Six Sigma brief

SIXSIGMACONTINUOUSIMPROVEMENTPROCESSQIAImproveQualityReduceCostProductivityImprovesCaptureMarketProvidesjobsandmorejobsModelsoftherelationshipsaffectingqualityandbusinessperformanceDeming’sModel:lessrework,lessscrapIncreasecycletime,increasethroughputbetterquality,lowerpriceOverallsocietybenefitsCOSTOFPOORQUALITY(COPQ)•ExternalFailureCosts–WarrantyAdjustments–Repairs–CustomerService–ReturnedGoods–ReturnedRepairedGoods–ProductRecalls–ProductLiabilitySuits–OpportunityCosts……………•InternalFailureCosts–Scrap–Rework–RE-INSPECTIONofRework–DowngradingBecauseofDefects–LossesCausedbyVendorScrap–DowntimeCausedbyDefects–FailureAnalysis……………..•AppraisalCosts–ReceivingInspection–In-processInspection–LaboratoryInspection–OutsideLaboratoryEndorsements–SetupforTesting–MaintenanceofTestEquipment–QualityAudits–CalibrationofQualityEquipment………..•PreventionCosts–QualityEngineering–DesignandDevelopmentofQualityEquipment–DesignVerificationandReviewtoEvaluatetheQualityofNewProducts–QualityTraining–QualityImprovementProjects–QualityDataGatheringAnalysisandReporting–OtherProcessControlActivitiesUsedtoPreventDefects………………LostOpportunityScrapReworkInspectionWarrantyRejectsLostsalesLatedeliveryEngineeringchangeordersLongcycletimesExpeditingcostsExcessinventoryTheCostofPoorQuality(COPQ)“Iceberg”TraditionalQualityCostsAdditionalCostsofPoorQuality(intangible)(tangible)4-8%25-35%(EasilyIdentified)(Difficultorimpossibletomeasure)LostCustomerLoyaltyMoreSetupsSixSigmaPhilosophy•Weareinbusinesstomakemoney•Wemakemoneybysatisfyingneeds•Weareabletosatisfyneedsbydoing•Everyneed/dopairisaninteraction•Theaimofcustomerfocusisonimprovingneed/dointeraction•Repetitionofthesameactionconstituteaprocess•Improveourbusinessmeansimprovementofourprocesses•Customersneedproducts/serviceson-time,withzerodefects,withlowercost•Asprocesscapabilityimproves,theproductqualityincreases•Asqualityincreases,costsandcycle-timegodown…………...•Thereductionofdefects,cycle-time,costleadstoimprovedcustomersatisfaction•Ascustomersatisfactionimproves,thelikelihoodofdoingbusinessincreases•Asbusinessincreases,we(asindividualandsociety)growandprosperWhatisSixSigma?Sigmaisastatisticalunitofmeasurewhichreflectsprocesscapability.Thesigmascaleofmeasureisperfectlycorrelatedtosuchcharacteristicsasdefects-per-unit,partspermilliondefective(PPM),andaprobabilityofafailure/error.Thesigmavalueindicateshowoftendefectsarelikelytooccur.Thehigherthesigmavalue,thelesslikelyaprocesswillproducedefects.Assigmaincreases,costsgodown,cycletimegoesdown,andcustomersatisfactiongoesup.Whatisthemeaningofquality???99%Good(3.8Sigma)99.9997%Good(6Sigma)20,000lostarticlesofmailperhourSevenarticlesofmaillostperhourUnsafedrinkingwaterforalmostOneunsafeminuteeverysevenmonths15minuteseachday5,000incorrectsurgicaloperations1.7incorrectoperationsperweekperweek2shortorlonglandingsatmostmajoroneshortorlonglandingeveryfiveairportseachdayyearsateachairport200,000wrongdrugprescriptionsperyear68wrongdrugprescriptionsperyearNoelectricityforsevenhourseachmonthOnehourwithoutelectricityevery34yearsSixSigmaIs….SixSigmaisdisciplinedmethodologyforcontinuousimprovementfor•Reducingprocessvariabilityandkeepingitreduced•achievebenefitsfromimprovementsin:•betterproduct/processquality•reducescarpandrework•reducecycletime•betterproduct/processdesign•reducemajorexpanses•Atoolsettomakethatchangepractical•Empoweredpeoplehavethecontroltheyneedtoimprovethewaytheywork•Acommonlanguagefordiscussing,measuringandcomparingprocesscapabilities•Apowerfulcompetitiveadvantage……….-6-5-4-3-2-1X+1+2+3+4+5+6NormalDistributionShifted1.5ProcessCapability(Sigma)PPMYield2308,53769%366,80793.3%46,21099.3%523399.98%63.499.9997%SigmaMeasures-ProcessCapabilityPerformanceLevelSIGMA%Yield#ofDefectsperMillion(DPM)A+699.999663.4A599.9767233B499.37906,210C393.366,807D269308,537F131691,462CostofQuality%1%ofsales5-15%ofsales15-25%ofsales25-40%ofsalesC93.366,8073•Establishorganizationalmeasurements•Identifythesigmalevel•EstablishCOPQmeasurementprocess•Identifythemajorareasforimprovement•3to4sigmameans15%to25%costofsales:-Whichmeansifyoursalesis$100millions,youcansaveupto$25millionsbyimplementingSixSigmaprogram.•ThesavingsiscontinuousbasisyearoveryearWhatistheBenefitsofSixSigma???OutputMeasurement•Failurerate(internalandexternal)•Warrantycost•Repaircostperunit•Cycletimeperunit•Cycletimefornewproductdevelopment•#ofengineeringchanges•Supplierissues•WIPinventorycost•Finishedgoodsinventory•Defectsproductarrivalatcustomer•#ofserviceeventsLearnhowthecompanieslikeGeneralElectric,AlliedSignal,Motorola,LockheedMartin,AmericanExpress,J.P.Morgan&Chase,andothersuseSixSigmamethodologiestoreducedefects,improveprocesses,lowercost,higherprofit,increasecustomersatisfaction,anddriveimprovementtoanewlevels.“TheSixSigmaQualityinitiativeshasloweredGE’scostsbydramaticallyreducingrework,simplifyingprocesses,andreducingdirectmaterialcosts.Designforsixsigmahasbeenakeytotheintroductionofnumeroushigh-qualitynewproductswithsignificantlyenhancedfeatures.”JohnF.Welchjr.,GeneralelectricChairmana