Final Test
90% Yield
Rolled Yield
90% Yield
81 %
90% Yield
73 %
90% Yield
66 %
90% 66% is not 90% Yield ... why not?
Using Final Test first time yield ignores the hidden factory. Final test performance is a function of inspection/test or prevention.
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Baseline Performance: Tire Company Plant Metrics
Rolled throughput Yield
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Rolled Throughput Yield Exercise
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Objective of Exercise
q
Demonstrate the impact of process variation on:

Rolled Throughput Yield Product Cost Cycle Time
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Goal of team
q q q
Ship 25 good units to customer Maximize yield Minimize:

Scrap and rework Total cost Total cycle time
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People/Equipment needed
q q q q q q
About 12 participants per team Three targets per team One deck of 52 cards per team Stop watch per team 3 pads of paper per team RTY.xls (Excel worksheet) - per instructor
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Process Flow
Good Units
Good Units
Input
Recycle
25 Units
Recycle
Recycle
Step #1
Step #2
Step #3
Good product is advanced to next process step, defects are recycled

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Team roles
At each process step:
Operator Material handler Recorder drops card moves good cards to next process step recycles defects back to operator records performance data for process step
Also, each team will need:

1 Timekeeper 1 Customer 1 Data entry clerk measures time to completion receives and counts good units received inputs performance data into worksheet
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Game rules
q q q
Start with full deck (52 cards) as input Stand next to (but not on) target Hold cards:

one at a time at arms length and at shoulder height with vertical orientation
Drop toward center of target
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Game Rules (continued)

q
q q
Units landing completely within customer specification limit (outer red circle) are moved to next process step (or shipped to customer) Units landing on or beyond specification limit are recycled Stop game when 25 good units are achieved in step 3 Use tally sheet provided to measure results Present results to group
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Data to track
q
Total good units moved to subsequent step (or to customer) Total drops at each step (you do not need to count recycled units separately) Total cards never used (first operator only must segregate units never used from recycled units) Total time from first drop to completion of customer order
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To begin
q q q q q
Choose roles Get equipment together Run trial of 5 units Return cards to first operator Begin dropping and start stopwatch
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Scoring and Results Sheet

(Use Excel file provided)
Results Input Data Material yield Process yield Step 1 Step 2 Step 3 RTY 61% 61% 71% 60% 26%
Total cards dropped Step 1 Step 2 Step 3 44 35 42 Total time (sec)
Total good units 27 25 25 120
Unused cards 11
Cost/unit Materials $ 8.20 Process 9.68 Scrap 0.64 Total $ 18.52 Cycle time 4.80
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Assumptions used in scoring

q
Yield

Materials yield - shipment qty / total input into step 1 RTY - multiplication of yield (units in spec / total drops) for all three process steps Materials cost - $5 per unit introduced into step 1 Process cost - $2 per drop Scrap - $1 per unit in process at end of game (WIP)
Cost

Cycle time - total time / number of units shipped to customer
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What did we learn?

q q q
Was there process variation? Was the process in control? What was the impact of process variation on:

defects? RTY? Cost? Cycle time
How could you improve?
RTY=$$
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Premise for Six Sigma Methods
Sources of variation can be

Identified Quantified and prioritized Eliminated by control or prevention
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3 Sigma Process
Lowe r Spe c Upper Spec
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6 Sigma Process
Lower Spec Upper Spec
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Ford (Batavia Plant)

Produced Ford-Designed Transaxle Built in Batavia, OH and in Japan (Mazda) Both met engineering specifications but Fleet owners stated that some Escorts shifted smoothly while others were not so good (based on small sample size). Analysis: All Smooth shifting Transaxles were built in Japan Both met specs, but.
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Batavia
Process Capability Analysis for Batavia
LSL USL
22
23
24
25
26
27
28
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Mazda - Japan
Process Capability Analysis for Mazda
LSL USL
23.524.024.525.025.526.026.5
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Lessons Learned
Is it enough to be in spec? What did Ford think? What did Mazda think? What do you think?
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Dissecting Process Capability

Inadequate Measurement Capability Inadequate Process Capability Supplier Variation Inadequate Design Margin
LSL
USL
Defects
Process Capability
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Dissecting Process Capability

1000 100 80 60 40 20 0
500
t.
Ov er W
Air Bu b
LSL
USL
Process Capability
Wr on
De f or
ma ti o
Defect
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gC ol o
eig h
ble
Percent
Count
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Business Impacts of Variability

q
Prevention Costs

Internal Failure

Education and training Quality planning Product design qualification tests Supplier qualification Customer interface Controlling processes
q
Scrap Supplier caused losses Rework Retest / Re-inspection Unplanned downtime Trouble shooting Engineering change notices
Appraisal Costs

External Failures

Incoming inspection Maintenance and calibration of equipment Setup inspection and tests Field testing Process audits
Processing customer inquiries Maintaining customer field service Retro fit costs Incurring penalties/claims Product warranty Lost sales
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Exercise
q
Go through the list on the previous slide and indicate which costs are EASILY accessed through your current finance systems. Count the selected elements
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A Simple Approach to Breakthrough Performance

The right support + The right projects + The right people + The right roadmap and tools = The right results
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A Simple Approach: The Right Support

q
q q
Infrastructure to drive Six Sigma throughout the company is in place Quality Champions support specific business units Sponsors are identified and trained Master Black Belts are trained, experienced and available
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A Simple Approach: The Right Projects

Strategies
Improve Profitability
Goals
$X million profit (+$X million 6S) savings
Projects
- Improve RTY from __% to __ % for HC shop - Increase on-time delivery... - Improve BOM accuracy... - Reduce supplier leadtimes.. - Reduce failure rates... - Reduce product variance by market...
New Product Introduction
Deliver X units of product at less than ___ warranty accrual by year end
Growth: Global Rental
Open markets in four new countries
- Reduce product delivery lead time... - Improve order processing time...
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A Simple Approach: The Right People
q q q q q
Quality Champions Sponsors Master Black Belts Black Belts Green Belts
Critical Mass Of Paradigm Shifters

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A Simple Approach: The Right People

The Six Sigma Management System
DMAIC Lead Teams Complete the Charter Break Barriers Select the Team Review Projects Meet Weekly with Belt Technical Conscience Project Reviews Mentor Belts Assist Local Leaders
MBBs
Belts
Sponsors
Six Sigma Projects

Ensure Six Sigma Standards are followed Monitor Six Sigma Measures Assist BU leadership
BU Quality Champ s Proces s Owner Local Leader s
Establish Business Goals Select Projects Establish Project Priorities Select Belts Conduct Reviews Verify Savings Audit Control Plans
Control Plan Ownership

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Quality Champion Roles and Responsibilities

q q q q q
Implements Six Sigma within the BU Tracks number of Belts and projects Selects Belt candidates Develops hopper of Six Sigma project ideas Selects projects to be chartered
Strategic leaders for Six Sigma Implementation

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Sponsor Roles & Responsibilities

q q q q
Articulate need for a project Provide leadership and direction to the Belt Break down organizational barriers Stakeholder - key beneficiary of project improvement Review progress continuously
Tactical Leaders for Process Improvement

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Master Black Belt Roles & Responsibilities

q q q q q q q q q q
Experts in Six Sigma Tools and Methodology Ensure results achievement Assist in project identification and 6 Sigma administration Break down technical barriers Coach and mentor Belts during project Maintain training materials Conduct Belt training Continuously improve Six Sigma process Identify, share and deploy Best Practices An optional Growth Path for BBs
Ensure business is self sustaining in 6 deployment

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Black Belt Roles & Responsibilities

Leaders of strategic, high impact process improvement projects q Developers of a functional team q Experts in applied quality and statistical tools q Technical/analytical expertise q Change agents q High energy, result getters q Leadership development pool q 100% DEDICATED to Six Sigma Initiative
q
Six Sigma process improvement drivers

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Green Belt Roles & Responsibilities

Leaders of process improvement projects q Work in own functional area q Drive continuous process improvement q Technical process experts q Appliers of quality and statistical tools q Change Agents q 20-40% time allocation to Six Sigma
Creating Critical Mass with Local Focus

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A Simple Approach: The Right Roadmap And Tools
q q q
Process Improvement Methodology Project Tracker Advanced tools
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The Process Improvement MethodologyTM

Define Define
Measure Measure
Analyze Analyze
Improve Improve
Control Control
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The Project Tracker
Project Tracker
Project Hopper and Sponsor Role Define
Identify 'Y" and draft charter Charter on Database and Approved
Process Map
C & E Matrix or FTA

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Overall Approach
Practical Problem Practical Problem
Statistical Problem Statistical Problem
y = f ( x1 , x2 ,..., xk )
Practical Solution Practical Solution Statistical Solution Statistical Solution
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6 Sigma Strategy
Gain insight into our current operational processes

how good is it (Baseline)? Baseline how good could it be (Entitlement)? Entitlement what is limiting it from getting better? how can it be improved (Closing the Gap)? Gap how much of the gap do we want to close during this project(Goal)? Goal
Six Sigma is the process of quickly closing the gap between process baseline and entitlement.
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Baseline Performance: Tire Company Plant Metrics
Rolled throughput Yield
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Process Excellence: The Right Metrics

Defects per 1000
Defects per 1000 units
70
Scrap
0.21 0.20 0.19
COPQ
0 5 10
65
0.18 0.17 0.16 0.15
55
0.14 0 5 10
Month
Month
Rate
Units per Day
Baseline Goal Actual
400
350 0 5 10
Month
How is this plant doing?

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Using Paretos to Select Projects

Pareto Chart for Cause
1800 1600 1400 1200 1000 800 600 400 200 0 0
s ces Pro cal hni Tec bly em Ass rs the O
100 80 60 40 20
Defect
Count Percent C % um
1328 77.0 77.0
198 11.5 88.5
164 9.5 98.0
34 2.0 100.0
Process Related Scrap is the Highest Knife Assembly and Inner Gasket are the two major process scrap drivers Two Potential Projects: - Knife Assembly - Inner Gasket
Major Part Failure due to Process

600 500 100 80 60 40 20 0
i Kn ly mb sse fe A et ask er G Inn m t top II m 00m TS ese ld S 5m ck 0x1 hie g, R ing -50 pco ty S prin ous fe fe H S Sto Kni Sa
Count
400 300 200 100 0
Defect
C ount Percent C % um
148 24.0 24.0
128 20.8 44.8
75 12.2 57.0
74 12.0 69.0
72 11.7 80.7
69 11.2 91.9
50 8.1 100.0
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Percent
Percent
Count
Example from Discrete Manufacturing: Process Steps
Actual data from a transformer factory Shown are process steps including design and purchasing
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Process Steps, Defects, Units and DPU

Line 1 2 3 4 7 9 10 11 12 13 14
Process Tank Line Paint Line Core Insulation Core/Coil Tanking Fit for Ship Block&Braze Tank Storage Engineering Purchasing
Def 10,166 3,992 2,096 120 302 720 895 379 461 775 11,747
Units 17,671 20,292 38,397 18,924 15,757 14,874 13,598 17,307 11,386 18,924 18,924
DPU 0.58 0.20 0.05 0.01 0.02 0.05 0.07 0.02 0.04 0.04 0.62
Which three process areas would you work to improve?
TOTAL=
31,653
18,924
1.67
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Process Steps, Defects, Units and DPU

Line 1 2 3 4 7 9 10 11 12 13 14
Process Def Tank Line 10,166 Paint Line 3,992 Core 2,096 Insulation 120 Core/Coil 302 Tanking 720 Fit for Ship 895 Block&Braze 379 Tank Storage 461 Engineering 775 Purchasing 11,747
Units 17,671 20,292 38,397 18,924 15,757 14,874 13,598 17,307 11,386 18,924 18,924
DPU 0.58 0.20 0.05 0.01 0.02 0.05 0.07 0.02 0.04 0.04 0.62
Tanks Paint
Materials
TOTAL=
31,653
18,924
1.67
Defects per Unit drives plantwide improvement

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How Do We Improve Capability ?

Our Outputs (Y) are determined by our Inputs (Xs). If we know enough about our Xs we can accurately predict Y. If we dont know much about our Xs, then we have to resort to Inspection and Test (Non Value-Added Operations)
Y = f(x1 , x2 , x3 ,..., xk )
Paint Thickness = (Paint Viscosity, Spray Angle, Spray Pressure, Standard Operating Procedures, , Spray Pattern) By knowing and Controlling the Xs, we reduce the Variability in Y. We eliminate or reduce inspection, test and rework.
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The Funneling Effect
MEASURE
+30 Inputs 10-15
All Xs
1st Hit List
ANALYZE
8 - 10
IMPROVE
Screened List
4-8 3-6
Found Critical Xs
CONTROL
Controlling Critical Xs
Optimized Process
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Top Tools
q q q q q q
Process map Cause and effects matrix Measurement system analysis Capability analysis Descriptive statistics Graphical techniques

q q q q q q q q q q q q q q q q q
Box Plots Histograms Scatterplots Time series plots Run charts Pareto charts Check sheets
q q q q
Statistical process control charts Correlation Simple and multiple regression Inferential statistics
Failure modes and effects analysis Multi-vari studies Fractional factorial experiments Full factorial experiments Response surface methods Transformations Normal distribution Sample size determination Test for Equal Variances Fishbone diagrams Hypothesis testing F-test T-test Chi-square test Tests for normality Non-Parametric Tests Analysis of Variance
Confidence intervals
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A Simple Approach: The Right Results at Cummins

q
q q q q
5 Black Belt projects completed with > $10M estimated annual savings, each 12 Green Belt projects completed with > $1M estimated annual savings, each $25 million Six Sigma savings in 2000 $132M Six Sigma savings in 2001 $397M Six Sigma savings in 2002 Average completed BB project worth $366K/year, with a median value of $250K/year Overall, most projects have realized more savings than expected by uncovering unexpected opportunities
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Six Sigma Everywhere

SERVICE DESIGN
ADMIN. Six Sigma Methods
PURCH.
QA
MFG.
MAINT.
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Pursuit of Quality
Inspect for Quality Statistical Process Control

(Deming)
Process Modeling
(Taguchi)
Design for Six Sigma

1930 1940 1950 1960 1970 1980 1990 2000
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Six Sigma - Summary

q
q q
q q
An initiative that extends and strengthens quality and productivity efforts An approach to bring Six Sigma skills in-house A proven breakthrough contributor to the financial bottom line A detailed roadmap to process improvement A methodology that our people can and should be using to do their jobs
Job description: Work your process and work to improve your process
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Six Sigma
q q q
Setting clear expectations for breakthrough in business execution Achieving excellence through process characterization, optimization, and control Creating a One Company approach to driving performance breakthroughs

Same roadmap and tools Same language Driving improvements from fact
Its just the beginning!

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Six Sigma Training

Revision: 2002-02 Effective Date: 7/2002

Objectives * What Is 6 Sigma ?

Why Are We Doing 6 Sigma ?

How Are We Deploying 6 Sigma ?

Revision: 2002-02 Effective Date: 7/2002

Objectives * What Is 6 Sigma ?

Why Are We Doing 6 Sigma ?

How Are We Deploying 6 Sigma ?

Revision: 2002-02 Effective Date: 7/2002

How close are you meeting your target?

Revision: 2002-02 Effective Date: 7/2002

The goal of a Six Sigma process is to:

Do you know where your target is?

Revision: 2002-02 Effective Date: 7/2002

Demings Philosophy On Processes

Six Sigma Focuses On Change

Revision: 2002-02 Effective Date: 7/2002

What is Six Sigma?

Revision: 2002-02 Effective Date: 7/2002

Six Sigma Focus

Getting Real Financial Results

Passion + Execution = Fast and Lasting Results

Revision: 2002-02 Effective Date: 7/2002

Changing The Decision Making Processes

How Many Times Have Your Heard This ?

I Think The Problem Is

What is Six Sigma ?

95.46 99.73 99.9937 99.999943 99.9999998

69.1% 93.32% 99.379% 99.9767% 99.99966%

PPM 308,537 66,807 6,210 233 3.4

WITH 1.5 SHIFT

Revision: 2002-02 Effective Date: 7/2002

The Sound of Six Sigma

Revision: 2002-02 Effective Date: 7/2002

Medical Profession 200,000 Wrong Drug Prescriptions / Year

68 Wrong Drug Prescriptions/ Year

What Does 6 Sigma Mean In Your Daily Life?

Baggage Handling Best in Class Airline Safety Rate

Revision: 2002-02 Effective Date: 7/2002

Number of antibiotic prescriptions issued in 1996: 282,631,000

Revision: 2002-02 Effective Date: 7/2002

Number of antibiotics prescriptions issued in 1996: 282,631,000

Revision: 2002-02 Effective Date: 7/2002

Sources: IMS America, Plymouth Meeting, PA.

Revision: 2002-02 Effective Date: 7/2002

Revision: 2002-02 Effective Date: 7/2002

The Inspection Exercise

Reality of Escaping Defects

Revision: 2002-02 Effective Date: 7/2002

The Inspection Exercise

Defects and the Hidden Factory

First Time Yield

90% Customer Quality

Yield After Inspection or Test

Time, cost, people

Manufacturing Variation Causes A "Hidden Factory" Increased Cost - Lost Capacity

Revision: 2002-02 Effective Date: 7/2002

Rolled Yield Versus First Time Yield

First Time Yield

Yield After Inspection or Test

90% Customer Quality

90% 66% is not 90% Yield ... why not?