six sigma methodologies: overview and application to supply management kimball bullington, ph.d.,...
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Six Sigma Methodologies:Overview and Application to Supply Management
Kimball Bullington, Ph.D., P.E.Associate Professor
Middle Tennessee State University
Copyright 2003, Kimball E. Bullington
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Where are we going? A Brief History of Quality Six Sigma Six Sigma Revival Applying Six Sigma to Supply
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America Re-discovers Deming
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… and Juran
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Rediscovering the Gurus Deming
Emphasis on Statistical Control 14 Points for Management
Juran Quality Planning and Analysis Managerial Breakthrough Quality Control Handbook
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Standards and Awards ISO 9000
Minimum standards Does your system conform to the standard? Does your practice conform to your system?
Malcolm Baldrige National Quality Award Provides some guidance Examples for others to follow Motorola – an early winner
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The Process Over time, the output of any process
shows a certain amount of natural or inherent variability
This is also referred to as random variability
It is due to countless minor factors and is assumed to be out of management’s control in the short run, i.e., you have to live with it
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Processdistribution
Mean
The Process The distribution of a process’
output has a mean, , and a standard deviation, ; it can have a wide variety of shapes
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Process Capability When selecting a process to
perform an operation, the inherent variability of process output should be compared to the range or tolerances allowed by the designer’s specifications
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Process Capability Lower
SpecificationUpper
Specification
A significant portion of the process output falls outside of the specification width
In other words, is the process capable of producing the itemwithin specifications?
Much of the process output fits within specification width
Almost all of the process output fits within the specification width
process distribution
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Statistics
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Where are we going? A Brief History of Quality Six Sigma Six Sigma Revival Applying Six Sigma to Supply
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Statistics LiteCentered Process
LSL USL
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Statistics Lite Centered Process
LSL USL
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Statistics Lite Centered Process
LSL USL
Non-conformingProduct
1,300 DPMO
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Statistics Lite Centered Process
LSL USL
Non-conformingProduct
2,600 DPMO
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Statistics Lite Shifted Process
LSL USL
1.5 mean shift
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Statistics Lite Shifted Process
LSL USL
Non-conformingProduct
66,800 DPMO
1.5 mean shift
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Statistics Lite Shifted ProcessCost to your company – 15-30% of
sales
LSL USL
Non-conformingProduct
66,800 DPMO
1.5 mean shift
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Cost of Poor Quality
Lost Opportunity
DowntimeRework
InspectionOvertime
Rejects
Lost sales
Late delivery
Long cycle times
Expediting costs Inaccurate Reports
(less obvious)
Lost Customer Loyalty
Redundant Operations
Cost of Capital
Excessive Planning
5-8% ofSales
15-22%of Sales
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Statistics Lite Centered 6Process
LSL USL
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Statistics Lite Shifted 6Process
LSL USL
1.5 mean shift
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Statistics Lite Shifted 6Process
LSL USL
1.5 mean shift
Non-conformingProduct
3.4 DPMO
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Where are we going? A Brief History of Quality Six Sigma Six Sigma Revival Applying Six Sigma to Supply
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Six Sigma Breakthrough Strategy Define Measure Analyze Improve Control
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Define - Selecting Projects The project must relate to
customer satisfaction The project’s results must reduce
defects by some threshold amount The project should achieve some
threshold of cost savings.
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Criteria for Project Selection Does it involve recurring
events? Is the scope narrow? Do measures exist? Do you have control of the
process?
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Define Phase, Continued If these criteria are met then:
1) Identify the customers involved, both internal and external to the function.2) Find out what the customer’s CT’s are (Critical to Quality, Critical to Delivery, Critical to Cost, etc). 3) Define the project scope and goals.4) Map the process to be improved.
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Define Phase - Tools Project Charter Stakeholder
Analysis Affinity Diagram SIPOC Voice of the
Customer CT Tree
Kano Model SWOT Analysis Cause-and-Effect
Diagrams Supplier
Segmentation Project
Management
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Charter Problem statement Business case Goals, milestones,
success criteria, & deliverables
Project scope / boundaries
Roles & responsibilities
Stakeholder support / approval needed
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Business Case
Potential Improvement
Potential Impact
Improve quality Reduce cost, inventory
Improve OTD Shortages , inventory Select better suppliers Q, $, LT, reduce
inventory
Implement rating system
Improve supply efficiency, better suppliers
Reduce price Reduce cost
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Define Phase - Tools Project Charter Stakeholder
Analysis Affinity Diagram SIPOC Voice of the
Customer CT Tree
Kano Model SWOT Analysis Cause-and-Effect
Diagrams Supplier
Segmentation Project
Management
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Define Outputs Once completed, the Define Phase
should answer the following questions:1) Who is the customer?2) What matters?3) What is the scope?4) What defect am I trying to reduce?5) What are the improvement targets?
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The Measure Phase Purpose
To collect current performance of the process identified in the Define phase
This data is used to determine sources of variation and serve as a benchmark to validate improvements
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Measurements Benefits of having good data need
to outweigh the costs of getting it
What does this measure do for the Project?
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The Measure Phase Upon completion of the measure phase,
Project Teams will have: A plan for collecting data that specifies
the type of data needed and techniques for collecting the data
A validated measurement system that ensures the accuracy and consistency of the data collected
A sufficient data set for problem analysis
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Measure - Key Concepts Measurement Variation
Exists naturally in any process and is the reason Six Sigma projects are undertaken
Data Data Collection Plan Measurement System Analysis
Ensures measurement techniques are reproducible and repeatable
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Recording Measurements 3 stages
The output stage These tell how well customer needs are
being met Parts of the process
These are taken at critical points in the process
The input stage These evaluate contributions to the process
that are turned into value for the customer
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Recording Measurements Output Stage
Shortages Line shutdowns Quality – discrepant material Material price variances Internal customer survey
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Recording Measurements Parts of the process
Project milestones Supplier ship on time performance Supplier OTD Supplier internal throughput yield Supplier suggested cost reductions
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Recording Measurements The input stage
Supplier base size % Buyers with degrees % of spend covered by LTC’s % of spend from reverse auction Supplier FMEA’s
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Determining Data Type What do we want to know?
Review materials developed during design phase
What characteristics do we need to learn more about?
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Data Collection Plan
What data will be collected? Why is it needed? Who is responsible? How will it be collected? When will it be collected? Where will it be collected?
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Measurement System Analysis After Data Collection Plan is
complete, it needs to be verified before actual data is collected
MSA is performed on a regular basis
MSA ends when a high level of confidence is reached that the data collected accurately depicts the variation in the process
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Analyze Phase
The analyze phase allows the Project Team to target improvement opportunities by taking a closer look at the data.
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Analyze Phase Capability Analysis - establishing
current performance level Graphical Analysis - a visual indication
of performance using graphs Root Cause Analysis – developing a
hypothesis about the causes of variation Root Cause Verification – verifying that
the planned action will generate the desired improvement
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Elements of Improve Phase Generate Improvement
Alternatives Create a “Should Be” Process Map Conduct FMEA Perform Cost/Benefit Analysis Pilot Validate Improvement
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FMEA(Failure Mode Effects Analysis)
Recognizes potential failure and the effects of that failure
Identifies actions that would reduce chance of failure
Documents the process
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Generating Improvement Alternatives
Define Improvement Criteria Generate Possible Improvements Evaluate Improvements and Make
Best Choice
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PilotBenefits of Pilot Determine best way to implement the
improvement Lowers risk of failure Increases opportunity for feedback Obtain buy-in from affected personnel Provides opportunity to revise the
improvement before full implementation
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Review of Improve Phase Generate Improvement
Alternatives Create a “Should Be” Process Map Conduct FMEA Perform Cost/Benefit Analysis Pilot Validate Improvement
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Control PhaseWhy is it important? The Control Phase begins as the
project team tries to eliminate errors by “Mistake Proofing” their improvement alternative.
Mistake Proofing attempts to eliminate the opportunities for error.
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Control PhaseWhy is it important? Mistake Proofing tries to make it
impossible for an operation to be performed incorrectly, and/or correct errors before they are passed to the next worker, where they might become a defect.
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Control Phase #2 During the Control Phase the Project
team will:1) Develop a plan to make sure the measurement system will remain relevant over the long term.2) Establish Control Charts the process owner will use to manage the process.3) Create a Reaction Plan to address situations that might cause the process to move out of control.
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Control Phase #3 The Control Phase ends when:
1) Standard Operating Procedures have been updated.2) Process Operators, the people who do the job, have been trained for the new process.
Once completed, the Control Phase should sustain the gains the project made while implementing ongoing process controls.
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Control Phase #4 When is a project complete?
1) When other Black Belts can see the ongoing controls work2) When the customer sees the results3) When the business sees the money.
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Six Sigma Six Sigma People Executives Champions (deployment, project) Master Black Belts Black Belts Green Belts
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Where are we going? A Brief History of Quality Six Sigma Six Sigma Revival Applying Six Sigma to Supply
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Six Sigma Supply Chain DMAIC Using Six Sigma momentum Cost – The Business Case for
Supply Black Belts for Supply
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Stakeholder AnalysisPeople or Groups
Level of Commitment
Buy Mfg Eng
Enthusiastic Support
Help it work
Compliant
Hesitant X
Indifferent
Uncooperative X
Opposed
Hostile X
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SIPOC ExampleSuppliers Inputs Processes Outputs Customer
s
Ops Mgt Supplier Perf.
SupplierEvaluation
Survey Ops Mgt
Buyers Complaints
Rating system
Buyers
Engrg. Tech Reqts
Improved Supplier Perform.
Engineering
Mfg. Rating system
Commit. to suppliers
Mfg.
Suppliers Supplier Complaints
Suppliers
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SWOT Analysis
Positive Negative
Internal Strengths Weaknesses
External Opportunities
Threats
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Critical 2: Special Situations
Critical 1:Long-term Relationship
Non-Critical 1:Contractual
High
Low High
Ris
k
Annual Spend
Supply Base Characterization
Non-Critical 2:Transactional
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Six Sigma Supply Chain Training DMAIC – Supply Strategy Commitment
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ReferencesBooks: Six Sigma Pocket Guide (Rath & Strong’s) The Black Belt Memory Jogger (GOAL / QPC) Six Sigma (Harry and Schroeder) Implementing Six Sigma (Breyfogle) The Six Sigma Way Team Fieldbook (Pande, et al) The Vision of Six Sigma: A roadmap for breakthrough
(Harry)Web sites: www.isixsigma.com www.ge.com/sixsigma www.asq.org