Managing for Quality and Performance Excellence, 10 th Edition

Summary of Key Points and Terminology

Chapter 9 – Process Improvement and Six Sigma

 A process is a sequence of linked activities that is intended to achieve some result,
such as producing a good or service for a customer within or outside the
organization. Generally, processes involve combinations of people, machines,
tools, techniques, materials, and improvements in a defined series of steps or
actions.
 Breakthrough is the accomplishment of any improvement that takes an
organization to unprecedented levels of performance. Breakthrough attacks
common causes of variation. Six Sigma projects often focus on breakthrough
improvements that add value to the organization and its customers through
systematic approaches to problem solving.
 Structured improvement methodologies typically consist of four steps: redefining
and analyzing a problem, generating ideas, evaluating and selecting ideas, and
implementing ideas. Common approaches are the Deming cycle, creative problem
solving, Six Sigma DMAIC, TRIZ, custom improvement methodologies, and many
others.
 The Deming cycle, or PDSA cycle, consists of four steps: Plan, Do, Study, Act.
Many organizations use the Deming cycle as the basis for their organizational
performance improvement activities.
 Solving quality problems often involves a high amount of creativity. Creativity is
seeing things in new or novel ways. The creative problem solving process consists
of understanding the “mess,” finding facts, identifying specific problems,
generating ideas, developing solutions, and implementing solutions
 The principal problem solving methodology used by Six Sigma is DMAIC—
define, measure, analyze, improve, and control. The Define stage identifies the
problem. The Measure stage includes collecting good data, observation, and careful
listening. The Analyze phase of DMAIC focuses on why defects, errors, or
 excessive variation occur, and focuses on root cause. The Improve stage focuses on
idea generation, evaluation, and selection. Finally, the Control stage focuses on
how to maintain the improvements.
 Six Sigma can be described as a business improvement approach that seeks to find
and eliminate causes of defects and errors in manufacturing and service processes
by focusing on outputs that are critical to customers and a clear financial return for
the organization. The term six sigma is based on a statistical measure that equates
to 3.4 or fewer errors or defects per million opportunities.
 Some of the contrasting features between TQM and Six Sigma include: TQM is
based largely on worker empowerment and teams; Six Sigma is owned by business
leader champions. TQM activities generally occur within a function, process, or
individual workplace; Six Sigma projects are truly cross-functional. TQM training
is generally limited to simple improvement tools and concepts; Six Sigma focuses
on a more rigorous and advanced set of statistical methods and DMAIC
methodology. TQM is focused on improvement with little financial accountability;
Six Sigma requires a verifiable return on investment and focus on the bottom line.
 A six sigma quality level corresponds to a process variation equal to half of the
design tolerance while allowing the mean to shift as much as 1.5 standard
deviations from the target. A k-sigma quality level satisfies the equation: k ×
process standard deviation = tolerance range/2
 The following Excel formula can be used to calculate dpmo corresponding to the
sigma level: = (1 – NORM.DIST(sigma level, 1.5, 1, TRUE))* 1000000 The sigma
level can be calculated on a spreadsheet using the Excel formula =NORM.S.INV(1
- dpmo/1,000,000) + 1.5.
 A problem is a deviation between what should be happening and what actually is
happening that is important enough to make someone think the deviation ought to
be corrected. Quality related problems often fall into five categories: conformance
problems, unstructured performance problems, efficiency problems, product design
problems, and process design problems.
 Projects are the vehicles that are used to organize team efforts and to implement the
DMAIC process. Being able to manage a large portfolio of projects, as would be
found in Six Sigma environments, is vital to organizational success.
 Project teams are a vital part of Six Sigma efforts and are comprised of champions,
master black belts, black belts, green belts, other team members, who each provide
different levels of knowledge and expertise in solving problems.
 Factors that should be considered when selecting Six Sigma projects are: financial
return, as measured by costs associated with quality and process performance, and
impacts on revenues and market share, impacts on customers and organizational
effectiveness, probability of success, impact on employees, and fit to strategy and
competitive advantage.
 Most of the tools used in DMAIC have been around for a long time. They include
elementary statistical tools, advanced statistical tools, product design and reliability,
measurement, process control, process improvement, and implementation and
teamwork.
 The Seven QC Tools for quality improvement are flowcharts, run charts and
control charts, check sheets, histograms, Pareto diagrams, cause-and-effect
diagrams, and scatter diagrams. These tools support quality improvement processes
and problem-solving efforts.
 Toyota created a unique tool, called the A3 Report, to succinctly consolidate and
visualize information for identifying and solving quality problems. They exploit
simplicity and visualization to facilitate process improvement.
 The process of drilling down to a more specific problem statement is sometimes
called project scoping.
 A Pareto distribution is one in which the characteristics observed are ordered from
largest frequency to smallest. A Pareto diagram is a histogram of the data from
the largest frequency to the smallest. Pareto diagrams help analysts to progressively
focus in on the most appropriate problems.
 One type of high-level process map is called a SIPOC diagram. SIPOC stands for
Suppliers-Inputs-Process-Outputs-Customers. SIPOC maps provide a broad
overview of the key elements in the process and help to explain who is the process
 owner, how inputs are acquired, who the process serves, and how it adds value. In
defining a problem, it is important to have a fundamental understanding of the
process that drives the results.
 A project charter defines the project, its objectives, and deliverables, and
represents a contract between the project team and the sponsor. A project charter
will typically define the problem in a simple fashion, the project objective, the
project team and sponsor, the customers and CTQs on which the project focuses,
existing measures and performance benchmarks, expected benefits and financial
justification, a project timeline, and the resources needed to carry out the project.
 In the Measure stage, Six Sigma uses the notion of a function in mathematics to
portray the relationship between process performance and customer value: Y =
f(X), where Y is the set of CTQs and X represents the set of critical input variables
that influence Y. A CTQ tree structure might be used “drill down” from Y to
identify the critical X-factors. Understanding these relationships helps in defining
the experiments that need to be conducted to confirm how input variables affect
response variable and sets the stage for the Control phase by defining those factors
that requiring monitoring and control.
 Data sheets are simple columnar or tabular forms used to record data. Check
sheets are special types of data collection forms in which the results may be
interpreted on the form directly without additional processing. They are often used
to set up the measure phase of DMAIC.
 A special type of process map, typically used in the DMAIC analyze phase, is a
value stream map. The value stream refers to all activities involved in designing,
producing, and delivering goods and services to customers. The value stream map
allows one to measure the impact of value-added and non-value-added activities on
the total lead time of the process, and compare this to the takt time—which is the
ratio of the available work time to the required production volume necessary to
meet customer demand. If the value stream is faster than the takt time, it generally
means that waste in the form of overproduction is occurring; when it is less, the
firm cannot meet customer demand.
 A root cause is “that condition (or interrelated set of conditions) having allowed or
caused a defect to occur, which once corrected properly, permanently prevents
recurrence of the defect in the same, or subsequent, product or service generated by
the process.” Root causes must be analyzed during the analysis phase for
improvement to take place. Root cause analysis is an approach using statistical,
quantitative, or qualitative tools to identify and understand the root cause.
 A cause-and-effect diagram is a simple, graphical method for presenting a chain
of causes and effects and for sorting out causes and organizing relationships
between variables.
 Scatter diagrams are the graphical component of regression analysis. While they
do not provide rigorous statistical analysis, they often point to important
relationships between variables.
 Brainstorming, a useful group problem-solving procedure for generating ideas and
has been described as useful “for the sole purpose of producing checklists of ideas”
that can be used in developing a solution to a problem. Thus it is a valuable tool
during the improve stage of the DMAIC process.
 Lean production refers to approaches that originated at the Ford Motor Company
in the early 1900s, but which were refined and modernized by the Toyota Motor
Corporation later in the century. Lean approaches focus on the elimination of waste
in all forms, including defects requiring rework, unnecessary processing steps,
unnecessary movement of materials or people, waiting time, excess inventory, and
overproduction. A simple way of defining it is “getting more done with less.” Some
of the key tools used in lean production are the 5S’s – seiri (sort), seiton (set in
order), seiso (shine), seiketsu (standardize), and shitsuke (sustain); visual controls;
efficient layout and standardized work; pull production; single minute exchange of
dies (SMED); total productive maintenance; source inspection; and continuous
improvement.
 In service contexts, lean production is often called lean enterprise.
 The tools and approaches used in Six Sigma and lean production are different, yet
complementary. Lean is focused on efficiency by reducing waste and improving
process flow while Six Sigma is focused on effectiveness by reducing errors and
 defects. Lean Six Sigma can be defined as an integrated improvement approach to
improve goods and services and operations efficiency by reducing defects, variation
and waste. Lean Six Sigma has gained considerable favor among practitioners in
many organizations.
 Although Six Sigma was developed in the manufacturing sector, it can easily be
applied to a wide variety of transactional, administrative, and service areas.
Services are generally driven by four key measures of performance:
o Accuracy, as measured by correct financial figures, completeness of
information, or freedom from data errors
o Cycle time, which is a measure of how long it takes to do something, such
as pay an invoice
o Cost, that is, the internal cost of process activities (in many cases, cost is
largely determined by the accuracy and/or cycle time of the process; the
longer it takes, and the more mistakes that have to be fixed, the higher the
cost)
o Customer satisfaction, which is typically the primary measure of success.
Therefore, differences between services and manufacturing make
opportunities in services more difficult to identify, and projects more
difficult to define. Small organizations (including manufacturing and
services) can use Six Sigma, although perhaps in a more informal fashion.