TECHNICAL PAPER 2005
TP05PUB78 Six Sigma and Lean Manufacturing author(s) ELZBIETA TRYBUS California State University Northridge, California
abstract The purpose of this paper is to discuss the philosophy and methodology of six sigma and lean manufacturing. Many practitioners say that six sigma is a new buzzword for lean manufacturing. This paper presents six sigma tools and a body of knowledge for six-sigma black-belt training. The finding is that lean manufacturing can be treated as a component of six sigma or a necessary condition for six sigma.
conference WESTEC® 2005 April 4-7, 2005 Los Angeles, California
terms Six Sigma Lean Manufacturing Six-Sigma Black-Belt Training
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SIX SIGMA AND LEAN MANUFACTURING Elzbieta Trybus, California State University, Northridge, CA 91330 Abstract The purpose of this paper is to discuss the philosophy and methodology of Six Sigma and lean manufacturing. Many practitioners say that Six Sigma is a new buzzword for lean manufacturing. This paper presents Six Sigma tools and body of knowledge for the Six Sigma Black belt training. The finding is that the lean manufacturing can be treated as a part of Six Sigma or a necessary condition for Six Sigma. Introduction Six Sigma widely implemented in various companies generates billions of dollars in cost savings. Six Sigma is also a strategic tool for many firms, as pointed in , , . However, some researchers and practitioners accused Six Sigma to be another version of the Total Quality Management (TQM), which was labeled by many as a management fad, , , , . Now, Six Sigma is compared to lean manufacturing. What is Six Sigma? Six Sigma, as defined in , can be best described as “a business process improvement approach that seeks to find and eliminate causes of defects and errors, reduce cycle times and cost of operations, improve productivity, better meet customer expectations, and achieve higher asset utilization and returns on investment in manufacturing and service processes”. Six Sigma is a fact based, data driven approach that values defect prevention over defect detection. It improves customer satisfaction and company performance by eliminating waste and reducing variation. So, in this aspect there is no clear distinction between Six Sigma and lean manufacturing. Six Sigma focus is on reducing process variation and enhancement of process control, while lean manufacturing eliminates waste and promotes process flow and work standardization Six Sigma was introduced by Motorola in the early 1980s and served as the company foundation for many improvements. The Six Sigma concept was originated by a reliability engineer, Bill Smith, at Motorola in the mid-1980s, who convinced Motorola’s CEO, Robert Galvin to support Six Sigma. Now, Six Sigma is considered the most powerful program recommended for any organization to reduce defects, reduce wastes, and improve profitability. Many organizations such as General Electric, Texas Instruments, Allied Signal, Boeing, 3M, Home Depot, Caterpillar, IBM, Xerox, and the United States Air Force Air Combat Command have developed business performance improvement approaches designed around the Six Sigma concept.
The term “six sigma” is based on a statistical measure that equates to 3.4 or fewer errors or defects per million opportunities (dpmo). Companies reported tremendous cost savings, e.g. GE generated $750 million in Six Sigma savings by 1996 and saved $10
billion each year by reduction of scrap, reworking of parts, correction of transactional errors and eliminating lost productivity (Harry and Schroeder). In this paper we will discuss basic steps of Six Sigma, its philosophy, methodology and similarities and differences with the lean manufacturing. In addition, the body of knowledge for Six Sigma Black Belt training will be presented. Six Sigma Philosophy Six Sigma views all work as processes that can be defined, measured, analyzed, improved and controlled (DMAIC). Since processes require inputs and produce outputs, then controlling inputs will allow controlling outputs. This is an entirely new approach to processes, when in the past only outputs, final product or services, were controlled for quality. This is expressed as Y = f(X), where x represents inputs and X represents outputs. Six Sigma Methodology The Six Sigma methodology consists of five phases: define, measure, analyze, improve, and control (DMAIC). Define Phase In this phase the projects, the goals and the deliverables to customers, both internal and external, are defined and determined. A person in charge of the Six Sigma project must define the chronic issues in the organization or the department. It is useful to map processes, in order to better understand them and locate the problems. Then one must select a project and learn its scope and sequence. This will help to determine project’s rules - how long it will run, what are the goals, what tools and personnel are needed to accomplish all goals. A project which cannot be completed in a reasonable period of time should not be accepted as a Six Sigma project. Because resources are limited, attention should be given to these Six Sigma projects that have the highest benefit to cost ratio in the shortest amount of time, . Six Sigma projects should concentrate on specific area of interest. Larger projects, or projects targeting more than one area of concentration and lasting more that three to six months should be divided into separate projects. Measure Phase Measurements must be addressed in the early planning stages of a Six Sigma project. First, the internal processes that influence critical to quality (CTQ) measurements should be identified. After identifying CTQ characteristics, performance standards, measurement systems and associated tools must be defined and selected. Once everybody on a Six Sigma team agrees on using these measures and tools the data collection process can begin. Organizations use various metrics to quantify the performance of processes, services, products and other business activities. During the last decade organizations used “dashboards” to track key measurements at the operational level and “balanced scorecards” at the strategic level. Dashboards are various graphs, charts and that indicate
when performance is not where it should be. Balanced scorecards are summaries of performance measures across the organization. A typical balanced scorecard includes quality performance measures, time measures, work performance, financial measures, and customer satisfaction, both internal and external customers. Operational definitions are needed for all measurements, for example, “what does it mean to have on time delivery?” Does it mean having the product or service ready within two days of the promised time? How many graphical mistakes are acceptable? In the measure phase, the black belt person conducts a measurement system analysis, which is called “gauge studies” and performs the evaluation of process capability. In particular, the gauge repeatability and reproducibility study is conducted. This study consists of four criteria: 1. How precise is the measurement? (accuracy) 2. If the same person and/or the same piece of equipment measures the same item more than once, will the results be the same? (repeatability) 3. If other people or other piece of equipment measure the same item, will the results be the same? (reproducibility) 4. Will accuracy, repeatability, and reproducibility change over time? (stability) Analyze Phase This phase focuses on understanding the relationship between the response variable Y (output) and the input variables. In other words, the team asks which inputs are affecting the outputs. This phase requires three steps, : 1. Develop hypothesis about cause(s). 2. Analyze process and/or data. 3. If the hypothesis is not rejected based on collected data, add cause(s) to the list of vital few. If the hypothesis is rejected, go to step 1. This is of course a big simplification of the analyze phase. Usually a great number of statistical tools including descriptive statistics, inferential statistics with confidence intervals and hypothesis testing, regression analysis, and analysis of variance is needed in this phase. Once the analysis phase is completed, the team is ready to move to the improve phase. Improve Phase The improvement concept is not new to the organizations. Originally many improvement approaches were concerned only with costs and productivity. Japan originated new approach focusing on the inputs of the process. Toshiba in 1946, Matsushita Electric in 1950, and Toyota in 1951 initiated formal improvement programs, in particular, just-in-time (JIT) and showed that companies can save money on inventories and make products with zero defects. This philosophy originated in Japan is called kaizen or continuous improvement. In the Six Sigma approach process owners must be trained in Six Sigma methods to learn improvement tools and use them on a daily basis. In order to meet customers’ needs the improvement starts in the design stage of a product. Then the efficiency of
the system is analyzed and improved by reducing process steps, worker’s idle time, reducing inventory, improving transportation, material handling, financial transaction processing, employee training and eliminating redundant and unnecessary documentation or reports. Some companies instead of applying gradual improvement decided to go through a breakthrough improvement. Another name for the breakthrough improvement is reengineering. As defined in , reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed. PepsiCo was successful when reengineering its key business processes, such as selling and delivery, equipment service and repair, procurement and financial reporting, . Control Phase In the control phase a manager continues to document and monitor processes via metrics and other measurement tools to assess their capability and take corrective action when needed. Any control system has three components: a standard or goal, a means of measuring accomplishment, and comparison of actual results with the standard. Effective control systems have documentation of all procedures for all key processes, methods for monitoring and controlling CTQ characteristics, written standards, like quality manual and standard operating procedures (SOP), samples, illustrations for workmanship, and maintenance activities. Finally, every system or organization should have internal audits. Usually those involved in the manufacturing process are asked to describe how a process or a procedure works. Then this description is compared to written documentation and compliance or differences are recorded. Internal audits also include a revision of any records, process records, training records, complaints, and previous audit reports. A final audit report and local project review are generated in this phase. Main tools in the control phase are statistical process control (SPC) charts, including charts for variables, charts for attributes, and charts for individual observations. It is worth to add that in some cases, the control phase never exists, because the problem was eliminated forever. Six Sigma Tools Six Sigma tools include both qualitative and quantitative process improvement techniques. Statistical process control, control charts, failure mode and effects analysis, and process mapping are widely used tools by Six Sigma practitioners. Multivariate methods, design of experiments and other tools are included in the Six Sigma methodology. The detailed description of topics and Six Sigma tools is presented in the next section which discusses body of knowledge for Six Sigma Black Belt training.
Body of Knowledge in Six Sigma Black Belt Training Six Sigma body of knowledge is composed of various concepts, tools, and techniques selected from many areas of business, management, statistics, engineering and experience. Body of knowledge required for the Six Sigma Black Belt Certification exam from the American Society for Quality (ASQ) includes the following: 1. Enterprise-wide deployment including enterprise view, leadership, organizational goals and objectives, and history of organizational improvement/foundations of six sigma. 2. Business process management composed of understanding process components, process owners, customers, understanding project management and benefits, and project measurements. 3. Project management including project charter and plan team leadership, team dynamics and performance, and management and planning tools. 4. Define Phase of Six Sigma includes project scope, metrics and problem statement. Main tools in this section are: Pareto diagrams, affinity diagrams, Kano model, critical to quality (CTQ) tree, SIPOC (suppliers, inputs, process, outputs, customers), rolled throughput yield (RTY), and VOC ( voice of the customer). 5. Measure Phase of Six Sigma is composed of the following topic areas: a. Process analysis and documentation: flow charts, process mapping, written procedures, work instructions, process inputs and outputs. b. Probability and statistics: basic probability concepts, types of data, methods for collecting data, random sampling, descriptive statistics, probability distributions, and inferential statistics with confidence intervals and hypothesis testing. c. Measurement systems: measurement methods, measurement system analysis, and metrology. d. Process capability. 6. Analyze Phase of Six Sigma presents exploratory data analysis and hypothesis testing including fundamental concepts, hypothesis tests for means (z and tdistributions), hypothesis test for variance ( Chi-Square distribution), hypothesis tests for proportions, hypothesis tests for difference between two population means and variances (F-test), goodness of fit test, analysis of variance (ANOVA), contingency tables, and non-parametric tests including: Spearman Rank correlation coefficient, Kruskal-Wallis One-Way Analysis of Variance by ranks, Mann-Whitney U test, Wilcoxon-Mann-Whitney Rank Sum test, Levene’s test, Mood’s median test. 7. Improve Phase of Six Sigma includes the following topic areas: a. Design of Experiments (DOE) including terminology, planning and organizing experiments, randomized and randomized block designs, full factorial experiments, fractional factorial experiments, Taguchi robustness concepts, mixture experiments. b. Response surface methodology including steepest ascent/descent experiments, and higher order experiments. c. Evolutionary Operations (EVOP).
8. Control Phase of Six Sigma includes the following tools: a. Statistical Process Control (SPC): objectives and benefits, variable selection, subgrouping schemes, sources of variability, basic control charts, analysis of control charts, and pre-control. b. Lean tools for control are 5S, kaizen, Muda- the seven wastes, kanban, poka-yoke, total productive maintenance (TPM), and standard work. c. Measurement system re-analysis. 9. Lean Enterprise includes following topics: a. Lean concepts with theory of constraints, lean thinking, continuous flow manufacturing (CFM), non-value-added activities, cycle-time reduction. b. Lean tools with concepts of visual factory, the seven wastes, kanban, poka-yoke, standard work, SMED (single minute exchange of die) c. Total productive maintenance (TPM) with TPM metric, steps to implement TPM, and designing for maintainability and availability. 10. Design for Six Sigma (DFSS) includes, a. Quality function deployment (QFD) b. Robust design and process c. Failure Mode and Effects Analysis (FMEA) d. Design for X (DFX) and special design tools. Lean Manufacturing Lean manufacturing is “getting more done with less”, . This involves identifying and eliminating non-value-added activities throughout the entire value chain to achieve faster customer response and satisfaction, reduced inventories, higher quality, and improved human resources. The following are the key tools in lean production, . 1. The 5S’s: seiri (sort), seiton (set in order), seiso (shine), seiketsu (standardize), and shitsuke (sustain). 2. Small production batches (ideally a single piece). 3. Visual controls (indicators for tools, parts, and production activities). 4. Efficient layout of equipment and standardized work. 5. Pull production (kanban, JIT), upstream suppliers do not produce until the downstream customer signals a need for parts/product. 6. Changeover time (rapid exchange of tools and fixtures in machine shops) 7. Total productive maintenance (equipment must be operational and available when needed, increased preventive maintenance). 8. Source inspection: inspection done by process operators. Continuous improvement (finding and removing root causes and 9. teamwork). Introduce paperless transactions, improve supplier relationship, focus on the process. Someone can treat Six Sigma as a philosophy of quality management and lean manufacturing equipped with statistical tools, project management tools and customer satisfaction. Or Six Sigma can be treated as the complementary approach to lean manufacturing. However, some basic differences exist between lean manufacturing
and Six Sigma. Lean manufacturing addresses visible problems in the process, such as inventory, material flow, and safety, while Six Sigma is concerned with less visible problems, for example, variation in performance. Lean manufacturing tools are simple and easier to apply, while Six Sigma tools require advanced training. The practical approach would be as follows: start with basic lean manufacturing tools and then move towards Six Sigma. Six Sigma Success Factors Six Sigma was first implemented at General Electric Appliances (GEA) in 1995. GE’s CEO, Jack Welch, confessed to GE shareholders that two major stretch improvement goals related to operating margins and inventory turns were missed. With the implementation of Six Sigma this shortfall was fixed: operating margins improved from 13.6% to 18.9%, inventory turns moved from 5.6 to 8.5 and earnings per share doubled over the five years of Six Sigma program, . In the first year of Six Sigma implementation at GE, 30,000 employees were trained at a cost of $200 million with returns of $150 million only. However, from 1996 to 1997 GE increased the number of Six Sigma projects from 3,000 to 6,000 and achieved $320 million in productivity gains and profits. By 1998, the company had generated $750 million in Six Sigma savings over and above their investment. Other organizations such as Allied Signal, Texas Instrument, Boeing, 3M, Caterpillar, Xerox, the U.S. Air Force Combat Command, Citibank, Bank of America, American Express, and Home Depot developed business performance improvement approaches designed on the Six Sigma concepts and reported significant results. Following GE’s successful implementation of Six Sigma, Xerox consolidated 36 administrative centers into 3 in 1999 and implemented its own program called “Lean Six Sigma”. The Xerox Six Sigma team identified the cause of its customers’ complaint: quick wear off a toner. And the cause was oil on the roller, which was fixed after working with the oilmaker to change the chemistry of this oil. This initiative saved $2 million for Xerox and kept its customers happy, . Successful firms’ reports identify the following success factors in Six Sigma programs: 1. Deployment Plan. If the Six Sigma program is implemented from the top of the organization to the bottom and if the organization has a well developed deployment (or action) plan the program will be successful. 2. Active participation of the senior executives 3. Project reviews 4. Technical support 5. Full-time vs. part-time resources 6. Training 7. Communications 8. Project selection 9. Project tracking 10. Incentive programs
11. A safe environment 12. Develop a supplier plan 13. Customer approval. Summary We, as human beings believe that dealing with errors is just a part of our live. This belief permeates organizations and companies. Having processes in which errors occur occasionally does not seem a big issue, but if a company handles hundred or thousands of processes and operations this becomes a larger problem. The Six Sigma approach is all about identifying what we don’t know, emphasizing what we should know and taking action to reduce errors. Six Sigma programs eliminate most errors, reduce waste, reduce costs, and make customers happy. Six Sigma programs is a wide initiative with firm theoretical and practical backgrounds. Six Sigma also includes tools of lean manufacturing but it is not a replacement for lean manufacturing. References      [ 6]   
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