1

Greenbelt TrainingGreenbelt Training

66 Overview Overview

2

Concept of Competitive Quality

Historically, Quality has been defined as“ Meeting the Specifications”“ Fitness for Use”

Today the most acceptable definition of Quality is

“ Meeting the Customer’s Requirements”

3

Concept of Competitive Quality

Will just meeting the requirements ensure future Market share ?

NO !

4

Concept of Competitive Quality

The definition of Competitive Quality is :

“ Product, Process or Service Uniformity around a Target Value”

The most noticeable difference in this operational definition of Quality is that it requires

CONTINUOUS IMPROVEMENT

The most noticeable difference in this operational definition of Quality is that it requires

CONTINUOUS IMPROVEMENT

6

Uniformity Around A Target Value

WHY CHANGE ?

The reason is simple, to remain or become competitive and thereby increase Profitability and Market Share

The reason is simple, to remain or become competitive and thereby increase Profitability and Market Share

7

The Impact of Added Inspection

1,000,000 ppm

3.4 ppm

6 ppm

If the likelihood of detecting the defect is 70% and we have 10 consecutive inspectors with this level of capability, we would expect about 6 escaping defects out of every 1,000,000 defects produced.

You can save your self by producing quality not by Inspection

You can save your self by producing quality not by Inspection

8

1

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) 3

1 Sigma - 68%

2 Sigma - 95%

3 Sigma - 99.73 %

(X – X)2

n =

Sigma - The Standard Deviation

9

Target

CustomerSpecification

Target CustomerSpecification

1

2

3

A 3 process because 3 standard deviationsfit between target and spec

3

0.27% Defects up-to 6.6 %

Before

12

34

56

After

6 !No Defects!

Reducing Variability Is The Key To Six Sigma

What is Six Sigma

10

Philosophy of Six Sigma

Six Sigma focuses on : Continuous Improvement of

Processes

Defect Prevention through the use of Statistical tools as opposed to Defect Detection through inspection.

11

66 Tools

MetricsProcess

• Focus and commitment to quality must be driven by top leadership

• Leadership must be fully engaged and accountable for success

• Focus is on statistical process capability and process variation analysis

• Products must be designed to be manufactured within process capability

• Process capability must be quantified

• Goal is defect free products and processes

• Focus is on true capability (rolled throughput yield) rather than end of line yield

• All decisions must be data driven

• Six Sigma provides classical problem solving tools enhanced with a fundamental knowledge of statistics and variation

Leadership

The Many Facets of Six Sigma

12

20,000 lost articles of mail per hour

Unsafe drinking water for almost 15 minutes each day

5,000 incorrect surgical operations per week

Two short or long landings at most major airports each day

200,000 wrong drug prescriptions each year

No electricity for almost seven hours each month

Seven articles lost per hour

One unsafe minute every seven months

1.7 incorrect operations per week

One short or long landing every five years

68 wrong prescriptions per year

One hour without electricity every 34 years

99.99966% Good (6 Sigma)99% Good (3.8 Sigma)

How Good is Six Sigma

13

Top Line Growth - satisfied customers are repeat customers

Bottom Line Growth - it costs less to do it right the first time

What does Six Sigma means to [Company Name]……

14

The Six Sigma Define-Measure-Analyze-Improve-Control (DMAIC) model consistently yields rapid, measurable, benefits

GE Results:• Implemented 6 efforts in late 1995.

• Targets savings over $10 B during next few years by reducing its current COPQ ($7B /yr.) to less than $1B annually by:

- Reducing scrap parts.- Reducing reworked parts.- Rectifying transaction mistakes.

GE Results:• Implemented 6 efforts in late 1995.

• Targets savings over $10 B during next few years by reducing its current COPQ ($7B /yr.) to less than $1B annually by:

- Reducing scrap parts.- Reducing reworked parts.- Rectifying transaction mistakes.

Motorola Results:• Implemented 6 program in 1987 when it was performing at a 4 level.

• By 1992 it averaged a 5.21 level.

• Sales productivity increased from $68.9K to $110.1K per employee and savings due to US operations improvements were over $2.2 Billion.

Motorola Results:• Implemented 6 program in 1987 when it was performing at a 4 level.

• By 1992 it averaged a 5.21 level.

• Sales productivity increased from $68.9K to $110.1K per employee and savings due to US operations improvements were over $2.2 Billion.

AlliedSignal Results:

• Implemented 6 in 1994 for Operations.• Initial 4 months, 600 projects reduced defects by 68%.• Saved $175M at bottom line in ‘95; $500M in ‘98 ! (not including overhead, inventory, indirect charges, or avoidance.• Over $2B in savings realized since 1992.• Fastest rate for implementing 6 yet!

AlliedSignal Results:

• Implemented 6 in 1994 for Operations.• Initial 4 months, 600 projects reduced defects by 68%.• Saved $175M at bottom line in ‘95; $500M in ‘98 ! (not including overhead, inventory, indirect charges, or avoidance.• Over $2B in savings realized since 1992.• Fastest rate for implementing 6 yet!

Avery Dennison Results:

• Implemented 6s in March, 1998.

• 52 completed projects

Forecast ‘99 savings = $18,500,000

Actual savings (through 2Q)=$5,800,000

• 130 projects planned or in progress

Annualized savings = $35M

‘99 impact = $12.3M

Avery Dennison Results:

• Implemented 6s in March, 1998.

• 52 completed projects

Forecast ‘99 savings = $18,500,000

Actual savings (through 2Q)=$5,800,000

• 130 projects planned or in progress

Annualized savings = $35M

‘99 impact = $12.3M

Industry Overview

15

40%

35%

30%

25%

20%

15%

10%

5%

3.4 233 6210 66,807 308,537 691,462

Cost of Failure (% Revenue)

Defects per Million

6 5 4 3 2 1Sigma

A $4.5 Million Cost Reduction Opportunity!

If [Company Name] is a 3 Company, Cost of Failure

is Estimated to be at Least 15% of Revenue

Cost Opportunity

16

Mostly variable cost productivity and asset utilization

550700

2000

1450

200380 450

170

1500

320

1050

-30

-500

0

500

1000

1500

2000

2500

1996 1997 1998 1999

$ M

illio

n

CostBenefits

Net

Six Sigma Cost and Benefits

Up front investment and staying power Significant impact on the bottom line

Up front investment and staying power Significant impact on the bottom line

For Reference only Six Sigma Saving in GE

17 . . . Six Sigma Reveals hidden facts and capabilities. . . Six Sigma Reveals hidden facts and capabilities

Lost Opportunity

Lost sales

Late delivery

Engineering change orders

Long cycle times

Expediting costsExcess inventory

Hidden Quality Costs

(intangible)

(Difficult to measure)

Lost Customer Loyalty

More Setups

Customer Sat

Field Modifications

Customer Productivity LossLengthy Installs

Employee Morale, Productivity, Turnover

T&L

Overtime 15 % COQ

Traditional Quality Costs

Scrap

Rework

Inspection

Warranty

Rejects

(tangible)

(Easily Identified)

1.5 % COQ

How much Cost Reduction is possible

18

PPMPPM

ProcessProcessCapabilityCapability

2

3

4

5

6

308,537

66,807

6,210

233

3.4Defects Per Million Defects Per Million

OpportunitiesOpportunities

Distribution Shifted ± 1.5s

Six Sigma as a Goal

19

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Sweet FruitSweet Fruit Design for Manufacturability

Bulk of FruitBulk of FruitProcess Characterization and Optimization

Low Hanging FruitLow Hanging FruitSeven Basic Tools

Ground FruitGround FruitLogic and Intuition

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

3 s Wall - Demand improvement3 s Wall - Demand improvement

4 s Wall - Must Improve Internally4 s Wall - Must Improve Internally

5 s Wall - Must Address Designs5 s Wall - Must Address Designs

The walls crumble faster when addressing process issues

Harvesting the Fruit of Six Sigma

20

PracticalProblem

PracticalProblem

StatisticalProblem

StatisticalProblem

StatisticalSolution

StatisticalSolution

PracticalSolution

PracticalSolution

Rejects for bad estimation of cost =20% averageRejects for bad estimation of cost =20% average

• Process characterization data set is non-normal.• After normalization: ST = 5.50 LT = 2.36

• Process characterization data set is non-normal.• After normalization: ST = 5.50 LT = 2.36

• DOE Results:- Technology - 52%- Labour rate - 24%- Interaction - 19%

• DOE Results:- Technology - 52%- Labour rate - 24%- Interaction - 19%

• Install standard measurement system for each technology• Reward & recognition policy to retain experienced labours in order to increase productivity

• Install standard measurement system for each technology• Reward & recognition policy to retain experienced labours in order to increase productivity

Attacking the Problem

21

The Focus of Six Sigma

Y Dependent Output Effect Symptom Monitor

X1 . . . Xn

Independent Input-Process Cause Problem Control

YY f(X)f(X)

Would you control shooter or target to get the Gold Medal at Olympics

22

YY == FF (x)(x)

OUTPUT SIGNAL IN-PROCESS PARAMETERSRELATIONSHIP or EQUATION

THAT EXPLAINS Y IN TERMS OF X

Distance traveled Car speed, traveling timeDetermined by

Money to Spend Income, Commitments, Credit Rating

Determined by

OUTPUT (Y) IS DETERMINED BY THE VALUES OF THE IN-PROCESS PARAMETERS (X’s)

Controlling the Output

23

YY == FF (x)(x)

Car speed, traveling timeCar Speed

Selection of CDs available

Traveling timeNumber of passengers

Amount of wear on brakes

Amount of gas in the tankTime since last service

WeatherCar inside temperature

Selection of CDs available

Number of passengers

Car inside temperature

Amount of wear on brakes

Amount of gas in the tankTime since last service

Weather

Car Speed

Traveling time

OUTPUT SIGNAL IN-PROCESS PARAMETERSRELATIONSHIP or EQUATION

THAT EXPLAINS Y IN TERMS OF X

Distance traveledDetermined by

Understanding the FF

gives insight into the right (x)(x)S

Controlling the Output

24

UNDERSTANDING OF FF

SELECT IMPORTANT (x)(x)SOUTPUT SIGNAL, YY

QUANTIFY WITHCORRELATION

VERIFYUNDERSTANDING

OF FF

How we’ve been taught to search for FF

Controlling the Output

YY == FF (x)(x)

25

YY == FF (x)(x)POOR OR NO

UNDERSTANDING OF FF

BRAINSTORM (x)(x)SOUTPUT SIGNAL, YY

NO CORRELATION

TRY AGAIN

Thousands of (x)(x)s to choose from.......

Without an understanding of FF - it’s your opinion vs mine !

Controlling the Output

26

Capturing the measurement on a Customer unit basis

Understanding our output as the Customer sees it

Learning from variance in performance on Customer Y

Unlocking the process keys that control Customer impact

Verify Correlation to find FF

YY == FF (x)(x)

Model

27

What are these opportunities…..

Cost of QualitySPANCustomer Satisfaction

28

Sigma Level Defects/MillionOpportunities Cost of Quality

<1% of Sales

5 - 15% of Sales

15 - 25% of Sales

25 - 40% of Sales

Not Competitive

3.4($0.3b)World Class

233 ($4.5b)

6210 ($7b)Industry Average

66,800 ($12b)

308,000

6

5

4

3

2

Cost of Quality

29

Order-to-Delivery Time vs Customer Want Date

Early Late

Customer Want DateOn Time

0-15 days

5% of orders are >25 days

late to request

+25 days

5% of orders are >15 days

early to request

40 Day Span

SPAN

30Focus on Average can turn your business redFocus on Average can turn your business red

Average River Depth - 4ft

Difference between Mean & variance

31Customers feel variance, not the meanCustomers feel variance, not the mean

• Using mean-based thinking, we improve average performance by 29%, and we break out the champagne ...

• But our customer only feels the variance and cancels the next order!

Delivery cycle time (days)What WE see

What customers feel

11.2 15.8

Insight Through Variance

Baseline Improved?

MeanStd Dev

277

154

186

2362

24265

11.29.0

122413

716

820251410113016

15.87.0

Outside In Thinking

32

Customer Process

[Company Name] Process

CA B

Customer’s View How did [Company Name] influence my

AC Performance?Missing data during download

[Company Name]’s View

How did I do against my

AB Obligations?Missing data during logical execution

The Eye of the Beholder

33

6 Sigma

Methods

Quality

OperationsBusiness Development

IT

Admin / Transport

CRT

Finance

... Can Be Applied To Every Business Function

Where in [Company Name]…

HR Training

Projects

34

Why Now?

Customers & Competitors are adopting elements of this business improvement process:– Customers:

• HP • Intuit

– Competitors:• Wipro Spectramind• EXL• Hughes

Driven by Customer Excellence at Lowest CostDriven by Customer Excellence at Lowest Cost

35

Six Sigma Overview Pre-Tea What is Six Sigma

Overview of ScopeLinkage to Vision

Roles and Responsibilities as Leaders/ Sponsor Pre-Tea

Criteria for Project Selection Pre-Tea

Criteria for BB/GB Selection Post-Tea

Introduction to Process Post- Tea

Table of Contents

36

Train….Apply…..

Review…..

EveryParticipant arrives

to training with a welldefined project withmeasurable savings

opportunities!

EveryParticipant arrives

to training with a welldefined project withmeasurable savings

opportunities!

Integrate training with metrics performance to maximize the bottom line impact. Integrate training with metrics performance to maximize the bottom line impact.

Implementation Strategy

37

Program Direction, Support,

and Marketing

Organizational“Buy-in”

Change Agentsand

Process Leaders

Program is structured to build a self-sustaining critical mass of process improvement competencies.

Program is structured to build a self-sustaining critical mass of process improvement competencies.

Green Belt

Leadership

Process Owner

Black Belt

Management

DefineDefine

MeasureMeasure

AnalyzeAnalyze

ImproveImprove

ControlControl

Six Sigma Program Structure

38

1. Lead the Six Sigma efforts overall in their BU

2. Provide Strategic Direction for Six Sigma Project teams

3. Track the Project’s Progress, Offer rewards as appropriate

4. Help the Black Belt / Green Belt overcome roadblocks, including seeking collaboration

5. Help find resources for the team as Needed, Allocate resources when authorized

6. Keep Black Belt / Green Belt focused on desired results

7. When immovable objects block the road, Redirect Project / Team activities

8. Serve as the Team’s Champion from Top-To-Bottom of Entire Business

9. Ensure that Project Solutions are well implemented, Gains are sustained and on-going responsibility transfers to Process Owner

Champion / Functional Leader Role

39

• Champion/Sponsor/Functional Leader– The Champion Or Sponsor Is The Person(s) Who Is Accountable For And Sanctions A Six Sigma Project. The

Champion Or Sponsor Is Involved In Project Team Chartering, Reviews Progress, Helps Remove Organizational Barriers To Project Success, And Is Often The Decision-Maker For Approval Of Final Recommendations

• Master Black Belt– Full-Time Positions Dedicated To Supporting Six Sigma Efforts. “Expert” Resources To Black Belts And Teams On The

Six Sigma Tools And Techniques Coach And Assist Black Belts And Team Members. Train The Black Belts, Champions, And Employees As Needed.

• Black Belt (Team Leader)– Full-time position where the Black Belt Is Accountable, Usually To The Champion, For The Project / Team Results. The

Black Belt Is Responsible For The Project / Team’s Progress, Provides Leadership In Planning The Project / Team’s Work, Applies Six Sigma Tools And Teaches Team Members How To Apply Them, Often Leads Team Meetings, And Ensures That Decisions Are Made By The Team In A Timely Manner To Meet Its’ Goals

• Green Belt (Team Leader)– Part-time position where the Green Belt Is Accountable, Usually To The Champion, For The Project / Team Results.

The Green Belt Is Responsible For The Project / Team’s Progress, Provides Leadership In Planning The Project / Team’s Work, Applies Six Sigma Tools And Teaches Team Members How To Apply Them, Often Leads Team Meetings, And Ensures That Decisions Are Made By The Team In A Timely Manner To Meet Its’ Goals

• Team Members– Team Members Are The Individuals Who Comprise The Six Sigma Project Team. Team Members Are Individually And

Collectively Accountable For Specific Tasks That Will Result In The Team’s Final Recommendation. When Team Members Are Responsible For A Particular Aspect Of A Project, They Often Will Make Their Own Decisions

Six Sigma Roles

40

Six Sigma Steering Committee - BQC– Assures [Company Name]’s Six Sigma implementation plan:

• Has appropriate resources allocated• Has appropriate scope and is involving all required elements of the organization• Is consistent with [Company Name]’s culture of Exceeding customer expectation

– Develop a communication plan to energize the organization around the Six Sigma implementation.

– Remove roadblocks to facilitate implementation.– Review the status of training / project implementation on a regular basis.– Establish [Company Name]’s business metrics and goals, assess progress towards

goals, analyze strengths and weaknesses of implementation, and provide strategic direction as necessary.

– Verify the financial (as calculated by Finance) impact of projects implemented.– Provide a forum to share best practices within the organization.

BQC – Roles & Responsibility

41

Six Sigma Overview Pre-Tea What is Six Sigma

Overview of ScopeLinkage to Vision

Roles and Responsibilities as Leaders/ Sponsor Pre-Tea

Criteria for Project Selection Pre-Tea

Criteria for BB/GB Selection Post-Tea

Introduction to Process Post- Tea

Table of Contents

42

1. Measure the same as the customer does

2. Determine your capability as the customer sees it

3. Understand the variance in the output signal

4. Find the in-process keys to impact the customer

1. Measure the same as the customer does

2. Determine your capability as the customer sees it

3. Understand the variance in the output signal

4. Find the in-process keys to impact the customer

Start With The Customer

Customer Focus

43

What theCustomer

Wants

ExceedingCustomer

Expectations

What IAm(?)

What IAm(?)

What IAm (?)

Competition ?

UnhappyCustomers

DelightedCustomers

What I Want to be

Performance Continuum

Status Quo

How ImportantIs This GAP?

Customer Focus

44

Objective:

1. What exactly is the problem being addressed in measurable terms?

Need:

2. Why is the project worth doing?

3. Is the project tied to a high importance customer CTQ?

4. What are the consequences of not doing this project?

5. How would it fit with business initiatives and targets?

Scope:

6. Is the scope reasonable? Can the problem be effectively broken apart into projects with reasonable scope?

Expectations:

7. Is there a clear owner in the organization for the problem and for the benefits of improving?

8. What specific goals would project be trying to achieve? What would constitute stretch results?

Project Selection

45

What exactly is the problem being addressed in measurable terms?

PROBLEMThe problem this project is going to solve is:

MEASURABLEIn measurable terms that means:

- Takes too long to submit the quotation to customer

- The productivity is very poor in our company

- There is too much documentation in our work

- Improve time of submission of quotation from the time enquiry comes from customer

- Improve productivity by 15 %

- Reduce the paperwork by 20%

Project Objectives

46

Who are your customers?

What do you provide your customers?

What is critical to quality for your customers?

What are your internal processes for providing your product orservice to customers?

What CTQ is this project addressing?

Project CTQs (Critical to Quality)

47

Why is this project worth doing?

Customer [Company Name]

Why is it important to do now?

Customer [Company Name]

What are the consequences ofnot doing this project?

Customer [Company Name]

What activities have higher orequal priority?

How does it fit with the businessinitiatives and targets?

Project Need

48

Short Term

Long Term

Threat Opportunity

12

3 4

Write down threat and opportunity for short term and long term for the problem you are addressing in your project

Project Need

49

What specific goals must be met? When must they be met?

For each goal, what milestones are critical and must be met?

What would constitute stretch results?

Expectations

50

Project Scoping

51

How far down should I scope my project?Why?

Why?

Why?

Level A

High levelproblem

Level B

InitialContributor

Level C

SecondaryContributor Project

Level???

Why?

When you can no longer answer the “Why?” with confidence, you have arrived at the project level.

Project LevelLevel D

Project Scoping

52

Why?

Why?

Why?

Level A

Level B

Level C

Level D

???

Why?

AHT too high AHT for Pavilion

P.L. is too highAHT for Team -11 is too high AHT for New

Agents is too high

Our project then becomes in measurable terms: Improving the AHT for New Batches from 30 min. to 20 min.

Project Level

Project Scoping

53

What must this projectaccomplish?

What (if anything) is out ofbounds for the team?

What resources are available tothe team?

What (if any) constraints mustthe team work under?

Project Scoping

54

Criteria for BB / GB Selection

Business Acumen

Project and Process Management

Data Affinity

Result Orientation

Relationship Building and Influence

Coaching and Mentoring

Team Leadership

Change Leadership

55

Curriculum for Green Belt

Receive 5 days training

Understand the statistical tools and practice them

Work on the project

Monthly presentation to the Project Sponsor / MBB

Close the project

Clear Green Belt Certification Test

56

Six Sigma Overview Pre-Tea What is Six Sigma

Overview of ScopeLinkage to Vision

Roles and Responsibilities as Leaders/ Sponsor Pre-Tea

Criteria for Project Selection Pre-Tea

Criteria for BB/GB Selection Post-Tea

Introduction to Process Post- Tea

Table of Contents

57

DESIGN

MEASUREIDENTIFY PROCESS ?

DEFINE

VALIDATE

OPTIMISE

CONTROL

IMPROVE

ANALYSE

CAPABLE ?

NO YES

YES

NO

DFSS (DMADOV) vs DMAIC

58

MeasureImprove

DefineAnalyze

PLAN DO

CHECK

&

ACT

Define the project (Y) & make the team & plan

Measure Y & X’s

What’s wrong with X’s

How much and what I can improve

Sustain the improvement

Control

DMAIC Process

59

Six Sigma Tools Used……….

• Project Scoping• SIPOC• Thought Process Mapping• Quality Metrices• Process Mapping• C&E matrix• FMEA• MSA• Concepts of DOE• DOE Strategies & Analysis• DOE• Control Strategies

60

Document Process Map

Begin To Link CTQs to Input Variables

Establish Measurement Capabilities

Establish Baseline Process Capabilities

Measurement Purpose

61

Process Map

Multi-Vari Studies

Experimentation

Control Plans / SPC

Optimized Process

+30 Inputs

8 - 10

4-8

3-6

C&E Matrix and FMEA

Found Critical X’s

Controlling Critical X’s

10-15

All X’s

1st “Hit List”

Screened List

The Funnel Effect

62

Input Measures

The Key Quality And The Key Quality And Delivery Requirements Delivery Requirements

Placed On Your Suppliers.Placed On Your Suppliers.

Output MeasuresProcess Measures

Measures That Are Internal Measures That Are Internal To Your Process. They To Your Process. They

Include Quality And Delivery Include Quality And Delivery Measures Important To Your Measures Important To Your Internal Customers As Well Internal Customers As Well As Waste And Cycle Time As Waste And Cycle Time

Measures. They Are Measures. They Are Correlated To The Pertinent Correlated To The Pertinent

Output Measures.Output Measures.

Output Measures Are Output Measures Are Measures Used To Measures Used To

Determine How Well Determine How Well Customer Needs And Customer Needs And

Requirements Are Met.Requirements Are Met.

Input, Output & Process Measures

64

Suppliers Customers

Start

Inputs Outputs RequirementProcess

Develop A Picture Of The Working Process As A Team

Steps to Business Process Mapping

65

ProcessWhat Must My Suppliers Provide My Process To Meet My Needs?

Input OutputHow Can I Assure That My Process Output Meets The Needs Of My Customer?

STARTBoundary

Boundary

Define the Boundaries of Business Process

66

What You Think It Is... What It Really Is... What It Should Be... What It Could Be...

[Company Name]

Process Map

67

Six sigma View

Final Test

RTY is the probability that a product will pass through the entire process without rework and without any defects. It is the true yield for a product at the completion of all the individual processes.

“The Hidden Factory”

Value Stream optimization is enabled by elimination of the hidden factory.Value Stream optimization is enabled by elimination of the hidden factory.

Industry Overview

Traditional View

68

Develop A Better Understanding of Your Operations

To Know Where To Begin

A B C D

0.80

$2 / Unit

700 un/dy

0.90

$10 / Unit

500 un/dy

0.90

$ 5 / Unit

400 un/dy

0.90

$2 /Unit

200 un/dy

0.583

$19

200 un

RTY

COPQ

Capacity

If this is your process, where do you put your key resources ?

Rolled Throughput Yield

–Rolled Throughput Yield (RTY) -- A true estimate of process yield

69

A B C D

0.90

$ 5 / Unit

400 un/dy

0.583

$19

200 un

Project # A Project # B Project # C

0.80

$2 / Unit

700 un/dy

0.90

$10 / Unit

500 un/dy

0.90

$2 /Unit

200 un/dy

RTY

COPQ

Capacity

Project Prioritization

70

Can you always measure …100% or less

What is Population ……what is sample?

Roll of statistics in measurement (descriptive / Inference)

1. We only use experience, not data.2. We collect data, but just look at the numbers.3. We group the data so as to form charts and graphs.4. We use census data with descriptive statistics.5. We use sample data with descriptive statistics.6. We use sample data with inferential statistics.

Role of Statistics

71

Types of data Measures of the Center of the data

Mean Median Mode

Measures of the Spread of Data Range Variance Standard Deviation

Normal Distribution and Normal Probabilities

Basic Statistics

72

Mean: Arithmetic average of a set of values Reflects the influence of all values Strongly Influenced by extreme values

Median: Reflects the 50% rank - the center number after a set of numbers has been sorted from low to high. Does not include all values in calculation Is “robust” to extreme scores

The mean and median will be affected by the nature of the distribution of numbers

Mode - Most Common Observation

Why would we use the mean instead of the median in process Improvement?

x xii

n

1

n

Measures of Central Tendency

73

1101009080706050403020

100

50

0

C1

Fre

que

ncy

Comparison of Distributions.

Sketch in the Means and Medians on each Distribution.Sketch in the Means and Medians on each Distribution.

Negative Skew Positive Skew

Symmetric Distribution

80706050403020100

300

200

100

0

C3

Fre

que

ncy

Comparison of Distributions.

Tail

13012011010090807060

300

200

100

0

C2

Fre

que

ncy

Comparison of Distributions.

Tail

Different Distributions

74

= Sample Standard Deviation

X = Sample Mean

= Population Mean

= Population Standard Deviation

Examples of POPULATION:

Entire IndiaAverage Literacy rate

Examples of SAMPLE:

500 people randomly selected

Population Parameters vs Sample Statistics

75

Population Mean =

X

N

ii

N

1

Sample Mean

Population Standard Deviation

= S =(X )

N

i2

i=1

N

Sample Standard Deviation

= x =x

ni

i =1

n

= s =(X )

n - 1

-- 2

i =1

N

X

Computational Equations

^

i

76

Range: the distance between the extreme values of a data set. (Highest - Lowest)

Variance ( ): the Average Squared Deviation of each data point from the Mean.

Standard Deviation ( ): the Square Root of the Variance.

The range is more sensitive to outliers than the variance.

Measures of Variability

77

(X )

N -1

i2

i=1

N

X

(X )

N -1

i2

i=1

N

X

X X - X (X - X)2

1 22 13 34 55 46789

10

Mean square

1.581139

Variance

Standard Deviation

Sum

Calculating Standard Deviation

78

Attribute / Discrete Data (Qualitative) Categories Yes, No Go, No go Operator 1, Operator 2, Operator 3 Pass / Fail

Variable / Continuous Data (Quantitative) Decimal subdivisions are meaningful Time, Pressure, Conveyor Speed

Types of Data

79

“While every process displays Variation, some processes display controlled variation, while other processes display uncontrolled variation (Walter Shewhart).

Controlled Variation is characterized by a stable and consistent pattern of variation over time. Associated with Common Causes.

Uncontrolled Variation is characterized by variation that changes over time. Associated with Special Causes.

Process A shows controlled variation. Process B shows uncontrolled variation

2520151050

75

70

65

Sample Number

Samp

le Me

an

X-Bar Chart for Process A

X =70.91

UCL=77.20

LCL=64.62

2520151050

80

70

60

50

Sample Number

Samp

le Me

an

X-Bar C hart for P roces s B

X =70.98

UCL=77.27

LCL=64.70

Variation

Special Causes

80

Company Process

ALL DATAn = 2000

0 (-11, 38) 49Sample Size , Median (Min, Max) SPAN

The most powerful potential process labels are those that are known at the beginning of the process.

Customer Type

Geography

Etc.

Stratification

81

ALL DATAn = 2000

0 (-11, 38) 49

Dashboardn = 899

-2 (-9, 21) 30

Non-Dashboardn = 1101

1 (-12, 70) 82

Northn = 261

-2 (-8, 8) 16

Southn = 297

-2 (-10, 24) 34

Eastn = 103

-1 (-8, 15) 23

Westn = 238

-1 (-8, 23) 32

Commercialn = 119

-2 (-10, 5) 15

Governmentn = 74

-2 (-8, 9) 17

Industrialn = 68

-2 (-7, 40) 47

Credit An = 71

-3 (-10, 0) 10

Credit Bn = 41

0 (-7, 6) 13

Credit Cn = 7

5 (-8, 31) 39

Even with small sets ofData, the median

difference appears.

Stratification

82

Key Learning Points:• The first thing you must do is Separate the Processes. We call this Stratification. If you don’t Stratify

(isolate) the processes, you will have more than one central tendency in the data set and you will never figure out what drives variance.

• If you think you have found the right label to stratify the processes, make sure you double check it to see if there is another label that is influencing the way the data appears. In this case, the real process label was Credit Rating, but it appeared in the Dashboard/Non-Dashboard data. You can double check by cross-cutting the data (look at Credit Rating and Dashboard at the same time in a tabular format), or by continuing to segment to see if the central tendency indicator still moves even though we thought it was an isolated process. In this case, if you continue with Dashboard as an isolated process, you will see the median move for various segmentations (especially Credit Rating).

• Once you have Stratified (isolated the processes) and you have a segment that reflects several different levels of Variance, you have the first clues to find the critical x’s that drive variance.

• When you find a critical x for one of the processes, check to see if it is also the critical x for the other processes. Often the factors that drive variance in one of the processes, also drive it in another.

Stratification

83ControlsControls

EffectEffect

External customer or downstream process step.

Because of your process what all I will not be able to do

CauseCause

Failure Mode(Defect)

Failure Mode(Defect)

Process Step

Material or process input

Prevention Detection

Detection

What manner my process was not able to

obey me

What made failure mode to take place. Ask 5

Why’s….

FMEA Model

84

CAUTION: Objects in mirror are closer

than they appear

A measurement system will not willingly disclose the type of distortion, inaccuracy or imprecision it is transmitting to our data. We must actively force it to reveal its hidden effects.

A measurement system will not willingly disclose the type of distortion, inaccuracy or imprecision it is transmitting to our data. We must actively force it to reveal its hidden effects.

Measurement System Analysis

85The Measurement System will transmit variation to our data.

ProcessInputs Outputs MeasurementProcess

Inputs Outputs• Observations• Measurements• Data

Parts(Example)

+Actual(Part)2

=

Product Variability(Actual variability)

Meas.System2 Observed

(Total)

2

MeasurementVariability

Total Variability(Observed variability)

Measurement System Variability

- Investigated through “R&R

Study”

Measurement System Analysis

86

LSL

Short-Term Capability

Long-Term Capability

Over time, a process tends to shift by approximately 1.5.Over time, a process tends to shift by approximately 1.5.

Short-Term Capability

USL

Establishing the Process Capability

87

Time 1

Time 2

Time 3

Time 4

Within Group

Between Groups

• Called shift (truly a measurement in sigma's of how far the mean has shifted)

• Indicates our process control

• The vital few

• Called short term (st)

• Our potential - the best we can be

• The reported by all 6 sigma companies

• The trivial many

st + shift = total

Visualizing the Causes

88

To reduce the number of Process Input Variables to a manageable number

To determine high risk inputs from Failure Modes and Effects analysis

To determine the presence of and eliminate Noise Variables through Multi-vari Studies

To plan the first improvement activities

Analyse Purpose

89

A common method of analysis at this stage is the variables tree.Try thinking about your process in this manner........

Customer Service Example

Not resolved the call

Skill to Skill Agent to Agent Call to Call Customer to Customer

Type of call

Sources of Variation

90

105

15

10

5

0

Index

Hrs

Var

Time Series Plot

PaperMiningUtilWater

15

10

5

0

Custom er

HrsV

ar

Box Plot

JulJunMay

15

10

5

0

Date

Hrs

Var

Scatter Plot

SalesmanCustomerDate

13.0

10.5

8.0

5.5

3.0

HrsVar

Main Effects Plot - Means for HrsVar

ANOVA (Analysis of Variance)

12013229343112.313.530.044.2

100.0 87.7 74.2 44.2

1000

900

800

700

600

500

400

300

200

100

0

100

80

60

40

20

0

Defect

CountPercentCum %

Per

cent

Cou

nt

Pareto Chart for : Defects

Pareto Chart

Tools Used……..

91

0 .5 1 1.5 2X=Study Time(Hours/Night)

Y=Grades(of 100%) 80

6040

60 70 80X=Dad’s Height (inches)

Y=Son’sHeight 80

6040

1 6 14 22 30X=Age of Car

Y=Selling Price(Thousands) 35

255

0 .5 1 1.5 2X=Car Weight (tons)

Y=Gas Mileage(mpg) 30

20

10

Some examples:

Regression…..

92

What we are looking for is a line which will minimize thedistances from the plotted points to the line....

**

** *

* *

* * *

Regression LineRegression Line

Scatter Plot Points(actual data values)

Scatter Plot Points(actual data values)

Deviations (distances)“How much the line missed by”

Deviations (distances)“How much the line missed by”

Input Variable (X)

ResponseVariable

(Y)

How do you find a line that “fits” the data?How do you find a line that “fits” the data?

Regression…..

93

X

Y

Measured

Predicted

Measured

Y = a + b X

Error

The R2 Statistic is defined as the sum of squares of errors divided by sum of the square of difference from average:

r

y y

y y

i ii

n

ii

n2

2

1

2

1

1

^

Regression…..

94

What will you do for Improve

– Identify solutions.

– Develop change management plan.

– Conduct cost / benefit analysis.

– Create implementation plan.

Improve

95

What will you do for Control

– Define and implement ongoing measurement / monitoring plan.

– Document procedures.

Improve

96

In the physical world, the law of entropy explains the gradual loss of order in a system. The same law applies to business processes.

Unless we add “energy” (in the form of documentation and ongoing process controls); processes will tend to degrade overtime, losing the gains achieved by design and improvement activities.

The quality plan is the structure through which we add this “energy” to business processes.

g

Target

Control

97

Three Main Control Mechanism……..

Avoid Potential Problems Control Potential Problems

Risk Management

Mistake Proofing

SPC

Control

98

Answer the following questions before the project is signed off:

• What can go wrong and derail improvements ?

• What controls are in place ?

• Can you show me your closure plan ?

• What happen when the people change ?

• Are there any follow up on projects ?

• Is all documentation completed ?

• Is the savings verified by finance ?

• Is the audit plan in place ?

Project Sign-off

99

Finalize Financial Results•Calculate tangible benefits

•Determine implementation costs

•Calculate net financial gain

•Calculate the intangible benefits e.g. cost avoidance, customer retention

Tangible Benefits - Implementation Costs = Net Financial gains (Over one financial year)

Bank

Project Sign-off

100

Complete Documentation Package……..Compile and organize a record of the key aspects of your six sigma project

Typical Elements of the Documentation Package

•A description of the project

•Problem statement & business case

•A list of CTQs + Xs

•Hypothesis tests

•Process capability analysis

•Control parameters

•Audit Plan/ owner

•Financial results

•Operational metrics

•Lessons learned and best practices

Project to be signed off by GB/BB, MBB, Financial controller, Process Owner, Champion.

Documentation

101

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Reward & Recognition