Chapter # 07 (Six Sigma)

Chapter 7: Six Sigma
TOTAL QUALITY
MANAGEMENT
BY
DR. ASIF MAHMOOD
[email protected]
Institute of Business & Management
University of Engineering and Technology,

Lahore
HOW GOOD IS GOOD ENOUGH?

99.9% is already VERY GOOD
But what could happen at a quality level of
99.9% (i.e., 1000 ppm),
in our everyday lives (about
4.6 )?
4000 wrong medical prescriptions each year

More than 3000 newborns accidentally falling
from the hands of nurses or doctors each year
Two long or short landings at airports each day
400 letters per hour which never arrive at their destination
HOW CAN WE GET THESE RESULTS?
13 wrong drug prescriptions per year

10 newborn babies dropped by
doctors/nurses per year
Two short or long landings per year.
One lost article of mail per hour
THE ANSWER IS:
Six Sigma
WHAT IS SIX SIGMA?

A statistical concept that measures a
process in terms of defects at the six
sigma level, there 3.4 defects per million
opportunities (DPMO).
Sta
ti
s t ic
s
GOALS OF SIX SIGMA

o
Improve Customer Satisfaction
Reduce variations
Defect reductions
o
o
o
o
Oriented towards developing manufacturing/ service setups

which has zero variations in both product and the process.
Objective of six sigma is to eliminate or reduce the defects
and rejects to practically zero
Standardize Business Development

Coordinate Metrics with Suppliers and
Customers
Ensure Industry and Government Compliance
Develop Career Growth Opportunities
LSS COMPANY STOCK PERFORMANCE

RESEARCH
50 Publicly Traded Companies with Organizational-Wide 6 Deployments
Source: iSixSigma
STATISTICAL BACKGROUND
WHAT IS SIGMA ?
Sigma
is the Greek letter used

in
statistics
to
represent
standard deviation from mean
value, an indicator of the degree
of variation in a set of a process.
Sigma
measures how far a given process

deviates from perfection (the data spread).
n
Mean- measure
of central tendency
The
Deviation
measures the amount
of data dispersion
around mean
Standard
i 1
x
n
i 1
n 1
MEASURING PROCESS PERFORMANCE

THE PIZZA DELIVERY EXAMPLE. . .
Customers
want their pizza

delivered fast!
Guarantee
= 30 minutes or less
What
if we measured performance and found

an average delivery time of 23.5 minutes?
On-time
performance is great, right?

Our customers must be happy with us, right?
HOW OFTEN ARE WE DELIVERING ON TIME?

ANSWER: LOOK AT
THE VARIATION!
30 min. or less
10
20
30
40
50
Managing by the average doesnt tell the whole story. The average
and the variation together show whats happening.
REDUCE VARIATION TO IMPROVE PERFORMANCE

HOW MANY STANDARD
DEVIATIONS CAN YOU
FIT WITHIN
CUSTOMER
EXPECTATIONS?
30 min. or less
10
20
30
40
50
Sigma level measures how often we meet (or fail to

meet) the requirement(s) of our customer(s).
THE 68-95-99.7 RULE OR THREE SIGMA RULE
1 Standard
Deviation
2 Standard
Deviations
3 Standard
Deviations
PROCESS CAPABILITY
Process capability is the ability of the process
to meet the design specifications for a service or
product.
Nominal value is a target for design
specifications.
Tolerance is an allowance above or below the
nominal value.
PROCESS CAPABILITY
Nominal
value
Process distribution
Lower
specification
20
Upper
specification
25
Customer Requirement
Our Process is capable
30
PROCESS CAPABILITY
Nominal
value
Process distribution
Lower
specification
Upper
specification
Acceptable
Defects
20
25
Defects
30
Customer Requirement
Our Process is not capable
PROCESS CAPABILITY
INDEX/RATIO, CP
Process capability ratio, Cp, is the tolerance width
divided by 6 standard deviations (process variability).
Cp =
Cp, lower =
Cp, upper =
Upper specification - Lower specification

6
X - Lower specification
Upper specification - X
INTENSIVE CARE LAB

EXAMPLE
The intensive care unit lab process has an average

turnaround time of 26.2 minutes and a standard
deviation of 1.35 minutes.
The nominal value for this service is 25 minutes with an
upper specification limit of 30 minutes and a lower
specification limit of 20 minutes.
The administrator of the lab wants to have three-sigma
performance for her lab. Is the lab process capable of
this level of performance?
Upper specification = 30 minutes
Lower specification = 20 minutes
Average service = 26.2 minutes
= 1.35 minutes
INTENSIVE CARE LAB
ASSESSING PROCESS CAPABILITY

Example
Cp =
Cp =
Upper specification - Lower specification

30 - 20
6(1.35)
= 1.23 Process Capability Ratio
PROCESS CAPABILITY INDEXCP

Poor Process
Cp<1
Just Ok
Cp=1
Good, Excellent
Cp>1
PROCESS CAPABILITY
INDEX, CPK
Process Capability Index, Cpk, is an index that measures
the potential for a process to generate defective
outputs relative to either upper or lower specifications.
Cpk = Minimum of
x Lower specification
3
Upper specification x
3
We take the minimum of the two ratios because it gives

the worst-case situation.
CPK GRASPING THE

CONCEPT
A
B
Specification
Limit
Cpk =
A divided by
B
Specification
Limit
A = Distance from process mean to closest spec limit

B = 3 Standard Deviations (also called 3 Sigma)
A bigger Cpk is better because fewer units will be beyond spec.
(A bigger A and a smaller B are better.)
WHY CPK IS NEEDED? IS CP NOT

ENOUGH?
o Cp tells u only about the smartness of curve
o Cpk tells u about the positioning / location of the curve
PROCESS CAPABILITY INDEX/RATIO

STANDARDS
The current process capability index standards
for Cp and Cpk are:
Cp 1.33
Cpk 1.33
Important Note:
Cp, lower= Cp, upper= Cp= Cpk
(When the process is centered about the
INTENSIVE CARE LAB

EXAMPLECONTINUED
The intensive care unit lab process has an average

turnaround time of 26.2 minutes and a standard
deviation of 1.35 minutes.
The nominal value for this service is 25 minutes with an
upper specification limit of 30 minutes and a lower
specification limit of 20 minutes.
The administrator of the lab wants to have three-sigma
performance for her lab. Is the lab process capable of
this level of performance?
Upper specification = 30 minutes
Lower specification = 20 minutes
= 1.35 minutes
INTENSIVE CARE LAB

Example
Cpk = Minimum of
Cpk =
Cpk =
Upper specification = 30
minutes
Lower specification = 20
minutes
Average service = 26.2
minutes
Upper specification x
x Lower specification
,
=
1.35
minutes
3
3
Minimum of
Minimum of
26.2 20.0
3(1.35)
1.53, 0.94
= 0.94
30.0 26.2
3(1.35)
Process
Capabilit
y Index
INTENSIVE CARE LAB

Example
Does not meet 3 (1.00 Cpk) target due to a shift in mean
(Note variability is ok since Cp is over 1.0)
Before Process Modification
Upper specification = 30.0 minutes Lower specification = 20.0
minutes
= 1.35 minutes Cpk = 0.94 Cp = 1.23
TECHNICAL DEFINITION OF SIX

SIGMA
75%
1.5
LSL
USL
12.5%
12.5%
3.4 DPMO
Cp=2 Cpk=1.5
Cp=2 Cpk=1.5
Cp=Cpk = 2
- -3
6 to LSL
6 to USL
3.4 DPMO
DEFECTS PER MILLION OPPORTUNITIES

Six Sigma allows managers to readily
describe process performance using a
common metric: Defects Per Million
Opportunities (DPMO)
DPMO
Numb ero f d efects

Nu mb erof
o pp ortun ies
it x No.o f un its
for error per
u nit
x 1,000,00 0
DEFECTS PER MILLION OPPORTUNITIES

Example of Defects Per Million
Opportunities (DPMO) calculation.
Suppose we observe 200 letters
delivered incorrectly to the wrong
addresses in a small city during a
single day when a total of 200,000
letters were delivered. What is the
DPMO in this situation?
DPMO
So, for every one

million letters
delivered this
citys postal
managers can
expect to have
1,000 letters
incorrectly sent
to the wrong
address.
200
x 1 ,000,000 1, 000
x 20 0,000
Cost of Quality: What might that DPMO mean in terms of over-time

employment to correct the errors?
SIGMA LEVELS
Spec.
Sigma
Range/
(with
Sigma
1.5
(DPMO)
Short Long
Defective
Yield
-term -term
Cpk
Cpk
Level
shift)
-0.5
691,462
69%
31%
0.33
0.17
0.5
308,538
31%
69%
0.67
0.17
1.5
66,807
6.7%
93.3%
1.00
0.5
2.5
6,210
0.62%
99.38%
1.33
0.83
3.5
233
0.023%
99.977%
1.67
1.17
4.5
3.4
0.00034%
5.5
0.019
99.99966% 2.00
0.0000019 99.9999981
2.33
%
%
1.5
1.83
SIX SIGMA TEAM
Executive Leader
Champion/Sponsor
Master Black Belt
Black Belt
Green Belt
Yellow Belt
White Belt
SIX SIGMA TEAM

EXECUTIVE LEADER
High
Level Executive committed to Six

Sigma Success
Knowledgeable in Six Sigma Process
Assign key individuals to the
Champion/Sponsor Position.
SIX SIGMA TEAM
Champion (Sponsor)
Promote
awareness and execution of Six

Sigma within lines of business and/or
functions
Identify potential Six Sigma projects to
be executed by Black Belts and Green
Belts
Identify, select, and support Black Belt
and Green Belt candidates
Participate in 2-3 days of workshop
training
SIX SIGMA TEAM
Master Black Belt

Teacher
and mentor for Black Belts

Resource for the Black Belts-experts on
the mathematical theory of statistical
methods
Experts on the Six Sigma process
Works with the Champion/Sponsor to
select projects.
SIX SIGMA TEAM
Black Belt (project leader)

Use
Six Sigma methodologies and advanced

tools (to execute business improvement
projects
Are
dedicated full-time (100%) to Six Sigma
Serve
as Six Sigma knowledge leaders within

Business Unit(s)
Undergo
5 weeks of training over 5-10 months
SIX SIGMA TEAM
Green Belt (project team member)

Use
Six Sigma DMAIC methodology and basic

tools to execute improvements within their
existing job function(s)
May
lead smaller improvement projects within

Business Unit(s)
Bring
knowledge of Six Sigma concepts & tools to

their respective job function(s)
Undergo
8-11 days of training over 3-6 months
Yellow and White Belts
DMAIC THE IMPROVEMENT

METHODOLOGY
Existing Processes
Control
Define
Improve
Measure
Analyze
DEFINE DMAIC PROJECT

WHAT IS THE PROJECT?
$
Project
Charter
Define
Cost of
Poor
Quality
S ta k e h o ld e r s
Voice of the
Stakeholder
the Customer, their Critical to Quality (CTQ) issues, and the
Core Business Process involved.

Define
project boundaries (scope) the stop and start of the process
Define
the process to be improved by mapping the process flow
Key Define Tools

Cost of Poor Quality (COPQ)
Voice of the Stakeholder (VOS)
Project Charter
As-Is Process Map(s)
MEASURE BASELINES AND CAPABILITY
WHAT IS OUR CURRENT LEVEL OF PERFORMANCE?
Measure the performance of the

Core Business Process involved.
Develop a data collection plan for
the process
Collect data from many sources to
determine types of defects and
metrics
Compare with customer survey
results to determine shortfall
Descriptive Statistics
Variable: 2003 Output
Anderson-Darling Normality Test
A-Squared:
P-Value:
10
20
30
40
50
95% Confidence Interval for Mu
0.211
0.854
Mean
StDev
Variance
Skewnes s
Kurtosis
N
23.1692
10.2152
104.349
0.238483
0.240771
100
Minimum
1st Quartile
Median
3rd Quartile
Maximum
0.2156
16.4134
23.1475
29.6100
55.2907
95% Confidence Interval for Mu

21.1423
19.5
20.5
21.5
22.5
23.5
24.5
25.5
26.5
8.9690
95% Confidence Interval for Median
25.1961
95% Confidence Interval for Sigma

11.8667
95% Confidence Interval for Median

19.7313
26.0572
Key Measure Tools

Critical to Quality Requirements
Pareto Chart for Txfr Defects

100
100
60
50
40
20
0
Defect
Count
Percent
Cum %
79
79.0
79.0
17
17.0
96.0
4
4.0
100.0
Percent
80
Count
(CTQs)
Sample Plan
Capability Analysis
Failure Modes and Effect Analysis
(FMEA)
Etc
ANALYZE POTENTIAL ROOT CAUSES
Analyze the data collected

and process map to
determine root causes of
defects and opportunities for
improvement.
Identify gaps between
current performance and
goal performance
Prioritize opportunities to
improve
Identify sources of variation
Key Measure Tools

Histograms, Boxplots, Multi-Vari
Charts, etc.
Hypothesis Tests
Regression Analysis
Ishikawa
Diagram
(Fishbone)
IMPROVE SOLUTION SELECTION
Improve the target

process by designing
creative solutions to fix
and prevent problems.
Create
innovate
solutions
using
technology
and
discipline
Develop and deploy
implementation plan
Solution
Selection Matrix
Solutio
n
Qualit
y
Time
CB
A
Oth
er
Solution
Implementatio
n Plan
Solution
Right
Wrong
Implementation
Bad
Good
QFD/House of Quality
Ti
me
Cost
Key Improve Tools

Solution Selection Matrix
To-Be Process Map(s)
Sigm
a
Nice
Try
Nice
Idea
Sco
re
CONTROL SUSTAINABLE BENEFITS
Control the improvements to keep the process on the new course.
Prevent reverting back to the "old way"
Require the development, documentation and implementation of

an ongoing monitoring plan
Institutionalize the improvements through the modification of
systems and structures (staffing, training, incentives)
Key Control Tools

Control Charts
Contingency and/or Action Plan(s)
35
Individual Value
UCL=33.48
25
Mean=24.35
LCL=15.21
15
0
10
20
Observation Number
30
DFSS THE DESIGN METHODOLOGY

DESIGN FOR SIX SIGMA
Define Measure Analyze Design
Verify
DMADV
Uses
Design new processes, products, and/or services from scratch

Replace old processes where improvement will not suffice
Differences between DFSS and DMAIC
Projects typically longer than 4-6 months

Extensive definition of Customer Requirements (CTQs)
Heavy emphasis on benchmarking and simulation; less emphasis on
baselining
Key Tools
Multi-Generational Planning (MGP)

Quality Function Deployment (QFD)
DMADV - DMAIC
Existing Processes
New Processes
Verify
Define
Design
Measure
Analyze
Control
Define
Improve
Measure
Analyze
48
COMPUTING THE CP VALUE AT COCOA FIZZ: 3 BOTTLING MACHINES ARE

BEING EVALUATED FOR POSSIBLE USE AT THE FIZZ PLANT. THE MACHINES
MUST BE CAPABLE OF MEETING THE DESIGN SPECIFICATION OF 15.816.2 OZ. WITH AT LEAST A PROCESS CAPABILITY INDEX OF 1.0 (CP1)
The table below shows the information

gathered from production runs on each
machine. Are they all acceptable?
Solution:
Machine A
USL LSL
.4
1.33
6
6(.05)
Machine B
Cp
Machin
e
USLLSL
.05
.4
.3
.1
.4
.6
.2
.4
1.2
Cp=
Machine C
Cp=
49
COMPUTING THE CPK VALUE AT COCOA

FIZZ
Design specifications call for a

target value of 16.0 0.2 OZ.
(USL = 16.2 & LSL = 15.8)
Observed process output has now
shifted and has a of 15.9 and a
of 0.1 oz.
16.2 15.9 15.9 15.8
,
3(.1)
3(.1)
Cpk is less than 1, revealing that

.1
the Cpk
process
is.33not capable
.3
Cpk min
50

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Chapter 7: Six Sigma

University of Engineering and Technology,

HOW GOOD IS GOOD ENOUGH?

4000 wrong medical prescriptions each year

HOW CAN WE GET THESE RESULTS?

13 wrong drug prescriptions per year

THE ANSWER IS:

WHAT IS SIX SIGMA?

GOALS OF SIX SIGMA

Improve Customer Satisfaction

Oriented towards developing manufacturing/ service setups

Standardize Business Development

LSS COMPANY STOCK PERFORMANCE

is the Greek letter used

measures how far a given process

MEASURING PROCESS PERFORMANCE

want their pizza

if we measured performance and found

performance is great, right?

HOW OFTEN ARE WE DELIVERING ON TIME?

REDUCE VARIATION TO IMPROVE PERFORMANCE

Sigma level measures how often we meet (or fail to

Our Process is capable

Our Process is not capable

Upper specification - Lower specification

INTENSIVE CARE LAB

The intensive care unit lab process has an average

INTENSIVE CARE LAB

ASSESSING PROCESS CAPABILITY

Upper specification - Lower specification

= 1.23 Process Capability Ratio

PROCESS CAPABILITY INDEXCP

We take the minimum of the two ratios because it gives

CPK GRASPING THE

A = Distance from process mean to closest spec limit

WHY CPK IS NEEDED? IS CP NOT

PROCESS CAPABILITY INDEX/RATIO

INTENSIVE CARE LAB

The intensive care unit lab process has an average

INTENSIVE CARE LAB

ASSESSING PROCESS CAPABILITY

INTENSIVE CARE LAB

ASSESSING PROCESS CAPABILITY

TECHNICAL DEFINITION OF SIX

DEFECTS PER MILLION OPPORTUNITIES

Numb ero f d efects

DEFECTS PER MILLION OPPORTUNITIES

So, for every one

Cost of Quality: What might that DPMO mean in terms of over-time

SIX SIGMA TEAM

SIX SIGMA TEAM

Level Executive committed to Six

SIX SIGMA TEAM

awareness and execution of Six

SIX SIGMA TEAM

Master Black Belt

and mentor for Black Belts

SIX SIGMA TEAM

Black Belt (project leader)