1. 1 1 st Middle East Six Sigma Forum Six Sigma – A Strategy for Achieving World Class Performance 7 th to 9 th December, Dubai Sunil Thawani Manager – Business Process Improvement Union National Bank, Abu Dhabi Sthawani@unb.com

2. 2 Purpose of Presentation Share concepts and application of Six Sigma with a case study; Deployment of Six Sigma as a strategy to achieve World Class Performance; Integration of Six Sigma with EFQM framework; Lessons Learnt

3. 3 World Class Performance With 99 % Quality With Six Sigma Quality For every 300000 letters delivered 3,000 misdeliveries1 misdelivery For every week of TV broadcasting per channel 1.68 hours of dead air1.8 seconds of dead air Out of every 500,000 computer restarts 4100 crashesLess than 2 crashes Source: The Six Sigma Way by Peter Pande and Others

4. 4 Based on teachings of Dr. Walter Shewhart, Dr. W. E. Deming & Dr. J. Juran. Process Control; Plan Do Check Act; Common and Special Causes; Improvement can be done project by project Statistical tools Hawthorne Plant Experiences Developed by Bill Smith at Motorola in 1980s What is Six Sigma ?

5. 5 What Is Six Sigma? Degree of variation; Level of performance in terms of 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  Sigma is a letter in the Greek Alphabet

6. 6 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.

7. 7 Sigma Level Defects Per Million Opportunities Rate of Improvement  1  690,000  2  308,0002 times  3  66,8005 times  4  6,21011 times  5  23027 times  6  3.468 times

8. 8 Bank of America – SS Experience Goals – # 1 in Customer Satisfaction – Worlds’ most admired company – Worlds’ largest bank Strategy - “ Develop business process excellence by applying voice of the customer to identify and engineer critical few business processes using Six Sigma Created Quality & Productivity Division Source: Best Practices Report

9. 9 Bank of America – SS Experience Wanted results in 1 year; Hired more than 225 MBB & BBs from GE, Motorola, Allied Signal for rapid deployment Developed 2 week Green Belt training programs Introduced computer simulation of processes Trained 3767 Green Belts, certified 1230 - Minimum value target per GB project – $ 250K Trained 305 Black Belts, certified 61 - Minimum value target per BB project – $ 1 million Trained 43 MBB, 1017 in DFSS 80 % of Executive Team trained in GB and 50 % Certified

10. 10 Bank of America – SS Experience Results of first 2 years: Reduced ATM withdrawal losses by 29.7 % Reduced counterfeit losses in nationwide cash vaults by 54% Customer delight up 20%; Added 2.3 million customer households 1.3 million fewer customer households experienced problems Stock value up 52% Y 2002 – BOA named Best Bank in US & Euro money's Worlds Most Improved Bank

11. 11 Revenue Capital Utilization Return on Assets Profits Quote Time Defect Rate Waste On Time Delivery Inventory; Machine Utilization Strategically: Used by Leadership as a vehicle to develop sustainable culture of Customer, Quality, Value and Continuous improvement. Operationally: By Quality Managers to reduce cycle times, costs, errors, rework, inventory, equipment downtime. Deployment across all types of processes and industries - worldwide

12. 12 Six Sigma & EFQM/ DQA Framework Results Innovation and Learning Encouraging & enabling people To participate in Improvement Personally actively Involved in improvement Recognizing Individual & Team effort Identifying & designing processes to deliver strategy Developing Team skills Aligning Individual & Organization Goals Recognizing People Establishing Process management System to be used Implementing Process Measures Improving processes to satisfy and Generate value For customers Delivery, Value, reliability Repurchase satisfaction Response Time to customers Time to Market Satisfaction Involvement Recognition Competency Productivity Utility consumption Timeliness Inventory Process cycle time Process costs Defect rates Productivity Cash flow Maintenance cost Return on assets Gross margins Net profit Sales Market Share Leadership Policy & Strategy People Processes People Results Society Results Partnerships Resources Key Perf Results Customer Results Enablers

13. 13 Who is Implementing Six Sigma At least 25% of the fortune 200 claim to have a serious six sigma program - Michael Hammer. Financial - Bank of America, GE Capital, Electronics - Allied Signal, Samsung, Sony Chemicals - Dupont, Dow Chemicals Manufacturing - GE Plastics, Johnson and Johnson, Motorola, Nokia, Microsoft, Ford. Airline - Singapore, Lufthansa, Bombardier And hundreds of others in Americas, Europe, Sub Continent.

14. 14 Six Sigma Results CompanyAnnual Savings General Electric$2.0+ billion JP Morgan Chase*$1.5 billion (*since inception in 1998) Motorola$ 16 billion (*since inception in 1980s) Johnson & Johnson$500 million Honeywell$600 million Six Sigma Savings as % of revenue vary from 1.2 to 4.5 % For $ 30 million/yr sales – Savings potential $ 360,000 to $ 1.35 million. Investment: salary of in house experts, training, process redesign.

15. 15 Six Sigma Project Methodology Control Define Measure Analyze Improve  Establish standards to maintain process;  Design the controls, implement and monitor.  Evaluate financial impact of the project  Identify, evaluate and select projects for improvement  Set goals  Form teams.  Collect data on size of the selected problem,  identify key customer requirements,  Determine key product and process characteristic.  Analyze data, establish and confirm the “ vital few “ determinants of the performance.  Validate hypothesis  Improvement strategy  Develop ideas to remove root causes  Design and carry out experiments,  Optimize the process.  Final solutions Project Phases

16. 16 Six Sigma – Case Study Service Organisation Background M/s Alpha Inc. manages out bound cargo from a distribution centre to different stores. Deliveries made on trucks - owned and hired. Customers dissatisfied at delivery schedules. Leadership decision to deploy Six Sigma; Team of 1 Black Belt and 3 Green Belts formed Sponsor of the project – Distribution Manager

17. 17 Define - Critical to Quality (CTQ) Focus on customers generating annual revenue of USD 400,000/-. Customer needs Improved delivery performance Level 1 CTQTimely delivery Level 2 CTQOn time delivery to schedule Level 3 CTQDelivery within +/- 1 hour of scheduled delivery time Current process sigma level - 2.43 or 175889 DPMO

18. 18 Define - Goal Statement Reduce number of delayed deliveries by 50 % by 31st December Y 2002 to better meet customer requirement of timely delivery defined as within +/- 1 hour of scheduled delivery.

19. 19 Define - Performance Standards Output unitA scheduled delivery of freight Output characteristic Timely delivery Project Y measureProcess starts when an order is received Ends when goods are received & signed for at customers desk. Process measurement – Deviation from scheduled delivery time in minutes. Specification limitsLSL = -60 minutes USL= +60 minutes TargetScheduled time or zero minutes deviation DefectDelivery earlier or later than 1 hour. No. of defect opportunities per unit 1 opportunity for a defect per scheduled delivery of freight.

20. 20 Define - SIPOC Diagram S upplier Stores Manager I nput Stores Order P rocess Steps (high level) Receive order Plan delivery Dispatch Driver with goods Deliver goods to stores Receive delivery O utput Received freight with Documents C ustomer Store Manager Detailed process maps drawn

21. 21 Measure and Analyze Driver and Distance identified as key factors influencing delivery performance. Driver selected for focus. Potential root causes as to why Driver influenced the time: – Size of the vehicle – Type of engine – Type of tyres – Fuel capacity

22. 22 Experiments designed and conducted using truck type and tyre size. Findings: – Larger tyres took longer time at certain routes where area was cramped and time lost in maneuvering. – High incidence of tyre failures since tight turns led to stress on tyres thus increasing number of flat tyres. Team modified planning of dispatch process by routing smaller trucks at more restrictive areas. Improve

23. 23 Test implementation. Process sigma level up from 2.43 or 175889 DPMO to 3.94 or 7353 DPMO. Performance still fell short of best in class 4.32 or 2400 DPMO. Improvement led to significant customer satisfaction. Process continually monitored and data on new cycle times, tyre failure collected as per defined methods and frequency, analysed and monitored. Customer satisfaction measured and monitored. Control

24. 24 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;

25. 25 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.

26. 26 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

27. 27 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 (25% class room, 75 % application) Creating a dedicated organisation for problem solving (85/50 Rule). What Makes Six Sigma Different?

28. 28 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

29. 29 Thank you Q & A