Organizing Six SigmaOrganizing Six Sigma

Christopher J. ZampognaChristopher J. ZampognaOperations Management 380Operations Management 380

Boise State UniversityBoise State University

What will be coveredWhat 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 SigmaThe History of Six Sigma

• ““Six Sigma” originated at Motorola in 1982Six Sigma” originated at Motorola in 1982

• Early adoptorsEarly adoptors– Allied Signal (Honeywell)Allied Signal (Honeywell)– General ElectricGeneral Electric

• Six Sigma management philosophy today Six Sigma management philosophy today – A well-developed, thorough approach to quality A well-developed, thorough approach to quality

improvementimprovement– Uses statistics and management by factUses statistics and management by fact– Is effective in manufacturing and services firmsIs effective in manufacturing and services firms

Defining Six Sigma (Defining Six Sigma (6 ))

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

- Peter S. Pande- Peter S. Pande66

Defining Six Sigma (Defining Six Sigma (6 ))

• The Greek symbol (sigma) refers to the The Greek symbol (sigma) refers to the amount of variation in a process around the amount of variation in a process around the mean value for that process mean value for that process

• Processes have acceptable upper and lower Processes have acceptable upper and lower limitslimits

• Six Sigma is concerned with reducing the Six Sigma is concerned with reducing the variations to get more output within those variations to get more output within those limitslimits

Defining Six Sigma (Defining Six Sigma (6 ))

• In the chart below, 64.6% of the measures are between In the chart below, 64.6% of the measures are between the upper and lower limitsthe upper and lower limits

• This is a 1 processThis is a 1 process• Reducing the variations in the process will bring a higher Reducing the variations in the process will bring a higher

percentage within the acceptable limitspercentage within the acceptable limits

Mean (μ)+1σ-1σ-2σ +2σ-3σ +3σ

34.13 %34.13 %

13.06 % 2.14 %

13.06 % 2.14 %

0.13 % 0.13 %

LowerLimit

UpperLimit

The The 66 Difference Difference

What is the Six Sigma difference ?What is the Six Sigma difference ?

• one typo per one typo per pagepage (3 sigma) (3 sigma)

vs.vs.

one typo per one typo per librarylibrary (6 sigma) (6 sigma)

• playing golf at a 6 sigma level means missing playing golf at a 6 sigma level means missing

one putt every 163 yearsone putt every 163 years

Brainstorming Brainstorming Exercise:Exercise:Where are the variations?Where are the variations?

Identify six processes in Identify six processes in youryour business that business that have variations in the output. have variations in the output.

(HINT: manufacturing, purchasing, inventory, forecasting,(HINT: manufacturing, purchasing, inventory, forecasting,product design, customer service, accounting...)product design, customer service, accounting...)

The Six Sigma RoadmapThe Six Sigma Roadmap

• Five steps to implementing Six SigmaFive steps to implementing Six Sigma99

1.1. Identify core processes and key customersIdentify core processes and key customers

2.2. Define customer requirementsDefine customer requirements

3.3. Measure current performanceMeasure current performance

4.4. Prioritize, analyze, implement improvementsPrioritize, analyze, implement improvements

5.5. Expand and integrate the Six Sigma systemExpand and integrate the Six Sigma system

Organizing Six SigmaOrganizing Six Sigma

• Key RolesKey Roles1010

– Leadership TeamLeadership Team– ChampionsChampions– Mentors (master black belts)Mentors (master black belts)– Experts (black belts)Experts (black belts)– Participants (green belts)Participants (green belts)

Key Six Sigma RolesKey Six Sigma Roles

• The Leadership GroupThe Leadership Group

– Be actively involved from outset Be actively involved from outset – Develop a strategic planDevelop a strategic plan– Establish Roles and InfrastructureEstablish Roles and Infrastructure– Establish supporting policiesEstablish supporting policies

• Job descriptionsJob descriptions• Reward/Compensation systemsReward/Compensation systems• Career pathsCareer paths

Key Six Sigma RolesKey Six Sigma Roles

• The Leadership Group (cont’d)The Leadership Group (cont’d)

– Select projects Select projects – Prioritize projects and allocate resourcesPrioritize projects and allocate resources– Facilitate, guide, manageFacilitate, guide, manage

Key Six Sigma RolesKey Six Sigma Roles

• The ChampionsThe Champions1717

– Find appropriate projectsFind appropriate projects– Represent projects to the leadership Represent projects to the leadership – Provide coachingProvide coaching– Ensure allocation of resourcesEnsure allocation of resources– Resolve issuesResolve issues

Key Six Sigma RolesKey Six Sigma Roles

• Master Back BeltsMaster Back Belts

– Coach and support project leadsCoach and support project leads

– Work as a change agent Work as a change agent

– Train others in the use of six sigma toolsTrain others in the use of six sigma tools

Key Six Sigma RolesKey Six Sigma Roles

• Black BeltsBlack Belts

– Highly trained expertsHighly trained experts

– Manage project leadersManage project leaders

– Lead project teamsLead project teams

Key Six Sigma RolesKey Six Sigma Roles

• Green BeltsGreen Belts

– Trained in the use of statistical toolsTrained in the use of statistical tools

– Lead project teamsLead project teams

– Participate on project teamsParticipate on project teams

AA Real-World Example Real-World Example

• General Electric’s General Electric’s 6 6 results:results:- reduced invoice defects and disputes with a key customer by 98%- reduced invoice defects and disputes with a key customer by 98%

- saved $1 million annually in contract review process (GE Capital)- saved $1 million annually in contract review process (GE Capital)

- developed breakthrough technology that reduced medical scan times to - developed breakthrough technology that reduced medical scan times to 30 seconds from 3 minutes30 seconds from 3 minutes

- improved a key call center performance measure from 76% 99%- improved a key call center performance measure from 76% 99%

- reduced vibrations in Power System rotors by 300%- reduced vibrations in Power System rotors by 300%

- saved $320 million in less than two years, $750 million in three years- saved $320 million in less than two years, $750 million in three years

ExerciseExercise

1)1) If you have a 2 sigma process, what percentage of the If you have a 2 sigma process, what percentage of the output is within spec ?output is within spec ?

2)2) Six Sigma originated at Honeywell –T/FSix Sigma originated at Honeywell –T/F

3)3) Six Sigma focuses on the customer –T/FSix Sigma focuses on the customer –T/F

4)4) What does the Greek symbol sigma represent?What does the Greek symbol sigma represent?

5)5) Six Sigma utilizes fact-based decision making – T/FSix Sigma utilizes fact-based decision making – T/F

6)6) Continuous improvement requires feedback and Continuous improvement requires feedback and adjustments to ensure achievement of business objectives adjustments to ensure achievement of business objectives – T/F– T/F

ANSWERS: 1) 94.38%, 2) False, 3)True, 4)Standard deviation, 5) True, 6) TrueANSWERS: 1) 94.38%, 2) False, 3)True, 4)Standard deviation, 5) True, 6) True

Six Sigma SummarySix Sigma Summary

• Project-driven management philosophy Project-driven management philosophy • Relies on fact-based decision making Relies on fact-based decision making

(statistical tools)(statistical tools)• Requires top-down support Requires top-down support • Requires an infrastructure that can Requires an infrastructure that can

support quality project managementsupport quality project management• Has been shown to have markedly Has been shown to have markedly

positive impacts on business positive impacts on business performanceperformance

Suggested ReadingSuggested Reading• Breyfogle, F.W., III, Cupello, J.M., & Meadows, B. (2003). Breyfogle, F.W., III, Cupello, J.M., & Meadows, B. (2003). Managing Six Sigma: A Practical Managing Six Sigma: A Practical

Guide to Understanding, Assessing, and Implementing the Strategy that Yields Bottom-Line Guide to Understanding, Assessing, and Implementing the Strategy that Yields Bottom-Line Success.Success. New York, New York: John Wiley & Sons. New York, New York: John Wiley & Sons.

• Eckes, George. (2001) Eckes, George. (2001) The Six Sigma Revolution: How General Electric and Others The Six Sigma Revolution: How General Electric and Others Turned Process into Profits.Turned Process into Profits. New York, New York: John Wiley & Sons. New York, New York: John Wiley & Sons.

  • Eckes, George. (2003) Eckes, George. (2003) Six Sigma for Everyone.Six Sigma for Everyone. New York, New York: John Wiley & Sons. New York, New York: John Wiley & Sons.

• Foster, S. Thomas. (2004). Foster, S. Thomas. (2004). Managing Quality: An Integrative ApproachManaging Quality: An Integrative Approach. Upper Saddle . Upper Saddle River, New Jersey: Pearson Prentice Hall.River, New Jersey: Pearson Prentice Hall.

• Kerzner, Harold. (2003). Kerzner, Harold. (2003). Project Management: a systems approach to planning, Project Management: a systems approach to planning, scheduling, and controling. scheduling, and controling. Upper Saddle River, New Jersey: Pearson Prentice Hall.Upper Saddle River, New Jersey: Pearson Prentice Hall.

• Kinicki, A, & Kreitner, R. (2003). Kinicki, A, & Kreitner, R. (2003). Organizational Behavior: key concepts, skills & best Organizational Behavior: key concepts, skills & best practices.practices. New York, New York: McGraw Hill. New York, New York: McGraw Hill.

• Pande, P.S., Neuman, R.P., & Cavanagh, R.R. (2000). Pande, P.S., Neuman, R.P., & Cavanagh, R.R. (2000). The Six Sigma Way: How GE, The Six Sigma Way: How GE, Motorola and other Top Companies are Honing Their Performance.Motorola and other Top Companies are Honing Their Performance. New York, New York: New York, New York: McGraw Hill.McGraw Hill.

BibliographyBibliography

1)1) Eckes, George. (2001) Eckes, George. (2001) The Six Sigma Revolution: How General Electric and Others The Six Sigma Revolution: How General Electric and Others Turned Process into Profits.Turned Process into Profits. p.5. New York, New York: John Wiley & Sons. p.5. New York, New York: John Wiley & Sons.

2)2) Eckes, Eckes, The Six Sigma Revolution. p.6.The Six Sigma Revolution. p.6.

3)3) IbidIbid..

4)4) Eckes, Eckes, The Six Sigma Revolution. pp.9-10.The Six Sigma Revolution. pp.9-10.

5)5) Costanzo, Chris. (2002). At Suntrust, Six Sigma is Middle Management’s Baby. Costanzo, Chris. (2002). At Suntrust, Six Sigma is Middle Management’s Baby. American American Banker, Banker, June 12, 2002, Vol. 167, Issue 112.June 12, 2002, Vol. 167, Issue 112.

6)6) Pande, P.S., Neuman, R.P., & Cavanagh, R.R. (2000). Pande, P.S., Neuman, R.P., & Cavanagh, R.R. (2000). The Six Sigma Way: How GE, The Six Sigma Way: How GE, Motorola and other Top Companies are Honing Their Performance.Motorola and other Top Companies are Honing Their Performance. New York, New York: New York, New York: McGraw Hill.McGraw Hill.

7)7) Breyfogle, F.W., III, Cupello, J.M., & Meadows, B. (2003). Breyfogle, F.W., III, Cupello, J.M., & Meadows, B. (2003). Managing Six Sigma: A Managing Six Sigma: A Practical Guide to Understanding, Assessing, and Implementing the Strategy that Yields Practical Guide to Understanding, Assessing, and Implementing the Strategy that Yields Bottom-Line Success.Bottom-Line Success. p.6. New York, New York: John Wiley & Sons. p.6. New York, New York: John Wiley & Sons.

BibliographyBibliography

8)8) Vasilash, Gary S. (1999). Missing One Putt Every 163 Years. Vasilash, Gary S. (1999). Missing One Putt Every 163 Years. Automotive Manufacturing Automotive Manufacturing and Productionand Production, Dec99, Vol. 111, Issue 12., Dec99, Vol. 111, Issue 12.

9)9) Pande, p.67.Pande, p.67.

10)10) Eckes, The Six Sigma Revolution. p.25.Eckes, The Six Sigma Revolution. p.25.

11)11) Pande, chapters 7 and 8.Pande, chapters 7 and 8.

12)12) Pande, p.110.Pande, p.110.

13)13) Eckes, George. (2003) Eckes, George. (2003) Six Sigma for Everyone.Six Sigma for Everyone. pp.15-26. New York, New York: John pp.15-26. New York, New York: John Wiley & Sons.Wiley & Sons.

14)14) Pande, pp. 96-103.Pande, pp. 96-103.

15)15) Gale, Sara F. (2003). Building Frameworks for Six Sigma. Gale, Sara F. (2003). Building Frameworks for Six Sigma. Workforce, Workforce, May2003, Vol. 82, May2003, Vol. 82, Issue 5.Issue 5.

BibliographyBibliography

16)16) Kerzner, Harold. (2003). Kerzner, Harold. (2003). Project Management: a systems approach to planning, Project Management: a systems approach to planning, scheduling and controlling. scheduling and controlling. Upper Saddle River, New Jersey: Pearson Prentice Hall.Upper Saddle River, New Jersey: Pearson Prentice Hall.

17)17) Pande, p.119.Pande, p.119.

18)18) Eckes, The Six Sigma Revolution. p.43.Eckes, The Six Sigma Revolution. p.43.

19)19) Pande, pp.123-127.Pande, pp.123-127.

20)20) Ibid.Ibid.

21)21) Foster, S. Thomas. (2004). Foster, S. Thomas. (2004). Managing Quality: An Integrative ApproachManaging Quality: An Integrative Approach. P.404. Upper . P.404. Upper Saddle River, New Jersey: Pearson Prentice Hall.Saddle River, New Jersey: Pearson Prentice Hall.

22)22) Eckes, The Six Sigma Revolution. p.43.Eckes, The Six Sigma Revolution. p.43.

23)23) Foster, pp.404-405.Foster, pp.404-405.

24)24) Breyfogle, p.146.Breyfogle, p.146.