MMZG 539/QMZG 539

Six Sigma
Rajiv Gupta
BITS Pilani
Live Lecture 2
 Agenda
• Module 1
– DPMO and Yields
• Module 2
– Organization for Six Sigma
• Module 3
– DMAIC Process

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 Lecture 2
• Begin Module 1
– DPMO and Process Yields

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DPMO With 1.5 σ shift
Process Sigma DPMO Process Yield %

6.0 3.4 99.99966

5.0 230 99.97700

4.0 6,210 99.37900

3.0 66,800 93.32000

2.0 308,000 69.20000

1.0 690,000 31.00000

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 Concept of Six Sigma – Defect Generation
Customer Customer
Spec Spec

- nσ + nσ

Defects Defects

CH 1.2 /5
• Let us see how the defects are calculated for
different values of σ
• Let us take 2 σ. How can we calculate the
number of defects when the σ value is 2?

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• We need to determine the area under the
normal curve that will lie outside the +/- 2 σ
limits on each side, i.e.,

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 - 2σ + 2σ

Defects Defects

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• Typically, a normal distribution is characterized by the
mean and the standard deviation. What values are
tabulated in the Normal tables in books and in software
such as Minitab and Excel?
• The tables in books and software is based on the
standard normal distribution, which has a mean of 0, and
standard deviation = 1.
• To convert any normal variable into the standard normal,
we subtract its mean and divide by σ.
i.e., (X- μ)/σ

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• So the value we look up in the tables as Z is the number
which corresponds to the number of standard deviations
from the mean of the distribution.
• So to look at the area under the normal curve outside
the 2 σ limits, we need to look for values of Z = -2 and Z=
+2.
• One more thing we need to understand is that the tables
give either one sided or 2 sided areas under the curve.

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 One sided area under the curve

- 2σ + 2σ

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 Two sided area under the curve

- 2σ + 2σ

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• The table in the Pyzdek book gives the one
sided area under the curve to the left of the
point. Therefore for Z = -2 we get α = 0.0228.
Doubling it, we get 2 α = 0.0456 or 4.56%.
Converting to defects per million we get
45,600 Defects Per Million Opportunities. The
tabulated value for DPMO for 2 σ = 308,000.
Why the difference?

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• Due to the 1.5 σ shift. We will discuss that a
little later.

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 Process Yield
• Process yield refers to the number of times an error is
not made (or good parts are produced)
• Yield = (No. of opportunities – defects)/No. of
opportunities
• For 3 sigma, DPMO = 66800
• Yield = (1000000-66800)/1000000
= 933200/1000000 = 0.9332 or 93.32%

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 Sigma Level From Process Yield
• If we have a process that makes 4000 pieces in
one week and the number of defects
produced is 30, what is the sigma level for the
process?

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• Yield = (4000-30)/4000 = 0.9925
• So the area under the curve outside the limits (on both
sides combined) should be 1-0.9925 = 0.0075.
• What is the DPMO?
• The area under the one sided distribution will be half that,
i.e., 0.00375. This is the value of α/2 in the Normal Tables.
• If we look up the Normal distribution (also available as
Norms.Inv function in Excel), Norms.Inv (0.99625) = 2.675
• To this we add the 1.5 sigma shift
• So the sigma level for the process is 2.675+1.5
= 4.175
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 - 2.675σ + 2.675σ

α/2 α/2

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 4.175 σ Process with 1.5 σ Shift
Customer
Customer Spec
Spec

1.5 σ shift

α/2
α/2

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 Customer
Customer Spec
Spec 2.675 σ
1.5 σ shift

4.175 σ with shift

α/2 α/2

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 Cost of Defects
• DPMO refers to the number of defects per million
opportunities
• Let us consider an example of Amazon that made 38.6 million
deliveries on Cyber Monday in 2013.
• If Amazon operates at six sigma level, the number of delivery
errors it could make that day would have been 3.4*38.6 = 125
• If each error cost Amazon Rs. 1000 (return/reshipping, etc),
the total errors would have cost Amazon 1,25,000.
• If Amazon operated at 5 sigma, the expected number of
errors would have been 233*38.6 = 8574 at a cost of Rs.
85,74,000

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Sigma Level DPMO Estimated errors Cost of errors
1 sigma 6,90,000 2,53,92,000 25,39,20,00,000
2 sigma 3,08,000 1,13,34,400 11,33,44,00,000
3 sigma 66,800 24,58,240 2,45,82,40,000
4 sigma 6,200 2,28,160 22,81,60,000
5 sigma 233 8,574 85,74,000
6 sigma 3.4 125 1,25,000

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 Chart Title
800,000

700,000

D 600,000
P 500,000
M
O 400,000

300,000

200,000

100,000

0
0 1 2 3 4 5 6 7
Sigma Level 23
From: “The Six Sigma Handbook” by Pyzdek and Keller
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 What We Observe
• The increase in errors is about 68 times going from 6 to 5
sigma. Going from 5 to 4 sigma, the errors go up by
about 26 times. Although the raw number of errors going
from 6 to 5 sigma is only 8449 compared with an
increase of 219586 errors going from 5 to 4 sigma
• So as the sigma levels rise, the rate of improvement
increases faster. Also, the difficulty of moving from level
3 to 4 is easier than moving from 4 to 5, which is easier
than moving from 5 to 6.

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From: “The Six Sigma Handbook” by Pyzdek and Keller

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From “The Six Sigma Handbook” by Pyzdek and Keller
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 System In Series

Stage 1 Stage 2 Stage 3 Stage 4

Yield from a stage i is Yi

Yield from the system is Ysys

Ys = Y1xY2xY3xY4
If Y1=Y2=Y3=Y4 = 0.9
Ysys = 0.94 = 0.656

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N Yi Ysys Yi Ysys
1 0.9 0.9 0.99 0.99
2 0.9 0.81 0.99 0.9801
3 0.9 0.729 0.99 0.9703
4 0.9 0.6561 0.99 0.9606
5 0.9 0.5905 0.99 0.951
6 0.9 0.5314 0.99 0.9415
7 0.9 0.4783 0.99 0.9321
8 0.9 0.4305 0.99 0.9227
9 0.9 0.3874 0.99 0.9135
10 0.9 0.3487 0.99 0.9044

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 At Six Sigma Level
N Yi Ysys
1 0.9999966 0.9999966
2 0.9999966 0.9999932
3 0.9999966 0.9999898
4 0.9999966 0.9999864
5 0.9999966 0.9999830
6 0.9999966 0.9999796
7 0.9999966 0.9999762
8 0.9999966 0.9999728
9 0.9999966 0.9999694
10 0.9999966 0.9999660

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 Lecture 2
• End of module 1

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 Lecture 2
• Begin Module 2
– Organization for Six Sigma

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 Project Team
Top Mgt

Process Owner

Champion

Black Belt

Team Members
Green Belt

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 Top Management
• Identifies the Big Financial Impact issues critical to
– Customer
– Quality
– Cost
– Delivery
– Productivity
• Assures linkage with the organisation’s strategy
• Assigns projects, roles and responsibilities
• Arranges training
• Provides resources, removes barriers
• Conducts periodic reviews
• Provides encouragement
• Sustains the campaign
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 Champion
• Accountable to the top management for results

• Develops the Charter with Black Belt / Leader

• Provides link between the team and top management

• Helps to obtain appropriate people and other resources

• Ensures that the team is making progress as planned

• Reviews team progress

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 Process Owner
• He has the responsibility for the particular process

• Understands how the process works, its capability and its relation
with other processes

• Monitors the the performance of the process to see how well it

meets the customer requirements

• Sustains improvement by –
– Empowering the team to make changes to the process
– Provides technical and process inputs whenever required
– Breaks down barriers that stand in the way of improvements

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 Black Belt / Team Leader
• Responsible for the successful completion of the project

• Assists Champion to develop the project charter

• Has domain expertise

• Teaches and guides team members on six sigma methodology

• Provides leadership for team effort

• Shares work load
• Negotiates for resources with champion
• Responsible for communication of progress and documentation
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 Team Member / Green Belt
• Has subject knowledge

• Has been trained for green Belt / QC Tools / Problem solving

• Works as a team member and completes the task assigned

• Participates in the team for

– Planning
– Brain storming
– Data Analysis
– Experimentation
– Implementation
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 Lecture 2
• End of module 2

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 Lecture 2
• Begin Module 3
– DMAIC Process

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 DMAIC
• The DMAIC (Define-Measure-Analyze-Improve-
Control) process has its origins in the
PDSA/PDCA cycle of Deming. It was developed
at Motorola by Bill Smith and Mikel Harry.
• Mikel Harry expanded the process to RDMAICSI
(Recognize-Define-Measure-Analyze-Improve-
Control-Standardize-Integrate).
• Most Six Sigma work is based on the DMAIC
process
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Six Sigma DMAIC Cycle
Define

Control Measure

Improve Analyse

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• There are several approaches/models of problem solving
including PDCA, DMAIC, 8D, Toyota’s approach, the
Scientific Method, etc.
• Although each specific model has its own nomenclature
and specific steps, the basic approach remains similar
across the models.
• We begin by recognizing there is a problem, we try to
understand the problem, we try to arrive at possible
solutions, we evaluate the options and select a solution,
we implement the solution, and check whether the
implementation was all right.
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PDCA DMAIC A3/8 Step 8D

Plan Define Clarify the problem 1. Form a team

Breakdown the 2. Describe the problem

Measure problem

Set a target 3. Define containment actions

Analyze Analyze root cause 4. Analyze root cause

Develop
5. Develop corrective actions
countermeasures

Do Improve Implement 6. Implement corrective actions

countermeasures
Check Control Evaluate results 7. Define actions to prevent
recurrence
Standardize success 8. Congratulate team
Act

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 D = Define the Problem
• Describe the problem in operational terms to
facilitate further analysis. Precisely specify the
process or problem to be evaluated. Identify
customers and the CTQs. Boundaries, beginning of
the process, end of the process, what is included,
time frame, etc.

• Tools: Process Maps, Relations Diagram, Affinity

Diagram, Tree Diagram, C-E diagram, FMEA

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 M = Measure
• Allows quantification of inputs (key process variables)
and outputs. Measure the internal processes that
impact the CTQs.

• Measure/Collect Data: Process capability

• Tools: Observations, listening, communications/

feedback from operators. SPC Tools -- Histograms,
Control Charts, Gauge Studies (Reproducibility,
Repeatability), etc.

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 A = Analyze
• Identify key variables that create errors (e.g. TGWs,
warranty rates/issues), excessive variations. Ask why?
Experiment. Plot the data: Always.

• Tools: P-Charts, Time Series, Control Charts,

Normality, Box Plots, Scatter Diagrams /Correlation,
C-E, Pareto Charts, Experiment Design (DOE), Plot
Main Effects and Interactions, Tests of Hypotheses,
ANOVA, Model Building, Regression Analysis, etc.

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 I = Improve
• Generate ideas for improvements. Determine factors
and levels of variables that produce significant
effects; Determine optimum process settings

• Tools: DOE, Taguchi Methods, Tests for Pairwise

Comparisons of Means

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 C = Control
• Establish methods/procedures to assure compliance
--that the new improvements can be put in place and
maintained/controlled with least
inspection/sampling.

• Install Quality System(s)—Define Approach,

Responsibility, Who, What, When, How—Standard
Operating Procedures, SPC, Control Plans, Audits,
Change Procedures, etc.

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 Improvement Diagram
Analyze Improve & Control
Define Measure
Establish Focus Examine Current Analyse Causes Act on Causes
Situation
Root Causes Actions
Project
Objective Authority with
Current average Div Managers
is 20 days; Min
9 and Max 55 Inadequate
Decrease the knowledge
time required days for
domestic travel. about vouchers
to get
reimburseme Papers get
nt for travel For foreign lost in the
expenses to travel the avg. zonal office
an average of is 37 days; Min Same rules for
4 days by 1st 31 and Max 76 local, inter
March days state and
foreign travel

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DMAIC Cycle

Lots of problems
Select a problem
Define the scope
Based on
CTQ
D
TALK
Collect data with
accuracy & precision
TO
PRODUCT
(Y)
M
List Suspect Variables
Prioritize variables TALK
Evaluate top few TO
PROCESS
(X)
A
Try out on pilot basis &
Check results
I
TALK TO
CREATIVE
MINDS
Convert statistical solution
to an actual solution

Standardize and monitor

C
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Questions?

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