Organizing Six Sigma Christopher J. Zampogna Operations Management 380 Boise State University

What will be covered The History of Six SigmaThe History of Six Sigma Six Sigma DefinedSix Sigma Defined Brainstorming ExerciseBrainstorming Exercise The Six Sigma RoadmapThe Six Sigma Roadmap Organizing Six SigmaOrganizing Six Sigma A Real-World ExampleA Real-World Example An ExerciseAn Exercise SummarySummary Reading ListReading List ReferencesReferences

The History of Six Sigma “Six Sigma” originated at Motorola in 1982“Six Sigma” originated at Motorola in 1982 Early adoptorsEarly adoptors –Allied Signal (Honeywell) –General Electric Six Sigma management philosophy todaySix Sigma management philosophy today –A well-developed, thorough approach to quality improvement –Uses statistics and management by fact –Is effective in manufacturing and services firms

Defining Six Sigma ( ) Defining Six Sigma (6 ) “Six Sigma: A comprehensive and flexible system for achieving, sustaining and maximizing business success. Six sigma is uniquely driven by a close understanding of customer needs, disciplined use of facts, data, and statistical analysis and diligent attention to managing, improving, and reinventing business processes.” - Peter S. Pande 6

Defining Six Sigma ( ) Defining Six Sigma (6 ) The Greek symbol (sigma) refers to the amount of variation in a process around the mean value for that processThe Greek symbol (sigma) refers to the amount of variation in a process around the mean value for that process Processes have acceptable upper and lower limitsProcesses have acceptable upper and lower limits Six Sigma is concerned with reducing the variations to get more output within those limitsSix Sigma is concerned with reducing the variations to get more output within those limits

Defining Six Sigma ( ) Defining Six Sigma (6 ) In the chart below, 64.6% of the measures are between the upper and lower limitsIn the chart below, 64.6% of the measures are between the upper and lower limits This is a 1 processThis is a 1 process Reducing the variations in the process will bring a higher percentage within the acceptable limitsReducing the variations in the process will bring a higher percentage within the acceptable limits

The 6 Difference What is the Six Sigma difference ? one typo per page (3 sigma) one typo per page (3 sigma)vs. one typo per library (6 sigma) one typo per library (6 sigma) playing golf at a 6 sigma level means missingplaying golf at a 6 sigma level means missing one putt every 163 years

Brainstorming Exercise: Where are the variations? Identify six processes in your business that have variations in the output. (HINT: manufacturing, purchasing, inventory, forecasting, product design, customer service, accounting...)

The Six Sigma Roadmap Five steps to implementing Six Sigma 9Five steps to implementing Six Sigma 9 1.Identify core processes and key customers 2.Define customer requirements 3.Measure current performance 4.Prioritize, analyze, implement improvements 5.Expand and integrate the Six Sigma system

Organizing Six Sigma Key Roles 10Key Roles 10 –Leadership Team –Champions –Mentors (master black belts) –Experts (black belts) –Participants (green belts)

Key Six Sigma Roles The Leadership GroupThe Leadership Group –Be actively involved from outset –Develop a strategic plan –Establish Roles and Infrastructure –Establish supporting policies Job descriptionsJob descriptions Reward/Compensation systemsReward/Compensation systems Career pathsCareer paths

Key Six Sigma Roles The Leadership Group (cont’d)The Leadership Group (cont’d) –Select projects –Prioritize projects and allocate resources –Facilitate, guide, manage

Key Six Sigma Roles The Champions 17The Champions 17 –Find appropriate projects –Represent projects to the leadership –Provide coaching –Ensure allocation of resources –Resolve issues

Key Six Sigma Roles Master Back BeltsMaster Back Belts –Coach and support project leads –Work as a change agent –Train others in the use of six sigma tools

Key Six Sigma Roles Black BeltsBlack Belts –Highly trained experts –Manage project leaders –Lead project teams

Key Six Sigma Roles Green BeltsGreen Belts –Trained in the use of statistical tools –Lead project teams –Participate on project teams

A Real-World Example General Electric’s 6 results:General Electric’s 6 results: - reduced invoice defects and disputes with a key customer by 98% - saved $1 million annually in contract review process (GE Capital) - developed breakthrough technology that reduced medical scan times to 30 seconds from 3 minutes - improved a key call center performance measure from 76% 99% - reduced vibrations in Power System rotors by 300% - saved $320 million in less than two years, $750 million in three years

Exercise 1)If you have a 2 sigma process, what percentage of the output is within spec ? 2)Six Sigma originated at Honeywell –T/F 3)Six Sigma focuses on the customer –T/F 4)What does the Greek symbol sigma represent? 5)Six Sigma utilizes fact-based decision making – T/F 6)Continuous improvement requires feedback and adjustments to ensure achievement of business objectives – T/F ANSWERS: 1) 94.38%, 2) False, 3)True, 4)Standard deviation, 5) True, 6) True ANSWERS: 1) 94.38%, 2) False, 3)True, 4)Standard deviation, 5) True, 6) True

Six Sigma Summary Project-driven management philosophyProject-driven management philosophy Relies on fact-based decision making (statistical tools)Relies on fact-based decision making (statistical tools) Requires top-down supportRequires top-down support Requires an infrastructure that can support quality project managementRequires an infrastructure that can support quality project management Has been shown to have markedly positive impacts on business performanceHas been shown to have markedly positive impacts on business performance

Suggested Reading Breyfogle, F.W., III, Cupello, J.M., & Meadows, B. (2003). Managing Six Sigma: A Practical Guide to Understanding, Assessing, and Implementing the Strategy that Yields Bottom-Line Success. New York, New York: John Wiley & Sons.Breyfogle, F.W., III, Cupello, J.M., & Meadows, B. (2003). Managing Six Sigma: A Practical Guide to Understanding, Assessing, and Implementing the Strategy that Yields Bottom-Line Success. New York, New York: John Wiley & Sons. Eckes, George. (2001) The Six Sigma Revolution: How General Electric and Others Turned Process into Profits. New York, New York: John Wiley & Sons.Eckes, George. (2001) The Six Sigma Revolution: How General Electric and Others Turned Process into Profits. New York, New York: John Wiley & Sons. Eckes, George. (2003) Six Sigma for Everyone. New York, New York: John Wiley & Sons.Eckes, George. (2003) Six Sigma for Everyone. New York, New York: John Wiley & Sons. Foster, S. Thomas. (2004). Managing Quality: An Integrative Approach. Upper Saddle River, New Jersey: Pearson Prentice Hall.Foster, S. Thomas. (2004). Managing Quality: An Integrative Approach. Upper Saddle River, New Jersey: Pearson Prentice Hall. Kerzner, Harold. (2003). Project Management: a systems approach to planning, scheduling, and controling. Upper Saddle River, New Jersey: Pearson Prentice Hall.Kerzner, Harold. (2003). Project Management: a systems approach to planning, scheduling, and controling. Upper Saddle River, New Jersey: Pearson Prentice Hall. Kinicki, A, & Kreitner, R. (2003). Organizational Behavior: key concepts, skills & best practices. New York, New York: McGraw Hill.Kinicki, A, & Kreitner, R. (2003). Organizational Behavior: key concepts, skills & best practices. New York, New York: McGraw Hill. Pande, P.S., Neuman, R.P., & Cavanagh, R.R. (2000). The Six Sigma Way: How GE, Motorola and other Top Companies are Honing Their Performance. New York, New York: McGraw Hill.Pande, P.S., Neuman, R.P., & Cavanagh, R.R. (2000). The Six Sigma Way: How GE, Motorola and other Top Companies are Honing Their Performance. New York, New York: McGraw Hill.

Bibliography 1)Eckes, George. (2001) The Six Sigma Revolution: How General Electric and Others Turned Process into Profits. p.5. New York, New York: John Wiley & Sons. 2)Eckes, The Six Sigma Revolution. p.6. 3)Ibid. 4)Eckes, The Six Sigma Revolution. pp )Costanzo, Chris. (2002). At Suntrust, Six Sigma is Middle Management’s Baby. American Banker, June 12, 2002, Vol. 167, Issue )Pande, P.S., Neuman, R.P., & Cavanagh, R.R. (2000). The Six Sigma Way: How GE, Motorola and other Top Companies are Honing Their Performance. New York, New York: McGraw Hill. 7)Breyfogle, F.W., III, Cupello, J.M., & Meadows, B. (2003). Managing Six Sigma: A Practical Guide to Understanding, Assessing, and Implementing the Strategy that Yields Bottom-Line Success. p.6. New York, New York: John Wiley & Sons.

Bibliography 8)Vasilash, Gary S. (1999). Missing One Putt Every 163 Years. Automotive Manufacturing and Production, Dec99, Vol. 111, Issue 12. 9)Pande, p )Eckes, The Six Sigma Revolution. p )Pande, chapters 7 and 8. 12)Pande, p )Eckes, George. (2003) Six Sigma for Everyone. pp New York, New York: John Wiley & Sons. 14)Pande, pp )Gale, Sara F. (2003). Building Frameworks for Six Sigma. Workforce, May2003, Vol. 82, Issue 5.

Bibliography 16)Kerzner, Harold. (2003). Project Management: a systems approach to planning, scheduling and controlling. Upper Saddle River, New Jersey: Pearson Prentice Hall. 17)Pande, p )Eckes, The Six Sigma Revolution. p )Pande, pp )Ibid. 21)Foster, S. Thomas. (2004). Managing Quality: An Integrative Approach. P.404. Upper Saddle River, New Jersey: Pearson Prentice Hall. 22)Eckes, The Six Sigma Revolution. p )Foster, pp )Breyfogle, p.146.