Final PPT (Six Sigma)

ADVANCED MANAGEMENT
CONCEPTS
1
AMBIKA BHATIA -JIMS
AMBIKA BHATIA 03/26/2020

2
SIX SIGMA

A Traditional View
Market Share
Sales Growth • Output Variables

Profitability
Manage the outputs.

AMBIKA BHATIA 3 03/26/2020
A Non-traditional View
Product Quality
COQ Service
• Input Variables On-Time Delivery
Relationships
Credit Terms
Customer
Training
Customer Satisfaction
Market Share
Sales Growth • Output Variables

Profitability
Manage the inputs; respond to the outputs.

What is Six Sigma?
5
Six Sigma is the measure of quality that strives for

near perfection. It is a disciplined, data-driven
methodology focused on eliminating defects. A Six
Sigma defect is defined as anything that falls outside
of a customer's specifications. Six Sigma is a
reference to a statistical measuring system,
equivalent to just 3.4 defects per every million
opportunities (Snee, 2003).

What’s in a name?
 Sigma is the Greek letter representing the standard
deviation of a population of data.
 Sigma is a measure
of variation
(the data spread)
σ
μ
What does variation mean?
20
 Variation means that a 15
process does not produce 10
the same result (the “Y”) 5
every time. 0
-5
 Some variation will exist in
-10
all processes.
 Variation directly affects customer experiences.
Customers do not feel averages!

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
x
0 10 20 30 40 50
 Managing by the average doesn’t tell the whole story. The

average and the variation together show what’s happening.
Reduce Variation to Improve Performance
How many standard

deviations can you
“fit” within
customer
expectations?
30 min. or less
x
0 10 20 30 40 50
 Sigma level measures how often we meet (or fail to meet)

the requirement(s) of our customer(s).
WHY SIX SIGMA?
11
Intense competitive pressures – especially from

rapid globalization.
Greater consumer demand for high quality products
and services, little tolerance for failures of any type.
Top management (and stockholder) recognition of
the high costs of poor quality.
The availability and accessibility of large data bases
and the increasing ability to explore, understand, and
use the data.

Normal Distribution - Gaussian Curve
 2
 ( xi  x)
D
RE

SO
 =
n 1
N
Sigma =  = Deviation
CE
( Square root of variance )
Axis graduated in Sigma

-4
-6
-3
-2
-5
-7
0
-1
6
4
3
2
7
1
between + / - 68.27 % result: 317300 ppm
1 outside (deviation)
between + / - 95.45 % 45500 ppm
2
between + / - 99.73 % 2700
3
ppm
between + / - 99.9937 % 63
4 ppm
between + / - 5 99.999943 % 0.57 ppm
between + / - 99.9999998 % 0.002

6 ppm

Six Sigma...And the Statistics
-1.5 Sigma+1.5 Sigma
Lower spec. limit Upper spec. limit
3.4 ppm
or Zero
3.0
-6.0
-5.0
0.0
-1.0
-3.0
-2.0
2.0
-7.0
1.0
-4.0
4.0
6.0
5.0
7.0
 Reduce the variation: when  < = Design specification width / 12 Cp > = 2
 Stabilize the process, without affecting the variance, Cp > = 2 and
to limit the maximum process shift to +/- 1.5 
Cpk > = 1.5
 Under these conditions, and in the worst case, there will be no more than a 3.4 ppm
 defect (reject) level, with specification limits at 4.5 on one side and 7.5 on the other.
 Note: One can see that the point corresponding to 6 on the graduated performance
scale above is measured in ”Sigma’s” (with 6 corresponding to a 3.4 ppm defect
level).
Six Sigma...And Capability
Design specification width

Cp =
6
Mean - Spec Limit

Cpk = Min.
3
 1 2 3 4 5 6 7 8
Cp 0.33 0.66 1 1.33 1.66 2 2.33 2.66
Cpk -0.16 0.16 0.5 0.83 1.16 1.5 1.83 2.16
With a maximum process shift of +/- 1.5 

The Opportunities...
Different Numbers of Opportunities ...
Manufacturing Process
6
Admini stra ti ve Areas
Customers or Suppliers
- Customers or Suppliers: One opportunity per product delivered or

per component purchased.
- Manufacturing process: Opportunities at each process step)
- Administrative areas: Number of opportunities for error for
each activity performed
Sigma and Opportunities
p
.O
P.M
D.
A quality level of "6" corresponds to les

than 3.4 defects per million Opportunitie
( i.e., correct 99.99966 % of the time )
Measurement With SIGMA Is Simple !!!
Estimate the Count the

Opportunities Defects
Follow the Indicator :

Defects per million Opportunities
6= 3.4 dpmo
Conversion into "Sigma" can

be accomplished with the help
of a statistical table .

Converting Defect Levels to..... Sigma !
An Example :
175 defects are identified while
producing 5000 controllers
D.P.U = 175 / 5000 = 0.035
The manufacture of one controller
allows for 1367 defect opportunities.
D.P.Op = 0.035 / 1367 = 0.0000256

D.P.M.Op = 25.6
"Sigma" level : 5.55

Six Sigma: An Ambitious Objective?
Accurate
• to 99.99966 % ( less than 3.4 defects for each million
opportunities ) could appear excessive....!
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
T
•wo long or short landings at American airports each day
400
• letters per hour which never arrive at their destination

The Impact of Quality: “6 Sigma Suppliers”
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13 wrong drug prescriptions per year

10 newborn babies dropped by
doctors/nurses per year
Two short or long landings per year in
all the airports in the U.S.
One lost article of mail per hour

Six Sigma and Continuous Improvement
= A structured approach to continuous improvement

( or ”Six steps toward excellence" )
- Identify the product or service you provide

4 - Define the process for doing work
- Identify the customer & their requirements
5 - Eliminate defect sources / optimize the proces
3 - Determine your needs & suppliers 6 - Continuously improve the Sigma level
Feedback 6
3 2
Enter Process Exit 1
Supplier Needs Activity 5
Product/Service Customer

The Statistical Tools
22
of Six Sigma:

The Statistical Tools of Six Sigma:
23

The Statistical Tools of Six Sigma
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Another way to look at it:

1. Clearly define the customer’s explicit requirements--CTQ
2. Count the number of defects that occur.
3. Determine the yield-- percentage of items without
defects.
4. Use the conversion chart to determine DPMO and Sigma.

Sigma and % accuracy
25
Defects per Million % Accuracy

Opportunities (DPMO)
One Sigma 691,500 30.85%
Two Sigma 308,500 69.15%
Three Sigma 66,810 93.32%
Four Sigma6,210 99.38%
Five Sigma 233 99.977%
Six Sigma 3.4 99.9997%
Seven Sigma 0.020 99.999998%

Managing Up the Sigma Scale
Sigma % Good % Bad DPMO

1 30.9% 69.1% 691,462
2 69.1% 30.9% 308,538
3 93.3% 6.7% 66,807
4 99.38% 0.62% 6,210
5 99.977% 0.023% 233
6 99.9997% 0.00034% 3.4
Cost of poor quality
27
Fig. 1 Cost of poor quality versus Sigma level

Cost of poor quality
as % of earnings
30%
20%
10%
0%
3 4 5 6 7
Sigma Level

The Six Sigma Evolutionary Timeline
1818: Gauss uses the normal curve 1924: Walter A. Shewhart introduces
to explore the mathematics of error the control chart and the distinction of
analysis for measurement, probability special vs. common cause variation as
analysis, and hypothesis testing. contributors to process problems.
1736: French 1896: Italian sociologist Vilfredo

mathematician Alfredo Pareto introduces the 80/20
Abraham de rule and the Pareto distribution in
Moivre publishes Cours d’Economie Politique.
an article
introducing the
normal curve.
1949: U. S. DOD issues Military
Procedure MIL-P-1629, Procedures
1960: Kaoru Ishikawa
for Performing a Failure Mode Effects
introduces his now famous
and Criticality Analysis.
cause-and-effect diagram.
1941: Alex Osborn, head of 1970s: Dr. Noriaki Kano

BBDO Advertising, fathers a introduces his two-dimensional
widely-adopted set of rules for quality model and the three
“brainstorming”. types of quality.
1986: Bill Smith, a senior

engineer and scientist introduces 1995: Jack Welch
the concept of Six Sigma at launches Six Sigma at GE.
Motorola
1994: Larry Bossidy launches

Six Sigma at Allied Signal.
Six Sigma Companies
Six Sigma and Financial Services
Inventor of Six Sigma
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Motorola is known for its cool cell phones, but the

company's more lasting contribution to the world is
the quality-improvement process called Six Sigma. In
1986 an engineer named Bill Smith, sold then-Chief
Executive Robert Galvin on a plan to strive for error-
free products 99.9997% of the time. It is the origin of
‘Six Sigma’.

Six Sigma at Motorola
32
Motorola saved $17 Billion from 1986 to 2004,

reflecting hundreds of individual successes in all
Motorola business areas including:
 Sales and Marketing
 Product design
 Manufacturing
 Customer service
 Transactional processes
 Supply chain management

General Electric: What Is Six Sigma?
33
“First, what it is not. It is not a secret society, a

slogan, or a cliché. Six Sigma is a highly disciplined
process that helps us focus on developing and
delivering near-perfect products and services”
 Saved $750 million by the end of 1998
 Cut invoice defects and disputes by 98 percent, speeding
payment, and creating better productivity
 Streamlined contract review process, leading to faster
completion of deals and annual savings of $1 million

Honeywell: Six Sigma Plus
34
“Six Sigma is one of the most potent strategies ever developed

to accelerate improvements in processes, products, and
services, and to radically reduce manufacturing and/or
administrative costs and improve quality. It achieves this by
relentlessly focusing on eliminating waste and reducing
defects and variations.
Initiated Six Sigma efforts in 1992 and saved more then $600

million a year by 1999.
Reduced time from design to certification of new projects like

aircraft engines from 42 to 33 months.
Increased market value by a compounded 27% per year

through fiscal year 1998.

Selecting the right projects for SIX
SIGMA
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Assure that the importance of the projects is

evident or can be readily demonstrated.
Assure the projects are viable and doable in a short

time.
Assure that the success of the projects can be

readily quantified.

Six Sigma Team
• Own vision, direction,
36
integration, results
Executive Leadership • Lead change
• Project owner
• Implement solutions
• Part-time
• Black Belt managers
• Help Black Belts
Project Champions
Green Belts
Black Belts
Master Black
• Full time Belts
• Train and coach • Devote 50% - 100% of time to Black Belt activities
Black and Green Belts • Facilitate and practice problem solving
• Statistical problem solving experts • Train and coach Green Belts and project teams

37
In order for Six Sigma to be successful within an

organization, there must be commitment from the
high level management positions. It is not enough to
execute this program without top level support. The
Executive Leader must be knowledgeable about the
program and provide the resources to institute the
program. They are the driving force for the the Six
Sigma philosophy within the corporation. From
there it flows from the Champion, Master Black Belt,
Black Belt and Green Belts.

Executive Leader Roles:
38
High Level Executive committed to Six Sigma

Success
Knowledgeable in Six Sigma Process
Assign key individuals to the Champion/Sponsor
Position.

Champion/Sponsor
39
Roles:
High Level Executive
Oversee the Black Belt positions
Provide resources to complete the job
Assist Black Belts to select projects
Benchmark with other organizations

Master Black Belt Roles:
40
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.
Responsible for the in-depth training involved for
the Black Belts and Green Belts.

Black Belt Roles:
41
Leaders of the Six Sigma process

Management and technical skills
Bring the project vision to reality
Solely dedicated to Six Sigma Program
Oversee Green Belts

Green Belt Roles:
42
Project Leaders
Support the Black Belt to complete the project
The Green Belt position works closely with the
Black Belts to decide how to complete the project.
They are individual who are trained in Six Sigma
but are also “close to the action” so they can
provide the necessary constructive input to
improve the process.

Six Sigma Methodology (DMAIC)
43
Define
Measur
e
Control
Analyse
Improv
e

DMAIC Steps
1. Define
44
1. Define 2. Measure 3. Analyze 4. Improve 5. Control
Identify projects that are measurable

Define projects including the demands of the customer and
the content of the internal process.
Develop team charter
Define process map

DMAIC – The Improvement Methodology
Define Measure Analyze Improve Control

Objective: Objective: Objective: Objective: Objective:
DEFINE the MEASURE current ANALYZE the root IMPROVE the CONTROL the
opportunity performance causes of problems process to eliminate process
root causes to sustain the gains.
Key Define Tools: Key Measure Tools: Key Analyze Tools: Key Improve Tools: Key Control Tools:
• Cost of Poor Quality • Critical to Quality • Histograms, • Solution Selection • Control Charts
(COPQ) Requirements Boxplots, Multi-Vari Matrix • Contingency and/or
• Voice of the (CTQs) Charts, etc. • To-Be Process Action Plan(s)
Stakeholder (VOS) • Sample Plan • Hypothesis Tests Map(s)
• Project Charter • Capability Analysis • Regression Analysis
• As-Is Process • Failure Modes and
Map(s) Effect Analysis
• Primary Metric (Y) (FMEA)
DMAIC Steps
2. Measure
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 Define performance standards

 Measure current level of quality into Sigma. It
precisely pinpoints the area causing problems.
 Identify all potential causes for such problems.

DMAIC Steps
3. Analyze
47
 Establish process capability

 Define performance objectives
 Identify variation sources
Tools for analysis

 Process Mapping
 Failure Mode & Effect Analysis
 Statistical Tests
 Design of Experiments
 Control charts
 Quality Function Deployment (QFD)
DMAIC Steps
4. Improve 48
1. Define 2. Measure 3. Analyse 4. Improve 5. Control
 Screen potential causes

 Discover variable relationships among causes and effects
 Establish operating tolerances
 Pursue a method to resolve and ultimately eliminate
problems. It is also a phase to explore the solution how to
change, fix and modify the process.
 Carryout a trial run for a planned period of time to ensure
the revisions and improvements implemented in the
process result in achieving the targeted values.
DMAIC Steps
49
5. Control
1. Define 2. Measure 3. Analyse 4. Improve 5. Control
Monitor the improved process continuously to

ensure long term sustainability of the new
developments.
Share the lessons learnt
Document the results and accomplishments of all the
improvement activities for future reference.

DFSS – The Design Methodology
Design for Six Sigma
Define Measure Analyze Develop Verify
 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)
Six Sigma – Case study
51
A dabbawala is a person in the Indian city of Mumbai

whose job is to carry and deliver freshly made food
from home in lunch boxes to office workers.
Dabbawalas pick up 175,000 lunches from homes
and deliver to their customers everyday.
Only one mistake is made in every 6 million
deliveries.
Accuracy rating is 99.999999. More than Six Sigma.

Six Sigma - First Generation (SSG 1)
52
 The era ‘1986 to 1990’ is referred to as the first

generation of Six Sigma, or SSG 1 for short.
 Pioneered at Motorola
 Statistical approach
 Measured Defects Per Million Opportunities (DPMO)
 Focused on:
 Elimination of defects
 Improving product and service quality
 Reducing cost
 Continuous process improvement

Six Sigma - Second Generation (SSG 2)
53
 In the 1990s, the focus of Six Sigma shifted from

product quality to business quality. General Electric
Corp. ushered in the second generation of Six Sigma,
or
SSG 2 as it is known.
 Six Sigma became a business-centric system of
management.
 Strong measurement on bringing dollars to the bottom
line.
 High potential candidates were selected as Black Belts.

Six Sigma - Third Generation (Gen III)
54
 Developed after the year 2000.

 Gen III can show companies how to deliver products
or services that, in the eyes of customers, have real
value.
 Combines Lean Manufacturing Techniques and Six
Sigma. Termed as Lean Six Sigma.
 Korean steel maker Posco and electronics maker
Samsung has begun a Gen III programme.

Conclusion
55
 A gauge of quality and efficiency, Six Sigma is also a measure of

excellence. Embarking on a Six Sigma program means delivering
top-quality service and products while virtually eliminating all
internal inefficiencies (Dedhia, 2005).
 A true Six Sigma organization produces not only excellent
product but also maintains highly efficient production and
administrative systems that work effectively with the company's
other service processes (Lucas, 2002).
 The primary factor in the successful implementation of a six
sigma project is to have the necessary resources, the support and
leadership of top management.

56

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ADVANCED MANAGEMENT

AMBIKA BHATIA -JIMS

AMBIKA BHATIA 03/26/2020

AMBIKA BHATIA 03/26/2020

Sales Growth • Output Variables

Manage the outputs.

Sales Growth • Output Variables

Manage the inputs; respond to the outputs.

Six Sigma is the measure of quality that strives for

AMBIKA BHATIA 03/26/2020

 Variation means that a 15

process does not produce 10

the same result (the “Y”) 5

Customers do not feel averages!

Customers want their pizza

 Guarantee = “30 minutes or less”

What if we measured performance and found an

 Managing by the average doesn’t tell the whole story. The

How many standard

 Sigma level measures how often we meet (or fail to meet)

Intense competitive pressures – especially from

AMBIKA BHATIA 03/26/2020

Axis graduated in Sigma

between + / - 99.9999998 % 0.002

AMBIKA BHATIA 12 03/26/2020

Design specification width

Mean - Spec Limit

Cp 0.33 0.66 1 1.33 1.66 2 2.33 2.66

Cpk -0.16 0.16 0.5 0.83 1.16 1.5 1.83 2.16

With a maximum process shift of +/- 1.5 

AMBIKA BHATIA 14 03/26/2020

- Customers or Suppliers: One opportunity per product delivered or

A quality level of "6" corresponds to les

Estimate the Count the

Follow the Indicator :

6= 3.4 dpmo

Conversion into "Sigma" can

AMBIKA BHATIA 17 03/26/2020

D.P.Op = 0.035 / 1367 = 0.0000256

"Sigma" level : 5.55

AMBIKA BHATIA 18 03/26/2020

•4000 wrong medical prescriptions each year

•More than 3000 newborns accidentally falling

AMBIKA BHATIA 19 03/26/2020

13 wrong drug prescriptions per year

AMBIKA BHATIA 03/26/2020

= A structured approach to continuous improvement

- Identify the product or service you provide

AMBIKA BHATIA 21 03/26/2020

AMBIKA BHATIA 03/26/2020

AMBIKA BHATIA 03/26/2020

Another way to look at it:

AMBIKA BHATIA 03/26/2020

Defects per Million % Accuracy

AMBIKA BHATIA 03/26/2020

Sigma % Good % Bad DPMO

Fig. 1 Cost of poor quality versus Sigma level