GOAL OF SI SIGMA

GOAL OF SIX SIGMA: "Bottom-line" financial improvementBENEFITS OF SIX SIGMA: Productivity increases, cycle time reduction, higher throughput, reduced defects, high levels of outgoing quality, standardized improvement methodology across the organization, a set of techniques and tools to simplify improvement efforts, greater customer satisfaction and dramatic improvement in the "bottom-line".DESCRIPTION OF SIX SIGMA: Using the popular Six Sigma definition, it is a statistical measure of quality, 3.4 defects per million or 99.99966% good quality. Although zero defects is the goal, as a measure Six Sigma will drive a firm toward achieving higher levels of customer satisfaction and reducing operational costs. Six Sigma is a robust continuous improvement strategy and process that includes cultural methodologies such as Total Quality Management (TQM), process control strategies such as Statistical Process Control (SPC) and other important statistical tools. It uses a structured systems approach to problem solving and strongly links initial improvement goal targets to bottom-line results._________________________________________________SIX SIGMA FAQ's:IS SIX SIGMA APPLIED ONLY TO TOUCHABLE PRODUCTS?Absolutely not.............it should be applied to all business processes in a company.WHAT TYPE OF FIRM SEEKS SIX SIGMA PERFORMANCE?Firms who are progressing to or have achieved Six Sigma already include: GE, Motorola, Allied Signal, Polaroid and Sony among others. Many other enlightened companies are starting Six Sigma programs. Adopters have reported significant annual savings attributed to their Six Sigma efforts. Suppliers to such companies will, themselves, have to aim for Six Sigma quality as well.HOW DOES SIX SIGMA FIT WITH TRADITIONAL "QUALITY INITIATIVES"No. Six Sigma is complementary to other initiatives such as ISO 9000 registration, which is mainly procedural; Total Quality Management (TQM), which is mainly cultural and Statistical Process Control (SPC), which is primarily statistical process control monitoring. All of these initiatives attempt to improve quality levels but typically reach a plateau. The Six Sigma approach goes to the next level.WHAT IS SIX SIGMA BLACKBELT TRAINING?This is specific and tailored training on the understanding of the Six Sigma process and theutilization of six sigma tools. The student will be trained in the methodology and tools use through real projects with bottom-line impact on the firm's profitability.WHAT IS A GREENBELT, BLACKBELT, MASTER BLACKBELT AND SIX SIGMA CHAMPION?Black Belt: An individual trained in the Six Sigma methodology and experienced leading cross-functional process improvement action teams.Green Belt: An individual trained in the Six Sigma methodology who is a team member of six sigma process improvement action teams.Master Black Belt: An individual trained in the Six Sigma methodology who acts as the organization-wide Six Sigma program manager. He oversees Black Belts and process improvement projects and provides guidance to Black Belts as required. A Master Blackbelt teaches other six sigma students and helps them achieve Greenbelt and Blackbelt status.Six Sigma Champion: Usually a top executive or senior manager who "talks the talk" and "walks the walk" of Six Sigma. He is the catalyst and driving force behind the organization's Six Sigma implementation.World Class Six Sigma e-Learning ServicesSix Sigma: What Does It Really Mean?The Latest buzzword being bandied about in the automotive industry is Six Sigma. What is Six Sigma and what does it mean to the automotive industry? Where did this concept originate?HistorySix Sigma is not actually a recent trend. In the 1980s, Motorola Inc., based in Schaumburg, Illinois, and Robert W. Galvin, then Chief Executive Officer, pioneered the concept of Six Sigma. Hoping to improve the quality of their pagers and cellular telephones. Motorola employed the techniques of Six Sigma in their internal training. In 1981, one of Motorola's top 10 goals was the improvement of quality by 10 times before 1986. To this end, Bill Smith of Motorola's Land Mobile Products Sector first identified the key to company -wide defect reduction, "Defects per Opportunities." Also known as "Defects per Unit," this technique allowed Motorola to measure defects uniformly in all business sectors. In 1988, using the philosophies of Six Sigma, Motorola was among the first recipients of the Malcolm Baldrige National Quality Award.Motorola's strategy and dedication to quality have been admired by numerous organizations around the world, especially members of the automotive community. The Six Sigma program sparked the interest of many organizations who approached Motorola in the hopes of imitating this customer-focused, bottom-line approach. IBM, hoping to emulate Motorola's success, was one of the first companies to implement the Six Sigma techniques. Utilizing what they learned, IBM's Application Business Systems Division, located in Rochester, MN, went on to win the Malcolm Baldrige National Quality Award in 1990. Six Sigma was fast becoming a critical success factor, continuously proving its applications to every type and level of organization. The automotive industry was watching as Six Sigma techniques brought performance to a new, previously lacking, level of quality.The next major event in the Six Sigma story occurred in 1991 when Jack Welch became Chief Executive Officer of General Electric Company. One of the first items on Jack's agenda was the restructuring of the entire GE organization, which consisted of 12 major businesses. Jack chose to divest GE of any companies that were not the best in the business. His attention to "best practices" led him to see out the Six Sigma philosophy, and implementation began on October, 1995. GE chose to employ this philosophy in all of their businesses, including GE Credit Corporation NBC-TV, and GE Capital and Mortgage Company. In 1995, GE began its program with an average of three sigma quality. Before two years had passed their quality level had increased to 3.5 sigma, and it is still growing. GE anticipates reaching their Six Sigma goal by 2000. This kind of success does come with a price in any industry. GE spent $450 million on a quality improvement last year alone. However, the Six Sigma investment has been offset by the profit increase, showing a bottom line improvement of $1.2 Billion. Jack Welch took a $25-billion organization and turned it into a $90-billion customer-driven, extremely profitable, quality company.Jack Welch in 1997: "We didn't invent Six Sigma-we learned it. The cumulative impact on the company's numbers is not anecdotal, nor a product of charts . It is the product of 276,000 people executing and delivering the result of Six Sigma to our bottom line. Six Sigma, even at this relatively early stage, delivered more than $300 million to our 1997 operating income."Jack Welch in 1998: "We have invested more than a billion dollars in the effort, and The financial returns have now entered the Exponential phase-more than three quarters of a billion dollars in savings beyond our insight for 1999."Prior to GE's Six Sigma program. Another person caught the eye of the Six Sigma watchers in the automotive industry. In 1994 Chief Executive Officer of AlliedSignal, Inc. (former Chief Executive Officer of General Electric Company, Larry Bossidy began to implement the techniques of Six Sigma. Within four years, Allied.Signal had made 2,400 process improvements, and reduced defects by sixty one percent-yielding $350 million in annualized cost savings. Larry Bossidy's success and initiatives were critical factors in influencing GE to undertake Six Sigma implementation.Larry Bossidy in 1997: "With $1.5 Billion in estimated savings already achieved, Six Sigma is one of the most ambitious projects we have ever undertaken. When our Six Sigma defect reduction program began in 1992, AlliedSignal was an average-quality manufacturer. Today we're a substantially above average, and getting better."The number of organizations involved in successful Six Sigma programs were steadily increasing and members of the automotive industry are taking note.BackgroundWhat is Six Sigma? Sigma, also known as standard deviation from the mean, measures the variability in a process. Six Sigma uses Defects per Opportunities (DPOs) as measurement tool. (Six Sigma uses the term "opportunities" rather than "units" because units tend to vary in complexity.) Defects per Opportunities is a good measure of the quality of a process or product. It correlates to defects, cost, and time. The sigma value indicates how often defects are likely to occur. The higher the sigma value, the lower the likelihood of defects. A defect is anything that results in customer dissatisfaction. Therefore, as sigma increases, cost and cycle time decrease while customer satisfaction increases. Most organizations in the United States currently operate at a three to four sigma quality levels (66,800 to6, 210 defects per million), which is 99.73% performance, losing up to 25% of their total revenue due to defects. (see table 1)The Six Sigma process focuses on three main areas:∙Cycle time reduction∙Defect reduction∙Customer satisfactionThe Six Sigma methodology entails the measurement and analysis of all of an organization's business processes. The automotive industry is very experienced in measurement and analysis, having been through QS-9000, which requires statistical process control (SPC), failure mode and effects analysis (FEMA), measurement system analysis (MSA), advanced product quality planning (APQP), and production part approval process (PPAP), to name a few tools. However, Six Sigma is not merely a quality initiative, it is a business initiative. A Six Sigma program should build onto an existing ISO/QS-9000, total quality management (TQM), and/or Malcolm Baldrige management system. Individually, these management systems are important quality fundamentals and building blocks, but integrated with Six Sigma they become part of the total Six Sigma program. Six Sigma does not undermine the value of any existing quality programs, but rather is one evolutionary phase of a complete quality strategy.Achieving the goal of Six Sigma requires more than small, incremental improvements; it requires breakthroughs in every area of operation. Moving sigma levels is not linear. It takes considerably more work to go from five to six sigma than it does to go from three to four sigma. Each sigma level requires an exponential reduction of defects. In statistical terms, this means that the six sigma process approaches zero defects.Some of the tools involved in Six Sigma programs are quite familiar and may even be used in current quality initiatives, including benchmarking, cycle time reduction, design of experiments, process mapping, and quality function deployment.The true challenge of Six Sigma is not the statistics, rather it is in the following five crucial steps.∙Define∙Measure∙Analyze∙Improve∙Control∙ImplementationHow does an automotive organization implement a Six Sigma program? Ideally, and without question, there must be commitment from top management. The Six Sigma process is doomed to failure without executive buy-in. Therefore, the education of senior management is the first step. For example, an initial phase/activity to take place is for top management to understand what Six Sigma means for them and everyone else in the organization. Top management must establish realistic goals, time frame, expectations, and answer human and financial resources will be made available. Once management has committed to the process, they will need to determine the initial projects and choose the individuals they would like to lead this process.The next step is the training of the team leaders (also known as Black Belts and Master Black Belts) which can be accomplished within a 16-week cycle. One week of training is conducted and then the potential Six Sigma Master is put back to work with a specific project outlined. The Six Sigma Master candidate works on the project for three weeks and then returns for another week of training. This cycle is repeated four times. At the end of the program the Six Sigma Master candidate is required to complete four to six projects. Each project is expected to demonstrate savings of up to $175,000 each.An important part of this process is mentoring. A mentor will give guidance and structure to the Six Sigma Master, allowing growth and learning in the best possible environment. There are additional levels of training given to individuals below and above the Six Sigma Master level, including Champions. Normally, an organization has 10 Six Sigma Masters and one Six Sigma Grand Master per 1,000 employees.Why should the automotive industry implement Six Sigma? If improving processes, saving money, reducing defects, ensuring customer satisfaction, and increasing stock value are important to the success of the business, then Six Sigma is the answer. If customers are satisfied with quality levels of three sigma or lower, then sit back and let the Six Sigma success stories entertain you. (see table 2)Industry research indicates that a 5% increase in customer retention yields increased profits of more than 25%. It is estimated that companies lode 15-20% of revenues each year to poor quality and employees satisfaction equals employee commitment. Six Sigma provides a measure that applies to both product and service activities (defects per million opportunities-DPMO), and sets attainable, short-term goals while striving for long-range business objectives-using teams to reduce defects. Six Sigma challenges the automotive community to anticipate what customers need and expect, while providing the tools to get there.This article is reprinted from the Informed Outlook, Volume 3, Number 19Visit their web site atWhy Six Sigma?For Motorola, the originator of Six Sigma, the answer to the question "Why Six Sigma?" was simple: survival. Motorola came to Six Sigma because it was being consistently beaten in the competitive marketplace by foreign firms that were able to produce higher quality products at a lower cost. When a Japanese firm took over a Motorola factory that manufactured Quasar television sets in the United States in the 1970s, they promptly set about making drastic changes in the way the factory operated. Under Japanese management, the factory was soon producing TV sets with 1/20th the number of defects they had produced under Motorola management. They did this using the same workforce, technology, and designs, making it clear that the problem was Motorola's management. Eventually, even Motorola’s own executives had to admit “our quality stinks,”i[i]Finally, in the mid 1980s, Motorola decided to take quality seriously. Motorola’s CEO at the time, Bob Galvin, started the company on the quality path known as Six Sigma and became a business icon largely as a result of what he accomplished in quality at Motorola. Today, Motorola is known worldwide as a quality leader and a profit leader. After Motorola won the Malcolm Baldrige National Quality Award in 1988 the secret of their success became public knowledge and the Six Sigma revolution was on. Today it's hotter than ever.It would be a mistake to think that Six Sigma is about quality in the traditional sense. Quality,defined traditionally as conformance to internal requirements, has little to do with Six Sigma. Six Sigma is about helping the organization make more money. To link this objective of Six Sigma with quality requires a new definition of quality. For Six Sigma purposes I define quality as the value added by a productive endeavor. Quality comes in two flavors: potential quality and actual quality. Potential quality is the known maximum possible value added per unit of input. Actual quality is the current value added per unit of input. The difference between potential and actual quality is waste. Six Sigma focuses on improving quality (i.e., reduce waste) by helping organizations produce products and services better, faster and cheaper. In more traditional terms, Six Sigma focuses on defect prevention, cycle time reduction, and cost savings. Unlike mindless cost-cutting programs which reduce value and quality, Six Sigma identifies and eliminates costs which provide no value to customers, waste costs.For non-Six Sigma companies, these costs are often extremely high. Companies operating at three or four sigma typically spend between 25 and 40 percent of their revenues fixing problems. This is known as the cost of quality, or more accurately the cost of poor quality. Companies operating at Six Sigma typically spend less than 5 percent of their revenues fixing problems (Figure 1). The dollar cost of this gap can be huge. General Electric estimates that the gap between three or four sigma and Six Sigma was costing them between $8 billion and $12 billion per year.Figure 1: Cost of Poor Quality versus Sigma LevelWhat is Six Sigma?Six Sigma is a rigorous, focused and highly effective implementation of proven quality principles and techniques. Incorporating elements from the work of many quality pioneers, Six Sigma aims for virtually error free business performance. Sigma, , is a letter in the Greek alphabet used by statisticians to measure the variability in any process. A company's performance is measured by the sigma level of their business processes. Traditionally companies accepted three or four sigma performance levels as the norm, despite the fact that these processes created between 6,200 and 67,000 problems per million opportunities! The Six Sigma standard of 3.4 problems per million opportunities1[1]is a response to the increasing expectations of customers and the increased complexity of modern products and processes.If you're looking for new techniques, don't bother. Six Sigma's magic isn't in statistical or high-tech razzle-dazzle. Six Sigma relies on tried and true methods that have been around for decades. In fact, Six Sigma discards a great deal of the complexity that characterized Total Quality Management (TQM). By one expert's count, there were over 400 TQM tools and techniques. Six Sigma takes a handful of proven methods and trains a small cadre of in-house technical leaders, known as Six Sigma Black Belts, to a high level of proficiency in the application of these techniques. To be sure, some of the methods used by Black Belts use are highly advanced;including the use of up-to-date computer technology. But the tools are applied within a simple performance improvement model known as DMAIC, or Define-Measure-Analyze-Improve-Control2[2]. DMAIC can be described as follows:InfrastructureA very powerful feature of Six Sigma is the creation of an infrastructure to assure that performance improvement activities have the necessary resources. In this author's opinion, failure to provide this infrastructure is the #1 reason why 80% of all TQM implementations failed in the past. Six Sigma makes improvement and change the full-time job of a small but critical percentage of the organization's personnel. These full time change agents are the catalyst that institutionalizes change. Figure 2 illustrates the required human resource commitment required by Six Sigma.Figure 2: Six Sigma InfrastructureLeadershipSix Sigma involves changing major business value streams that cut across organizational barriers. It is the means by which the organization's strategic goals are to be achieved. This effort cannot be lead by anyone other than the CEO, who is responsible for the performance of the organization asa whole. Six Sigma must be implemented from the top-down.Champions and SponsorsSix Sigma champions are high-level individuals who understand Six Sigma and are committed to its success. In larger organizations Six Sigma will be lead by a full time, high level champion, such as an Executive Vice-President. In all organizations, champions also include informal leaders who use Six Sigma in their day-to-day work and communicate the Six Sigma message at every opportunity. Sponsors are owners of processes and systems who help initiate and coordinate Six Sigma improvement activities in their areas of responsibilities.Master Black BeltThis is the highest level of technical and organizational proficiency. Master Black Belts provide technical leadership of the Six Sigma program. Thus, they must know everything the Black Belts know, as well as understand the mathematical theory on which the statistical methods are based. Master Black Belts must be able to assist Black Belts in applying the methods correctly in unusual situations. Whenever possible, statistical training should be conducted only by Master Black Belts. Otherwise the familiar “propagation of error” phenomenon will occur, i.e., Black Belts pass on errors to green belts, who pass on greater errors to team members. If it becomes necessary for Black Belts and Green Belts to provide training, they should do only so under the guidance of Master Black Belts. For example, Black Belts may be asked to provide assistance to the Master during class discussions and exercises. Because of the nature of the Master’s duties, communications and teaching skills are as important as technical competence.Black BeltCandidates for Black Belt status are technically oriented individuals held in high regard by their peers. They should be actively involved in the process of organizational change and development. Candidates may come from a wide range of disciplines and need not be formally trained statisticians or engineers. However, because they are expected to master a wide variety of technical tools in a relatively short period of time, Black Belt candidates will probably possess a background in college-level mathematics, the basic tool of quantitative analysis. Coursework in statistical methods should be considered a strong plus or even a prerequisite. As part of their training, Black Belts receive 160 hours of classroom instruction, plus one-on-one project coaching from Master Black Belts or consultants.Successful candidates will be comfortable with computers. At a minimum, they should understand one or more operating systems, spreadsheets, database managers, presentation programs, and word processors. As part of their training they will be required to become proficient in the use of one or more advanced statistical analysis software packages. Six Sigma Black Belts work to extract actionable knowledge from an organization’s information warehouse.To assure access to the needed information, Six Sigma activities should be closely integrated with the information systems (IS) of the organization. Obviously, the skills and training of Six Sigma Black Belts must be enabled by an investment in software and hardware. It makes no sense to hamstring these experts by saving a few dollars on computers or software.Green BeltGreen Belts are Six Sigma project leaders capable of forming and facilitating Six Sigma teams and managing Six Sigma projects from concept to completion. Green Belt training consists of five days of classroom training and is conducted in conjunction with Six Sigma projects. Training covers project management, quality management tools, quality control tools, problem solving, and descriptive data analysis. Six Sigma champions should attend Green Belt training. Usually, Six Sigma Black Belts help Green Belts define their projects prior to the training, attend training with their Green Belts, and assist them with their projects after the training.Staffing Levels and Expected ReturnsAs stated earlier in this article, the number of full time personnel devoted to Six Sigma is not large. Mature Six Sigma programs, such as those of Motorola, General Electric, Johnson & Johnson, AlliedSignal, and others average about one-percent of their workforce as Black Belts. There is usually about one Master Black Belts for every ten Black Belts, or about 1 Master Black Belt per 1,000 employees. A Black Belt will typically complete 5 to 7 projects per year. Project teams are lead by Green Belts, who, unlike Black Belts and Master Black Belts, are not employed full time in the Six Sigma program. Black Belts are highly prized employees and are often recruited for key management positions elsewhere in the company. After Six Sigma has been in place for three or more years, the number of former Black Belts tends to be about the same as the number of active Black Belts.Estimated savings per project varies from organization to organization. Reported results average about US$150,000 to US$243,000. Note that these are not the huge mega-projects pursued by Re-engineering. Still, by completing 5 to 7 projects per year per Black Belt the company will add in excess of US$1 million per year per Black Belt to its bottom line. For a company with 1,000 employees the numbers would look something like this:Master Black Belts: 1Black Belts: 10Projects: = 50 to 70 (5 to 7 per Black Belt)Estimated saving: US$9 million to US$14.6 million (US$14,580 per employee)Do the math for your organization and see what Six Sigma could do for you. Because Six Sigmasavings impact only non-value added costs, they flow directly to your company's bottom line. Implementation of Six SigmaAfter over two decades of experience with quality improvement, there is now a solid body of scientific research regarding the experience of thousands of companies implementing major programs such as Six Sigma. Researchers have found that successful deployment of Six Sigma involves focusing on a small number of high-leverage items. The steps required to successfully implement Six Sigma are well-documented.1.Successful performance improvement must begin with senior leadership. Startby providing senior leadership with training in the principles and tools they needto prepare their organization for success. Using their newly acquired knowledge,senior leaders direct the development of a management infrastructure to supportSix Sigma. Simultaneously, steps are taken to "soft-wire" the organization and tocultivate an environment for innovation and creativity. This involves reducinglevels of organizational hierarchy, removing procedural barriers toexperimentation and change, and a variety of other changes designed to make iteasier to try new things without fear of reprisal.2.Systems are developed for establishing close communication with customers,employees, and suppliers. This includes developing rigorous methods ofobtaining and evaluating customer, employee and supplier input. Base linestudies are conducted to determine the starting point and to identify cultural,policy, and procedural obstacles to success.3.Training needs are rigorously assessed. Remedial basic skills education Isprovided to assure that adequate levels of literacy and numeracy are possessed byall employees. Top-to-bottom training is conducted in systems improvement tools,techniques, and philosophies.4. A framework for continuous process improvement is developed, along with asystem of indicators for monitoring progress and success. Six Sigma metricsfocus on the organization's strategic goals, drivers, and key business processes.5.Business processes to be improved are chosen by management, and by peoplewith intimate process knowledge at all levels of the organization. Six Sigmaprojects are conducted to improve business performance linked to measurablefinancial results. This requires knowledge of the organization's constraints.6.Six Sigma projects are conducted by individual employees and teams lead byGreen Belts and assisted by Black Belts.Although the approach is simple, it is by no means easy. But the results justify the effort expended.。