What is Six Sigma? Jim Bossert Bank of America

The problem used to be: “How do we get management interested enough in quality to do something about it?” Now the problem is: “How do we get the people to believe that we are really going to do something and stick with it?” Philip B. Crosby

“Nothing flourishes until is is clear in the mind of the thought leaders” “Real comprehension has to exist if the determination is to be obvious” Philip B. Crosby

What is Six Sigma? Six Sigma - The Initiative Process Systematic Approach to Reducing Defects which Affect What is Important to the Customer Tools Qualitative, Statistical and Instructional Devices for “Observing” Process Variables & Their Relationships as well as “Managing” their Character

n Vision n Goal n Philosophy n Metric n Method n Tool n Symbol n Benchmark n Value n Vision n Goal n Philosophy n Metric n Method n Tool n Symbol n Benchmark n Value  What is Six Sigma ? A level of performance that reflects significantly reduced defects in our products A statistical measurement of our process capability, as well as a benchmark for comparison A set of statistical “tools” to help us measure, analyze, improve, and control our processes A commitment to our customers to achieve an acceptable level of performance.... A means to stretch our thinking with respect to quality Sigma is a letter in the Greek Alphabet

Six Sigma - Goal (DPMO Distribution Shifted ± 1.5  )   PPM Process Capability Process Capability Defects per Million Opp.

THE GOALS OF SIX SIGMA: Defect Reduction Yield Improvement Improved Customer Satisfaction Higher Net Income

IRS - Tax Advice (phone-in) (140,000 PPM) 7 Sigma Scale of Measure 1,000, ,000 10,000 1, PPM Restaurant Bills Doctor Prescription Writing Payroll Processing Order Write-up Journal Vouchers Wire Transfers Airline Baggage Handling Purchased Material Lot Reject Rate Domestic Airline Flight Fatality Rate (0.43 PPM) (with ± 1.5  shift) Best-in-Class Average Company © 1994 Dr. Mikel J. Harry - V4.0 Where does industry stand ? © 1994 Six Sigma Academy

What’s it Based On ? Customer..... Anyone Who Receives Product, Service, or Information Opportunity..... Every Chance to Do Something Either “Right” or “Wrong” Successes Vs. Defects..... Every Result of an Opportunity Either Meets the Customer Specification or it Doesn’t

Strategy Know What’s Important to the Customer Reduce Defects Center Around Target Reduce Variation Breakthrough Improvement Not Incremental!

Profit Total Cost to manufacture and deliver products Profit Theoretical Costs Cost of Poor Quality COPQ Why Focus on COPQ? Price Erosion Theoretical Costs Cost of Poor Quality COPQ Profit Theoretical Costs COPQ Which Feels Better??

The Cost of Poor Quality (COPQ) “Iceberg” Engineering change orders Traditional Quality Costs Lost Opportunity Hidden Factory Lost sales Late delivery Long cycle times Expediting costs Excess inventory Additional Costs of Poor Quality (intangible) (tangible) (Difficult or impossible to measure) Lost Customer Loyalty More Setups Scrap Rework Inspection Warranty Rejects Administration / Disposition Concessions Average COPQ approximately 15% of Sales

Risk of Loss Risk of Loss Extent of Knowledge (Derived from Observation & Measurement) Extent of Knowledge (Derived from Observation & Measurement) “ “When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind. It may be the beginning of knowledge, but you have scarcely, in your thoughts, advanced to the state of science.” Lord Kelvin Knowledge is the Foundation

Science Art Discipline Chaos Knowledge Where Are Your Processes Today? Directions of Knowledge Good Decisions Fire Fighting Waste

Leadership Commitment, Competence & Involvement Methodology & Tools Data Driven Statistically Validated Best People 100% Dedicated to Defect Reduction Project Focused What Makes Six Sigma Different?

Collecting Data Communicate in an objective manner To collect quantifiable facts about a problem or opportunity To establish baseline information about a problem or process To facilitate cost benefit analysis of proposed solutions To compare before and after - quantify the impact of a solution To justify extension of the solution Data Builds Knowledge The Importance of the Common Language of Data

What do I need to know to make Decisions? How do I need to see the information? What tool will be used? What data do we need? Where is the data located? Planning Execution Questions to be Answered Drive Data Collection

STATISTICS IS COMMUNICATING INFORMATION FROM DATA -Schilling STATISTICS IS NOT A SUBSTITUTE FOR ENGINEERING JUDGMENT - Dodge STATISTICAL THINKING WILL ONE DAY BE AS NECESSARY FOR EFFICIENT CITIZENSHIP AS THE ABILITY TO READ AND WRITE. -H.G. Wells DATA IS NOT KNOWLEDGE. IN ORDER TO GIVE UP ITS KNOWLEDGE, DATA MUST BE TORTURED. STATISTICS ARE THE IMPLEMENTS OF TORTURE. Mikel Harry

Old Philosophy of QualityNew Philosophy of Quality LSLUSLLSLUSL Area outside the specification limits represent quality losses. Conformance to Specifications “Goal Post Mentality” Deviation from the target represents quality losses. Taguchi’s Loss Function Average Loss = k[  2 + (y - T) 2 ] “Variation is Evil” -Some Production Guy No the Target The Changing Quality Philosophy

The highest quality products and services are the lowest cost products and services

Breakthrough Strategy Characterization Phase 1: Measure Phase 2: Analyze Optimization Phase 3: Improve Phase 4: Control ,000, ,000 10,000 1, Sigma Scale of Measure PPM The Breakthrough Methodology Define the problem... DMAIC to the Rescue!

THE NATURE OF THE PROBLEM Six Sigma methodology identifies processes that are off-target, and/or have a high degree of variation, and corrects the process Six Sigma methodology identifies processes that are off-target, and/or have a high degree of variation, and corrects the process Off-TargetVariation On-Target Center Process Reduce Spread X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X

Another View LSL USL LSL Off-TargetVariation On-Target Center Process Reduce Spread The statistical view of a problem USL LSL LSL = Lower spec limit USL = Upper spec limit Large THE NATURE OF THE PROBLEM - A STATISTICAL LOOK

Insufficient Process Capability Unstable Parts and Material Region of Six Sigma Synergy Inadequate Design Margin Primary Sources of Variation

  Measure of variation and quality Measure of capability of our processes How Do We Measure Variation and Quality?

The Standard Deviation   Point of Inflection 11 11 T T USL p(d) Upper Specification Limit (USL) Target Specification (T) Lower Specification Limit (LSL) Mean of the distribution (m) Standard Deviation of the distribution (s) Upper Specification Limit (USL) Target Specification (T) Lower Specification Limit (LSL) Mean of the distribution (m) Standard Deviation of the distribution (s) 33 The distance between the point of inflection and the mean constitutes a standard deviation. If three such deviations can be fit between the target value and the specification limit, we would say the process has “three sigma capability.”

  Point of Inflection 11 11 T T USL p(d)  33 33 This is a 6 Sigma Process The Standard Deviation

f (X) Y= n X1... XN n Independent n Input-Process n Cause n Problem n Control n Y n Dependent n Output n Effect n Symptom n Monitor The Focus of Six Sigma To get results, should we focus our behavior on the Y or X ? If we are so good at X, why do we constantly test and inspect Y ? Focus on X rather than Y, as done historically

Improvement Strategy (DMAIC) Focus Vital Few x i Y Y Y Y Y x 1, x 2,... x n Vital Few x i Phase Measure Analyze Improve Control Select Product or Process Key Characteristic(s); e.g..., Customer Y Define Performance Standards For Y Validate Measurement System for Y Establish Process Capability of Creating Y Define Improvement Objectives For Y Identify Variation Sources In Y Screen Potential Causes For Change In Y & Identify Vital Few x i Discover Variable Relationships Between Vital Few x i Establish Operating Tolerances On Vital Few x i Validate Measurement System For x i Determine Ability To Control Vital Few x i Implement Process Control System On Vital Few x i SIX SIGMA METHODS GENERATE DATA-BASED DECISIONS

Harvesting the Fruit of Six Sigma Sweet Fruit Design for Manufacturability Bulk of Fruit Process Characterization and Optimization Low Hanging Fruit Seven Basic Tools Ground Fruit Logic and Intuition Process Entitlement We don't know what we don't know We can't act on what we don't know We won't know until we search We won't search for what we don't question We don't question what we don't measure Hence, We just don't know

Breakthrough Strategy Black Belt Certification Program EventCycleActivity DescriptionDuration 1Initial Meeting and Planning Session2 days 21Champion Coordination Meeting1 day 31Session 1: Black-Belt Training 5 days 41On-The-Job Application Exercise 15 days 52Champion Coordination Meeting1 day 62Standard Six Sigma Review1 day 72Session 2: Black-Belt Training4 days 82On-The-Job Application Exercise15 days 93Champion Coordination Meeting1 day 103Standard Six Sigma Review1 day 113Session 3: Black-Belt Training4 days 123On-The-Job Application Exercise15 days 134Champion Coordination Meeting1 day 144Standard Six Sigma Review1 day 154Session 4: Black Belt Training3 days 17Contingency6 days 1st Month 2nd Month 3rd Month 4th Month