Six Sigma

What is Six Sigma??  A statistical concept that represents amount of variation in a process relative to a specification  % defect free  A business philosophy focused on continuous improvement of key processes through the use of thorough process analysis to achieve operational excellence

What’s So Bad About Variation?  In world-class organizations, working to improve quality is not an extracurricular activity. It is a minimum requirement. - Chang, Labovitz, and Rosansky

DPMO  1 sigma = 68.27% = 697,700 dpmo  3 sigma = 99.73% = 66,810 dpmo  5 sigma = % = 233 dpmo  6 sigma = % = 3.4 dpmo Note: estimates of long-term sigma values

Where did Six Sigma Come From?  Motorola started it  GE made Six Sigma famous  Based on the QI tools learned in this course, plus other tools  Need for companies to become more competitive

 Motorola has been implementing Six Sigma throughout the organization now for over 15 years, extending the practice beyond manufacturing into transactional, support, and service functions. As a result, we have documented over $16 billion in savings to our own organization!

SS is not Continuous QI  SS has an increased focus on quality as defined by the customer and uses a “sigma score”  SS uses rigorous statistical techniques  SS prioritizes improvement projects and resources based on the company’s strategic initiatives  It is TQM with a stats focus – quantitative and qualitative

How to Do SS  Management commitment  Focus on the Customer  Structured Training  Encourage open discussion about processes and defects  Gather data, analyze it, make improvements (DMAIC) on a project basis  Create a team-based, cooperative environment

The Training  Black Belt  Green Belt  (Yellow Belt)  Master Black Belt  Champion  Executive Sponsors

Typical Structure for SS at GE

SS Deployment (from B&W)  Business alignment planning  First wave of BB training  Second wave of BB and GB training  Infrastructure development to deliver results and sustain culture (a QMS is always best)

SS Method 1 Define 2 Measure 3 Analyze 4 Improve 5 Control

Financial Tool: COPQ  Cost of Poor Quality Internal Failure External Failure Appraisal Prevention (Lost Opportunity)

Internal Failure Costs  Design corrective action  Production rework  Material losses (scrap)  Machine down time  Overtime

Appraisal Costs  Measuring/inspecting product  Receiving inspection  Testing  External and internal auditors

External Failure Costs  Cost of recall/warranty  Liability claims  Customer complaint investigations  Loss of customer loyalty  Effects on reputation/marketplace perception

Prevention Costs  Customer satisfaction surveys  Supplier reviews and ratings  Process validation  SPC  Education/training

Lost Opportunity Costs  Lost sales  Lost customers  Delayed market entry  Environmental and safety issues

Total Cost of Quality  Add up all costs  COPQ Ratio = Total Cost of Quality $ Monthly Cost of Sales $  Examples