Welcome to LSSGB Competency

Development Program
By
KPMG
Introduction to Six Sigma
• Evolution of six sigma
• Six Sigma was introduced by Bill Smith in year 1986 - Motorola
• Quality Inspection -
• ISO – 1947
• JUSE – Japanese Union of Scientists and Engineers
• 1979 – Bob Gelvin
• MBNQA – 1988
• 1995 – GE – Jack Welch
Counting the f’s
Read the passage given below, individually and considering that every occurrence of the alphabet “f”
is a defect, report out the number of f’s mentioned in the passage.

“The necessity of training farm hands for first-class farms in the

fatherly handling of farm livestock is foremost in the minds of farm
owners. Since the forefathers of the farm owners trained the farm hands
for first-class farms in the fatherly handling of farm livestock, the farm
owners feel they should carry on with the family tradition of training
farm hands of first-class farms in the fatherly handling of farm livestock
because they believe it is the basis of good fundamental farm
management.”
Evolution of Lean
• Lean, similar to Six Sigma is a process improvement that is solely based on
the fundamental goal of waste elimination and flow maximization.
• In other words, meeting customer requirements faster, quicker and better,
that is in a more effective and efficient way.
• Lean manufacturing, as management philosophy, came mostly from the
Toyota Production System (TPS). The term “lean” was first introduced in
article “Triumph of the Lean Production System” written by John Krafcik
in1988.
• Taiichi Ohno, considered to be the father of the Toyota Production System,
was instrumental in improving overall customer value by focusing on
reduction of the process wastes at Toyota.
 What is Six Sigma
• Six Sigma is a continuous improvement methodology which focuses
on minimizing variations in the process.
PDCA Variations: Deviation from the
standard value
SDCA Std login time: 9:30 AM
PDCA 1 – 9:29 am
2 – 9:27 am
SDCA 3 – 9:31 am
PDCA 4 – 9:32 am CCV – Common
5 – 9:29 am Cause variations
6 – 9:31 am
PDCA – Plan Do Check Act .
SDCA – Standardize Do Check Act .
.
16 – 11:45 am – SCV – Special cause
• CCV – These are the variations which are observed in the process
when the process is not affected by any external entity or adverse
behavior of the process parameters.
• SCV – These are the variations which are observed in the process
when the process is affected by any external entity or adverse
behavior of the process parameters.

Six Sigma is a CI methodology which focuses on

eliminating the effect of SCV and minimizing
the effect of CCV.
Focus of Six Sigma
• Reduce Variation
• Reduce Defects
• Reduce Cost
• Reduce Cycle Time
• Delight Customer
Definitions of Six Sigma
Definitions of Six Sigma:
Metric: Demonstrates the level of Quality at 3.4Defects Per Million Opportunities or
99.99967% of process Yield

Methodology: Two approaches or methodologies

Management System: Overall organizational strategy to drive improvements in the

organization

Commitment: It is a commitment given by producer to the consumer to provide good

quality products at reduced costs.
Used to
Methodology While
designing
improve the new
existing processes or
processes systems

D - Define D - Define
M - Measure
M - Measure A - Analyze
A - Analyze D - Design
I - Improve V – Verify

C - Control DFSS – Design for

Six Sigma
Significance of Six Sigma
Define Phase
• Objective: To identify the opportunities of Improvement and to define
the problem

Current Defects
Customer feed back
Processing time • Customer
Employee feedback • Process Parameters
Bottlenecks in the process • Top management Target
Punctuality
Costs
Tracking current deviations
Technology developments
Benchmarking
Define Phase
• Objective: To identify opportunities for improvement and to define
the problem
Step 1: To identify opportunities for improvement Feedbacks VOC – Voice of
Internal Customer Complaints Customer
Customer - External Customer Surveys
Process Performance – KPI’s – Key Performance indicators Focused group
Management Target discussions
CTQ – Critical to
Quality
Define:
Objective: Identify and define the problem

Step 1. Identification of the problem(Opportunity for improvement)

Sources: Channels:

Customer: Feedbacks, surveys, focused group discussions

Process Performance:
Management Targets:

Process Performance: KPI’s – Monitor and track the KPI’s

Find the consistent gap – OFI

Management Target - Annual Business Plan – Objectives (Big Y)

Voice of Customer(VoC):
You take too long to sanction a loan
You always serve cold pizza
CTQ – Critical to Quality
N – Name of metric - loan processing time
U – Unit of measurement - hr
T – Target- 24 hrs
N – Temperature of pizza
U – UOM – degree Celsius
T - 70
Analyze the VOC
• What are the different categories of VOC
• Prioritize the VOC categories

1) Affinity Diagram
2) Kano Model
Affinity Diagram
• Record each VOC on a post it note in bold letters

• Without talking sort the ideas simultaneously as a team into 5 –10 related groupings For each
grouping create summary or header cards using consensuses
• Draw the final affinity diagram connecting all finalized header cards with their grouping
Affinity Diagram – An Example
Personal
Flexible product Easy process Availability Advice/consulting
interface

Knows about my
Low interest rate Easy application Will come to my facility Knowledgeable reps
finances

Available outside normal business Knows about my

Variable terms Easy access to capital Professional
hours business

All charges Makes finance

Quick decision Available when I need to talk Friendly
clearly stated suggestions

Make me feel Cares about my

Pay back when I want Can apply over phone Responsive to my calls
comfortable business

No prepayment Know status of loan during Patient during Has access to

Talk to one person
penalties/ charges application process experts

Know status of loan (post- Provides answers to

Pre-approved credit Will come to my facility Knowledgeable reps
approval) questions

Preference if bank Available outside normal business

Variable terms Professional Calls if problems arise
customer hours
Kano Model – Dr. N. Kano – Japanese Sensai
 KANO Model
Satisfaction
+

More the Better

Delighters

Dysfunctional - + Functional

Must Be

-
Dissatisfaction
Step #2 – Creation of Project Charter
• Business Case – Linkage of the project to organizational objective, benefits to
the organization.
• Problem Statement – 1) What is the Pain, 2) What is the Impact of Pain, 3)
Since when is the pain (Data Period)
CTQ
Milestones UOMPlanned StartCurrent
Actual
Level
Start Target
Planned
Level end TimeAcp
• Goal Statement - SMART Date Date date da
Define
• Scope of the project CST days 4 2 30days
Measure
In Scope: Health Insurance Analyze
Improve Insurance, Fire etc
Out of Scope: Motor Insurance, Transit
Control
• Milestones
• Team Details
Sponsor Signoff:
 CTQ UOM Current Level Target Level Time period
Project Charter
CST days 4 2 30days

• Project charter is a one page document which provides complete information about the project
• Business Case – How the project is linking with the organizational objectives
• Problem Statement – 1. Pain
2. Impact of the Pain
3. Data period for pain – since when is the pain
Based on the data from 1st Jan 2020 to 31st March 2020, its observed that the Claim
Settlement Time 4 days, which is on a higher side as compared to industry standard
of 2 days, this high claim settlement time is resulting in loss of revenue by 20%.
• Goal Statement
SMART – Specific, measurable, achievable, realistic and timebound
Scope of a project:
In Scope: Medical(Health insurance) Claims
Milestones Planned Start Actual Start Planned end Actual end
• Scope of the project
Date Date date date
• Milestones Out of Scope: Marine, motor etc
• Team Details Define
Measure
Analyze
Team Details
• Sponsor – CXO or a Director level person
• Champion - Toll Gate Review:
• Black Belt
• Green Belt(Leader)
• Team Members
• SME’s – Subject Matter Experts
Step #3 - Process Mapping
• Gemba Walk – process walkthrough
• Creation of Process Map
1) High Level Process Mapping – SIPOC – Supplier Input Process Output Customer
2) Activity (Sub Process) level process Mapping – Flow chart, Top down charting
and functional deployment chart(Swim lane Chart)
SIPOC – TMT Steel Rod Making

SUPPLIER INPUTS PROCESS OUTPUT CUSTOMER

Supplier 1 Raw Material(Ore) Iron Making Molten Iron Steel Making
Fluxes, Coke, Coal Slag Slag Yard

Iron Making Molten Iron Steel Making Billets Rolling

Steel Making Billets Rolling Final Products(TMT) Customer C

Examples: Sub-process mapping
Process flowchart Top down flow chart/ Deployment or cross-functional
Top down charting map/ swim-lane flowchart

Planning for a party

Dept 1 Dept 2 Dept
1.0 2.0 3.0
Determine Find Invite
party size location guests Creates
List
1.1 2.1 3.1
Yes
Decide Decide Complete Writes Is the Sends out the
on budget theme invitations
invitation guest list invitation
No Covered

1.2 2.2 3.2

No
Decide on Select Send
Yes guest list location invitations
Completes
list

Invitation task
completed

© 2018 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
25
“AS-IS” Process Mapping: Cross Functional
Template
Customer

Sales

Planning

Procurement

Operations

Logistics

2 days
3 days
Y(Dependent Parameter) = F(X) (Independent parameters which influence Y)
CTQ (Productivity, CSAT, Defects, Cycle time) Causes
KPOV - Key Process output variable ; KPIV – Key process input variables
Lag Indicator Lead Indicators
 Measure Phase
• Objective: Validate the Measurement System and Collect the Data

Data

Continuous data is a
type of data which we Discrete data is a
measure Continuous Data Discrete Data type of data which
we count
Basic Statistics

Measures of Central Tendency:

Mean
Median
Mode
• Measures of Variation
- Range = Max - Min
- Variance – Square of std dev.
- Standard Deviation – Standard error from the mean value
• Data Distribution – Normal Distribution
 LCL – Lower Control Limit UCL – Upper control limit
Range
Variance
Std Dev
CCV
SCV
SCV

  𝜎 −5
−6   4 𝜎−3
  𝜎−   𝜎 -2
  -1
  ´𝑥  +1
  +2
  +
  +
  +
  +
 

Normal Distribution:
It is a symmetric type of data distribution – Symmetric above
Measures of central tendency – Mean, Median and Mode
Is a bell shaped curve
It ranges from – Infinity to + Infinity
Variations are represented in terms of Standard deviation
Step 1:Data collection plan
Parameters Operational Type of Type of Sample Reportin Resp of Data Source
Definition Data Sampling size g data Collecti
estimati Frequen collecti on
on cy on period
CTQ(Productivi C/D Population Daily Ram Process
ty, defect rate, data /ERP
CT etc) considered
Sham

SHAFT S–
Vernier
Operational definition is the standard R – screw
gauge
guideline which tells about when, Sh -
where, how to collect the data
Sampling
(IIIII)
(IIIII)
1) Random Sampling: Take the samples in
random order, in random sampling every unit
in the population has equal probability to get
selected as sample
2) Systematic Sampling: sampling is done on
the basis of a set order
Population 3) Stratified Sampling: Stratified random sampling
Stratified systematic sampling

Auto 9:00 – 5
Infra
Customer 10:00 – 5
Sample Customer
Population s 11:00 – 5
12:00 - 5
Sample is representative unit of the
population
Defense
Conditions for sampling
customer
1) Population size is large
2) Time required for data
collection is high 4) Cluster Sampling/Rational Subgrouping/Sub
3) Cost of data collection Group:
 100 data points

Individual Sampling
Sub Group Sampling
1-1
1) 9:00 – (IIIII)
2 -1
2) 10:00– (IIIII)
3 -1
3) 11:00 – (IIIII)
4-1
4) 12:00
5 -1
5
6
20
100 - 1

Short term variation – within sub group variation

Long term variation - Between sub group variation
 Sample size estimation – Minimum number
of samples required to perform an analysis

To determine Avge. wt. of men in Bangalore city

Allow an error = 2kg

X-2 XKg X+2

S, N - 1) Margin of Error
2) Population standard deviation – std.dev. Of the historic
data
3) Confidence level – 95%

S = Z^2sigma^2/E^2
 Formulas for sample size estimation

Continuous Data Discrete Data

The formula for calculating the sample size for continuous data is
For Discrete Proportion data

2
2 2 N= 1.96 P(1-P)
Zc  1.96  E
N= n=
E E

Where:
Where:
n = minimum sample size
n = minimum sample size
P = estimation of the proportion of the population or process which is defective
 = estimate of standard deviation of the population

E= Margin of error E= Margin of Error

1.96 = value of Zc at 95% confidence 1.96 = value of Zc at 95% confidence

Step 2: Measurement System Analysis(MSA)
1 – 10.01mm
2 – 10.03mm
3 – 10.05mm
4 – 10.00mm Overall variation = Process Variation + Measurement System Variation
5 – 9.98mm Measure
6 - 9.99mm ment
System
Measure
ment
MSA Equipmen Operator
t
Continuous Data – Guage
R&R Study

Discrete Data – Attribute

Agreement Analysis
Guage R & R Study
Total Guage R&R
OV = PV+MSV

Repeatability: Repeatability or Repeatability error is the error observed

while measuring same parts, with the same measurement equipment
and same operators multiple times.
Reproducibility: It is the error observed while measuring same parts,
with same measurement equipment but with different operators
multiple times.
Case 1
96 Case 2(a) Case 2(b)
98 96 97
97 96 97
96 97
 AIAG – Automotive industry action
group
Steps to conduct GRR Study
• Select 10 parts from the process, such that these 10 parts represent
the entire range of process variation
Part Operator Response
1 A 10.1
• Select 3 operators 3 A 10.03
• Number the parts from 1 to 10 6and mask the number.
A 9.98

• Select an operator and get measured all 10 parts in the random order
provided by you
• Repeat Step #4 with other 2 operators
• Repeat Step #4 and Step #5 either 2 or 3 times
 Analysis of GRR study output – Acceptance
criteria
Study Variation (SV%) % Contribution Acceptable Criteria

Good Measurement AIAG –

0% to 10% Less than 1% System Automotive
industry
Value of Conditionally Accepted action
Total GRR 10% to 30% 1% to 9% (Depending on the group
Criticality of the
Application)

Greater than 30% Greater than 9% Not Acceptable

Number of Distinct
Categories Less than 5 Not Acceptable
Analysis of GRR study output
• Total GRR

% Study Variation % Contribution

Total GRR Value
 Attribute Agreement Analysis
1 – Poor
3 – Avge
5 - Excellent

Sl.No. Agreements
1 Within Appraiser Agreement
2 Appraiser to Standard Agreement
3 Appraiser to Appraiser Agreement

Std Agreements Decision

Agreements>90% Good M.S, can be used for data collection
80<Agreement>90 Conditional Acceptance
Agreement<80% Not Acceptable
Step #3 – Collection of Data according to
Data Collection plan
Step 4: Process Baselining
Sigma Value -

s
Scale of Six Sigma
Sigma level -

Sigma level calculation

Discrete Data: 3
1) DPMO Method
2) RTY Method 2

Continuous Data: 1
Process Capability Method
DPMO – Defects per million
Pay
opportunities Date

Amt in Words
Amt in figures

Signature

DPU = No. of defects observed/Total number of items inspected

DPO = No. of defects observed/(Total number of items inspected*Opportunity per item)

DPMO =[ No. of defects observed/(Total number of items inspected*Opportunity per

item)]*10^6

Question: A restaurant serves 1000 meals a day, out of which 100 were served
late and 50 were served cold, Each late serving and cold serving is considered
as a defect, then calculate DPMO
 RTY Method – Rolled Throughput Yield
RTY = 70%
90/100 80/90 70/80
100
80 70
90
P1 P2 P3 I Good - 100

10 - rework 10 - rework 10 - rework

First Pass Yield, First Time right Bad - 0

Yield = Output/Input
Y = 100%
Process Capability Method
Process Capability: Ability of the stable process to meet customer
requirement
 LSL LCL UCL

Process Capability Method USL

Process Stability: when my process is free from SCV,

and the variations in my process are constant over a CCV
period of time.

Process Capability: It is the ability of stable process to

meet the customer requirements
  𝜎 −5
−6   4 𝜎  22
  𝜎− 23 24
 ´
25 26 27 28 +
  +
  +
 

Cp = Total Customer requirement/Total Process Variation

Cust. Order = 1000 units = Average wt = 25g+- 3g (USL – LSL)/6s
= 28 – 22/6*1
Upper Specification Limit(USL) = 25+3 = 28 Cp=1
Lower Specification Limit(LSL) = 25-3 = 22

Process Avge = 25g Data Normality test

Process variation Std.dev = 1g
CASE -1
 LSL = 22
Process Capability Method USL = 28

Cust. Order = 1000 units = Average wt = 25g+- 3g CCV

Upper Specification Limit = 25+3 = 28

LSL = 25-3 = 22
  𝜎 −5
−6   𝜎−
  4 𝜎 20 21 22 2  3 24 25 26 27 28 +
 
Process Avge = 23g
Process variation Std.dev = 1g Cpk – Process Capability index
Cpk =Min { USL – Xbar/3s, or Xbar – LSL/ 3s}
Cp = (USL – LSL)/6s
=Min {(28 – 23)/3*1 or (23-22)/3*1}
= 28 – 22/6*1
= Min {5/3, 1/3}
Cp=1
Cpk = 0.33

Sigma level = Cpk*3

= 0.33*3 = 1
If my process is operating at a level of 6 Sigma, what would
be CPK?
Analyze
• Data Door Approach: Relationship between the identified causes and
the CTQ
• Process Door Approach: We use lean concepts to understand or
identify the wastes in the process and we try to eliminate the same

Data Door Approach:

Y(CTQ) = F(X) (X1, X2,X3,X4…..)

Step 1 - Identification of Probable causes
Cause and Effect Analysis
Fishbone diagram
Ishikawa diagram Man
Method
Mother
nature

Effect – High PR to PO
lead time, low
productivity, high
defects

4P
Measurement Machine
Material People
Policy
Procedure
Product
Filters
1) Controllable/un controllable
2) Direct Solutions – lack of skills,
lack of SOP etc.

Step #2 – Prioritization of the causes

1) Pareto Analysis
2) Control Impact Matrix
Pareto Analysis
C – Freq
A - 45
B - 32
C - 24
D - 16
E–8

Wilfred Pareto
Pareto Analysis works on 80:20 principle

Cause Freq Cum Freq

A 45 45
B 32 77
C 24
Pareto Diagram/ Pareto Analysis
Vital Few
causes

Useful Many causes

Cum. Fre.
Freq. of occ %

A B C D
 Control Impact Matrix
Control – Control on the cause
Impact – Impact of the cause on the process

C–L C–H
HIGH

I-H I-H
Impact

C–H
C–L
I-L
LOW

I-L

LOW HIGH
Control
Step #3 – Data Door Approach – Validating the relationship
between probable causes(X) and the CTQ(Y)
• Data Analysis Methods

Y(CTQ) = X1, X2,X3,X4…

Hypothesis Testing
Hypothesis Testing
Hypothesis: It is a claim that I want to test or prove.

To test Hyp. I require 2 things - Claim, As is condition

Null Hypothesis (H0) Alternate Hypothesis(Ha,H1)
As Is Condition, Status Quo Claim you want to test
Always Represents equality Never comes with equality sign(it never
Hyp. Of innocence represents equality)
Hyp. Of Guilt
Research Hyp
 Actual Accepted
GP GP
GP BP

Type 1 Error(Alpha Error) (5%): Probability of rejecting null hyp. When it is

true
Actual Accepted
BP BP
BP GP

Type 2 Error(Beta Error) (10%): Probability of accepting null hyp, when it is false
Confidence level = 1 – Alpha
= 1 - 0.05
= 0.95 = 95%

P Value: Probability of getting an observed sample when null hyp. is true.

P value < Alpha Value - Reject Null Hypothesis

P value > Alpha Value – Fail to reject Null Hyp.

Population

“ P low null go, P high null Hai”

Infer the @ 95%
confidence
Sample
Sample
Type of Population Parameters
Comparison
Mean Proportion Median Std. Dev.
One to 1 Sample T 1 Proportion
Standard test Test
One to One 2 Sample T Test 2 Proportions
Test
Multiple One Way Chi Square test
ANOVA for association

Steps to conduct Hyp. Test

1) Write Hyp. Statements
2) Decide the confidence level(95%)
3) Select appropriate testing method and
perform the test and obtain the p value
4) Take Decision based on p value
5) Write Conclusion
Note: When you are performing mean
tests, if the sample size is less than 30
then use T tests, else if sample size is
more than 30 then use Z tests
Correlation Analysis Y = Mx+C
• Linear Relationships
• Non Linear Relationships
Y Y

X X
Y

X
Correlation Analysis
Correlation coefficient (r)

-1 to +1

+-(0.8 to 1) – Strong correlation

+-(0.5 to 0.8) – Moderate correlation
Less than +-(0.5) – Weak correlation
 Regression Analysis

Y(CTQ) X1
X2
X3

CTQ = A1*X1+A2*X2
Regression analysis gives 3 insights:
1) Out of identified causes, which of the causes are
influencing my output
2) How much percentage of variation in output is
answered due to the significant causes
3) Prediction model – by using this model you can predict
output at desired levels of input