Six Sigma Black Belt – Study Guides
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Introduction to Six Sigma
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Index
• History of continuous improvement • Value and foundations of Six Sigma • Value and foundations of Lean • Integration of Lean and Six Sigma • Business processes and systems • Six Sigma and Lean applications
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History of Continuous Improvement •
Continuous improvement involves constantly identifying and eliminating the causes that prevent a system or process from functioning at its optimum level.
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The concept of continuous improvement originated in Japan in the 1970s. It was adopted in many countries, including U.S.A., in the early 1980s.
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Continuous improvement—and consequent customer satisfaction—is the principle on which the concept of Lean manufacturing is developed. When this principle is combined with just-in-time technique, Lean manufacturing results.
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Continuous improvement helps an organization to add value to its products and services by reducing defects, mistakes, etc. and to maximize its potential.
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As continuous improvement requires constant ongoing efforts, it is essential that the top management takes a long term view and commits itself for its implementation.
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Continuous improvement enables organizations identify and rectify problems as and when they occur. Thus, it ensures smooth functioning of the processes.
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Many modern quality improvement models or tools like control charts, sampling methods, process capability measures, value analysis, design of experiments, etc. have been influenced by the concept of continuous improvement.
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Value and Foundations of Six Sigma The Six Sigma concept was developed at Motorola in the 1980‘s. Six Sigma can be viewed as a philosophy, a technique, or a goal. • • •
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Philosophy: Customer-focused breakthrough improvement in processes Technique: Comprehensive set of statistical tools and methodologies Goal: Reduce variation, minimized defects, shorten the cycle time, improve yield, enhance customer satisfaction, and boost the bottom line
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Enterprise-Wide View What is Six Sigma – Mathematically? The term ‗Six Sigma‘ is drawn from the statistical discipline ‗process capability studies‘. •
Sigma, represented by the Greek alphabet ‗σ‘, stands for standard deviation from the ‗mean‘.
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‗Six Sigma‘ represents six standard deviations from the ‗mean‘. This implies that if a company produces 1,000,000 parts/units, and its processes are at Six Sigma level, less than 3.4 defects only will result. However, if the processes are at three sigma level, the company ends up with as many as 66,807 defects for every 1,000,000 parts/units produced.
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Please refer to the chart below that shows the number of defects observed for every 1,000,000 parts produced (also referred to as defects per million opportunities or DPMO). Two Sigma Three Sigma Four Sigma Five Sigma Six Sigma
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308,507 DPMO 66,807 DPMO 6,210 DPMO 233 DPMO 3.4 DPMO
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Enterprise-Wide View What is Six Sigma – Mathematically? • Process standard deviation (σ) should be so minimal that the process performance should be able to scale up to 12σ within the customer specified limits. So, no matter how widely the process deviates from the target, it must still deliver results that meet the customer requirements. • USL – Upper specification limit for a performance standard. Any deviation beyond this is a defect. • LSL – Lower specification limit for a performance standard. Any deviation below this is a defect. • Target – Ideally, this will be the middle point between USL and LSL.
-6σ
LSL
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target
T
+6σ
USL
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Six Sigma Approach • Six Sigma approach is to find out the root causes of the problem, symbolically represented by Y = F(X). • Here, Y represents the problem that occurs due to cause (s) X.
Business goal Business problem Y Small business problem Project Y1 Statistical problem Measurable Y1 Statistical solution Y1 =F(x1, x2, x3, …, xn) + Error Business solution Y = F(X), X = (x1, x2, x3, …, xn) Achieved business goal
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Six Sigma Process Y=
Y Dependent Customer related output Effect Symptom Monitor
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F(X)
x1, x2, x3, …, xn Independent Input-process Cause Problem Control
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Six Sigma System • Commitment of dedicated resources and implementation of Six Sigma methodology to achieve business goals. • It requires: Involvement and support of top management Focus on customer Authentic and reliable data Disciplined and systematic application of methodology Reorientation of work culture
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Benefits of Six Sigma
Continuous defect reduction in products and services Enhanced customer satisfaction Performance dashboards and metrics Process sustenance Project based improvement, with visible milestones Sustainable competitive edge Helpful in making right decisions
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Value and foundations of Lean
History of Lean
The concept of Lean was introduced by Eli Whitney in 1850. Henry Ford introduced some of the important concepts of ‗Lean manufacturing, namely ‗flow systems‘, ‗continuous assembly lines‘, etc.
Toyota‘s John Krafcik developed the major principles of ‗Lean manufacturing‘ in the 1980‘s. In 1990, Womack, Jones, and Roos, in their book ‗The Machine That Changed The World‘, termed the TPS (Toyota Production System) as ‗Lean manufacturing‘.
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Value of Lean
National Institute of Standards and Technology (NIST) describes Lean as ―a systematic approach to identifying and eliminating wastes (non-value added activities) through continuous improvement by flowing the product at the pull of the customer in pursuit of perfection.‖ The value of Lean lies in the fact that it not only identifies non-value added activities but also emphasizes value-added activities.
Lean enables organizations attain perfection in processes by implementing appropriate measures at appropriate times and in appropriate quantities. Perfecting the processes will allow organizations to be flexible and responsive to required changes. By using the appropriate ―Lean tools‖, organizations evolve to become dynamic and adaptive.
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Philosophy of Lean Manufacturing
The process oriented philosophy of Lean aims at organizing the processes of an organization to produce the goods and services continuously to ensure customer satisfaction. One of the basic principles that marks the Lean philosophy is ‗speed‘. Lean aims at minimizing the ‗lead time‘, i.e. the time between placement or order and shipment of goods.
The philosophy of Lean requires an organization to reduce the production time to the minimum by eliminating non-value-adding activities.
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Goals of Lean Manufacturing
The major objectives of Lean are as follows: • Improving teamwork among employees • Making the work place disciplined and organized
• Meeting the demands of the customers using ‗pull system‘ (producing goods or services as per the market demand) as against ‗push system‘ (producing goods and services based on the capacity to produce) • Reducing batch sizes by using ‗flow systems‘ in place of ‗batch and queue systems‘
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Enterprise-Wide View • To channelize production in such a way that the value system flows into every product and service produced by the organization. • To minimize variations in the processes and to aim for Six Sigma quality levels
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Integration of Lean and Six Sigma
• Bill Smith of Motorola formulated the principles of Six Sigma methodology in the 1980‘s, whereas the principles of the Lean concept were developed by John Krafcik of Toyota motors during the same period. • Initially, Lean was developed to speed up manufacturing processes and save time, whereas Six Sigma was developed to improve quality in the semiconductor industry by reducing variations in the processes.
• Both Lean and Six Sigma help in significantly improving the quality of the processes and simultaneously reducing the costs without losing any work hours. • When Lean and Six Sigma principles are combined in the processes, generally, Lean principles are applied first, and if complex problems still remain to be resolved, Six Sigma is then introduced.
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Enterprise-Wide View • Lean and Six Sigma have the common goal of ‗providing complete satisfaction to the customer‘, but the methods of realizing this goal are different. • The Lean-Six Sigma philosophy emphasizes defect prevention over defect correction.
• Lean-Six Sigma uses analytical tools and relies significantly on effective use of data.
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Advantages of Integrating Lean and Six Sigma
• Lean-Six Sigma can be utilized to decrease inventory by minimizing variation and smoothening the process flow. • Six Sigma identifies opportunities and eliminates defects, whereas Lean speeds up the process flow. • Lean-Six Sigma promotes participation of top level management in the training process, thus enabling the employees to adapt to changes easily. • Lean-Six Sigma emphasizes on the involvement and empowerment of employees at all levels in the organization. • Lean-Six Sigma helps an organization to optimize process control and standardize work flow.
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Business Processes and Systems • A business process is a combination of structured and measured activities or tasks that results in the creation of a product or rendering of a service to a particular customer or a specific cluster of customers. • Every process begins and ends with the customer. It is developed and used to fulfill the customer‘s needs, requirements and expectations.
• An organization requires that its business processes aim at maximization of values and minimization of wastes, so that it can satisfy the customers to the fullest and remain competent in the market. Hence, effective business processes are the key to the creation of an efficient organization.
• Processes are the means by which an organization creates value for its customers. An organization that uses the process approach adopts the voice of the customer as its most important consideration for planning and executing its activities.
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Types of Processes
Processes can be classified as management processes, operational processes, and supporting processes.
• Management processes: These processes administer the operation of a system. Some examples of management processes are planning, corporate governance, etc. • Operational processes: These processes create the primary value stream for the customers. Hence, they are also called ‗core business processes‘. Some examples of operational processes are purchasing of raw materials, manufacturing of goods, rendering of services, marketing, etc.
• Supporting processes: These processes support the core business processes of the organization. Some examples of supporting processes are accounting, technical support, etc.
These processes can be divided into many sub-processes that play their intended roles to successfully complete the respective head processes.
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Business Systems
• A business system is a system that implements a process or a set of processes. It ensures that all the processes operate smoothly without delays or lack of resources. • The basic aim of a business system is to ensure that the processes, products, and services are subjected to continuous improvement.
• To ensure that continuous improvement takes place in processes, products, and services, a business system must provide scope for collection and analysis of data from processes and other reliable sources.
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Enterprise-Wide View • It is important to have an appropriate business system in place and the relevant processes under the system are well-documented. • The documentation of the processes must be done in such a way that every task, activity, and their sequence are taken into account for proper execution as planned for in the business system.
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Lean and Six Sigma Applications
• To ensure success of Lean and Six Sigma implementations, it is always preferable that a group representing the top management oversees the implementation. • This group will identify and rank the difficulties that come in the way of efficient implementation, and assemble teams to solve them on a priority basis.
• This group is responsible to train, support, recognize, and reward the teams involved in the Lean and Six Sigma applications.
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Six Sigma and Lean Applications to Processes in Different Types of Enterprises The various areas in which Six Sigma and Lean applications can be implemented are given below: • A services organization can make use of Six Sigma and Lean for various purposes like determining ideal lead time, meeting tight schedules, etc. • A manufacturing organization can use Six Sigma and Lean for various purposes like reducing cycle time on assembly lines, improving productivity, etc.
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Enterprise-Wide View • An organization can also use Six Sigma and Lean to boost product usability by improving its design. • An organization can also use Six Sigma and Lean to manage multiple projects through improved coordination and communication between the project managers.
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In this chapter, we have learned about:
• History of continuous improvement • Value and foundations of Six Sigma • Value and foundations of Lean • Integration of Lean and Six Sigma • Business processes and systems • Six Sigma and Lean applications
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