Total quality parameters - new ventures

SIXSIGMA

Total Quality Parameters – New VenturesTotal Quality Parameters – New Ventures

Venkatesh SarvasiddhiHead-Direct MarketingHCL Technologies

SIXSIGMA

Hidden Costs

• Excessive use of material

• High inventory

• Inadequate resource utilization

• Cost of redesign and re-inspection

• Cost of resolving customer problems

• Lost customers / Goodwill

Hidden costsHidden costs

• Conversion efficiency of materials

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BR

EA

KT

HR

OU

GH

ST

RA

TE

GY

Identification

Characterization

Optimization

Institutionalization

Define

MeasureAnalyze

ImproveControl

Standardize

Identify key businessissues

Understand current performance levels

Achieve breakthroughimprovement

Integrate Six Sigma in day to day functioning.

Stage Phase Objective

The Six Sigma roadmap- Breakthrough strategy

SIXSIGMA

Accurate and PrecisionAccurate and Precision

Accuracy & precision of a process can be Accuracy & precision of a process can be best explained by using the analogy of a best explained by using the analogy of a rifle firing at a target. rifle firing at a target.

SIXSIGMA

Accurate and preciseAccurate and precise

+

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What is it?What is it?

creating value for our customers

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““Six Sigma”Six Sigma”: What is it?: What is it?

““A comprehensive and flexible system for A comprehensive and flexible system for achieving, sustaining and maximizing business achieving, sustaining and maximizing business success. Six Sigma is uniquely driven by close success. Six Sigma is uniquely driven by close understanding of customer needs, disciplined use understanding of customer needs, disciplined use of facts, data and statistical analysis, and diligent of facts, data and statistical analysis, and diligent attention to managing, improving and reinventing attention to managing, improving and reinventing business processes.”business processes.”

-- The Six Sigma Way, by Pande, Newman and Cavanaugh


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Six SigmaSix Sigma: What is it?: What is it?

Specifically –

• Customer-focused, fact and data-based decision making driving out waste and defects which creates value for our customers.

It is just NOT Supply Chain or Manufacturing


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• A A cultureculture that rapidly drives our key activities* to that rapidly drives our key activities* to be defect free 999,997 times out of 1,000,000.be defect free 999,997 times out of 1,000,000.

• < 3.4 defects per million opportunities.< 3.4 defects per million opportunities.

* Valued by or critical to our customer.

Six SigmaSix Sigma: What is it?: What is it?


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Sigma - the lower case Greek letter that denotes a statistical unit of measurement. It measures the variability or spread of the data.

What is Sigma?What is Sigma?

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Six Sigma MethodologySix Sigma Methodology• Define - Define - Gather facts regarding the exact question to Gather facts regarding the exact question to be be

answeredanswered• Measure - Measure - Establish our baseline performance and Establish our baseline performance and

collect meaningful data relevant to the problemcollect meaningful data relevant to the problem• Analyze - Analyze - All about finding the real root cause(s) and All about finding the real root cause(s) and the key the key

to solving our problemto solving our problem• Improve - Improve - Evaluate possible solutions based on their Evaluate possible solutions based on their impact impact

on performanceon performance• Control - Control - Quantify the change in performance and Quantify the change in performance and

make sure the improvement is sustainedmake sure the improvement is sustained

y = f (x1, x2, x3…, xn)

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Customers FirstCustomers First

CustomerRequirements

ProcessImprovementEmployee

Involvement

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Customer RetentionCustomer Retention

• Acquiring a new customer costs more than Acquiring a new customer costs more than retaining an existing customerretaining an existing customer

• It can take years to sign a new customer and only It can take years to sign a new customer and only minutes to lose oneminutes to lose one

• Standing still is not an optionStanding still is not an option

Companies measure customer retentionCompanies measure customer retention

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What to Ask Every CustomerWhat to Ask Every Customer

““How do you measure success?”How do you measure success?”““How will you measure How will you measure ourour success?” success?”

Helps you learn about their businessShows the customer you understand their

customersGive you a basis for process improvement

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Reduce VariationReduce Variation

Defects: Service unacceptable to

customer

Improvement ObjectivesImprovement Objectives

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Cure Time

Nu

mb

er o

f S

amp

les

Lower Specification Limit (LSL)

Upper Specification Limit (USL)

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Putting Six Sigma in Perspective!Putting Six Sigma in Perspective!

• 20,000 lost articles of mail 20,000 lost articles of mail every hour.every hour.

• Power outages seven hours Power outages seven hours each month.each month. . .

• 5,000 incorrect surgical procedures 5,000 incorrect surgical procedures each weekeach week for a major healthcare provider.for a major healthcare provider.

• Unsafe drinking water nine minutes Unsafe drinking water nine minutes every day.every day.

• Two long / short airport landings Two long / short airport landings every dayevery day. .

FourFour Sigma Sigma quality ( quality (6210 DPMO)6210 DPMO) means… means…99.370% right…but…..99.370% right…but…..


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Putting Six Sigma in Perspective!Putting Six Sigma in Perspective!

• Airline passenger safety ~ 8.2 Airline passenger safety ~ 8.2 – Currently at 2.6 DPMO (incidents per million Currently at 2.6 DPMO (incidents per million

takeoffs and landings).takeoffs and landings).

• Airline baggage handling ~ 3 Airline baggage handling ~ 3

SixSix Sigma Sigma quality ( quality (< 3.4 DPMO).< 3.4 DPMO).


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Impact of Six SigmaImpact of Six Sigma

The Cost of Poor Quality

Sigma Level Defects per Million Opportunities Cost of Poor Quality

2 398,537 (Noncompetitive Companies) Not applicable3 66,807 25-40% of sales4 6,210 (Industry Average) 15-25% of sales5 233 5-15% of sales6 3.4 (World Class) < 1% of sales

Each sigma shift provides a net income improvement which equals 10% of sales.

Six Sigma, by Harry and Schroeder, p. 17


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Sample Supply Chain MeasuresSample Supply Chain Measures

Distribution CenterDistribution Center• Inventory AccuracyInventory Accuracy• Shipment AccuracyShipment Accuracy• ProductivityProductivity

Relationship?Relationship?• Audit ScoresAudit Scores• OvertimeOvertime• ComplaintsComplaints

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• 1987 Motorola introduced Quality Program now known as Six 1987 Motorola introduced Quality Program now known as Six Sigma Sigma (Bill Smith)(Bill Smith)

• Allied Signal picked it up.Allied Signal picked it up. • G.E. Success….G.E. Success….

– Capital ServicesCapital Services– Medical Systems (CAT Scan)Medical Systems (CAT Scan)

• Dozens of others…...Dozens of others…...– Learned the hLearned the highest ighest qquality uality pproducer is also the roducer is also the llowest owest ccost ost pproducer.roducer.– Learned customer loyalty Learned customer loyalty of a Six Sigma company is of a Six Sigma company is ~3X~3X that that

of the of the average average companycompany..

It all began at…..Motorola…not G.E.It all began at…..Motorola…not G.E.


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Who else is doing Six Sigma?Who else is doing Six Sigma?

• Avery DennisonAvery Dennison

• DowDow

• DuPontDuPont

• FoxboroFoxboro

• SonySony

• Deere & Co. Deere & Co. (John Deere)(John Deere)

• DelphiDelphi

• Allied SignalAllied Signal

• FordFord

• Johnson & JohnsonJohnson & Johnson• CaterpillarCaterpillar• Lockheed MartinLockheed Martin• IBMIBM• CitiGroup CitiGroup

(Visa/MasterCard)(Visa/MasterCard)• GG..EE..• J.P. MorganJ.P. Morgan• ServiceMasterServiceMaster


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How does Six Sigma work?How does Six Sigma work?Why is it different?Why is it different?

Top down, executive led. Customer focused (VOC). Project oriented

• Led by “Black Belts”.• 3-5 months long.• Ave. yearly impact $150-250K/project.• Consistent methodology.


Process

ControlsX4, X5, X6…

X1

X2

X3

Output YCritical to Customer

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What is the “Methodology”?What is the “Methodology”?

DDefineefine

MMeasureeasure

AAnalyzenalyze

IImprovemprove

CControlontrol

D M A I C


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• What are the “The Tools”?What are the “The Tools”?

Six Sigma is a Six Sigma is a disciplinediscipline using these tools: using these tools:

– Advanced analysis tools (Design of Experiment, Advanced analysis tools (Design of Experiment, Linear Regression, etc.)Linear Regression, etc.)

– Re-engineeringRe-engineering

– Lean manufacturingLean manufacturing

– Supply chain improvementsSupply chain improvements

– Design for Six Sigma (DFSS)Design for Six Sigma (DFSS)

– For development of new products, new For development of new products, new services, new processes, and new workflows.services, new processes, and new workflows.


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Who are the other “Key Players”?Who are the other “Key Players”?

• Senior ChampionSenior Champion – Owns Six Sigma for the Business. – Owns Six Sigma for the Business.• ChampionChampion – Identifies – Identifies and resources and resources projectprojects.s.• Master Master BBlack lack BBeltelt – Serves as coach – Serves as coach to the Black Belt and project team. to the Black Belt and project team.• Black Black BBeltelt – Leads the project team, full time – Leads the project team, full time.. • Green Green BBeltselts – Team members (part-time) from the organization sponsoring the – Team members (part-time) from the organization sponsoring the

projectproject• Project SponsorsProject Sponsors – Team leaders. – Team leaders.• Process OwnersProcess Owners – Owns the process / workflow. – Owns the process / workflow.• Executive Six Sigma Steering CommitteeExecutive Six Sigma Steering Committee – Oversees progress, resolves issues, – Oversees progress, resolves issues,

ensures success enterprise-wide.ensures success enterprise-wide.


SIXSIGMA

Your TeamYour Team

• All associates must look for improvement All associates must look for improvement opportunitiesopportunities

• They must be rewarded for finding them !!They must be rewarded for finding them !!

• You must train them to understand how to investigateYou must train them to understand how to investigate

• Training in a classroom settingTraining in a classroom settingis not sufficientis not sufficient

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Summary “take aways”Summary “take aways” Customer focused….Driven by the Voice of the Customer.Customer focused….Driven by the Voice of the Customer. Strong top management leadership, commitment, and involvement. Very Key!Strong top management leadership, commitment, and involvement. Very Key! Project orientation with measurable financial results.Project orientation with measurable financial results. Consistent methodology for all work. Consistent methodology for all work. Time driven.Time driven. Time driven….more accountable. Time driven….more accountable. • Six Sigma - is a Six Sigma - is a disciplinediscipline not an “add on” or “program”. not an “add on” or “program”.

- - NOTNOT a supply chain/manufacturing activity. a supply chain/manufacturing activity.- - No new toolsNo new tools….new ways to apply them!….new ways to apply them!

• GoalsGoals– Value for the Customer (i.e. no defects or waste & low cost)Value for the Customer (i.e. no defects or waste & low cost)– Improved productivity = profitability.Improved productivity = profitability.– Customer success and satisfaction + Profitability = GrowthCustomer success and satisfaction + Profitability = Growth


SIXSIGMAcreating value for our customers

References……

• The Six Sigma Way (ISBN 0-07-135806-4) by Pande, Neuman, and Cavanaugh

• The Power of Six Sigma (ISBN 0-7931-4434-5) by Subir Chowdhury

• Six Sigma (ISBN 0-385-49437-8) by Harry and Schroeder.

• The Six Sigma Handbook (ISBN 0-07-137233-4) by Pyzdek is more technical and becoming the 'handbook' for Black Belts.

SIXSIGMAcreating value for our customers

References……

Also...you might consider:

•www.6-sigma.com

•www.sixsigma.co.uk

•www.sixsigmasystems.com

•www.isixsigma.com

Total quality parameters - new ventures

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