Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma...

33
Quantitative methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Transcript of Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma...

Page 1: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Quantitative methods in

process improvement –

Six Sigma (6σ)

Diganta Borah

Sr. Engineer (P&A)

Page 2: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Topics

♦Understanding Six Sigma

♦History of Six Sigma

♦Six Sigma Methodologies & Tools

♦Roles & Responsibilities

Page 3: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Six Sigma is. . .

♦ A performance goal, representing 3.4 defects for every million opportunities to make one.

♦ A series of tools and methods used to improve or design products, processes, and/or services.

♦ A statistical measure indicating the number of standard deviations within customer expectations.

♦ A disciplined, fact-based approach to managing a business and its processes.

Page 4: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

μ

σ

What’s in a name?

♦ Sigma is the Greek letter representing the standard

deviation of a population of data.

♦ Sigma is a measure

of variation

(the data spread)

Page 5: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

What does variation mean?

♦ Variation means that a

process does not produce

the same result (the “Y”)

every time.

♦ Some variation will exist in

all processes.

♦ Variation directly affects customer experiences.

Customers do Customers do notnot feel averages!feel averages!

-10

-5

0

5

10

15

20

Page 6: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Measuring Process PerformanceThe pizza delivery example. . .

♦ Customers want their pizza delivered fast!

♦ Guarantee = “30 minutes or less”

♦ What if we measured performance and found an average delivery time of 23.5 minutes?

– On-time performance is great, right?

– Our customers must be happy with us, right?

Page 7: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

How often are we delivering on

time?Answer: Look at

the variation!

♦ Managing by the average doesn’t tell the whole story. The average and the variation together show what’s happening.

s

x

30 min. or less

0 10 20 30 40 50

Page 8: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Reduce Variation to Improve

PerformanceHow many standard

deviations can you

“fit” within

customer

expectations?

♦ Sigma level measures how often we meet (or fail to meet) the requirement(s) of our customer(s).

s

x

30 min. or less

0 10 20 30 40 50

Page 9: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Managing Up the Sigma Scale

3.40.00034%99.9997%6

2330.023%99.977%5

6,2100.62%99.38%4

66,8076.7%93.3%3

308,53830.9%69.1%2

691,46269.1%30.9%1

DPMO% Bad% GoodSigma

Page 10: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Examples of the Sigma Scale

In a world at 3 sigma. . .

♦ There are 964 U.S. flight cancellations per day.

♦ The police make 7 false arrests every 4 minutes.

♦ In one hour, 47,283 international long distance calls are accidentally disconnected.

In a world at 6 sigma. . .

♦ 1 U.S. flight is cancelled every 3 weeks.

♦ There are fewer than 4 false arrests per month.

♦ It would take more than 2 years to see the same number of dropped international calls.

Page 11: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Topics

♦Understanding Six Sigma

♦History of Six Sigma

♦Six Sigma Methodologies & Tools

♦Roles & Responsibilities

Page 12: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

The Six Sigma Evolutionary Timeline

1736: French mathematician Abraham de Moivre publishes an article introducing the normal curve.

1896: Italian sociologist Vilfredo Alfredo Pareto introduces the 80/20 rule and the Pareto distribution in Cours d’Economie Politique.

1924: Walter A. Shewhart introduces the control chart and the distinction of special vs. common cause variation as contributors to process problems.

1941: Alex Osborn, head of BBDO Advertising, fathers a widely-adopted set of rules for “brainstorming”.

1949: U. S. DOD issues Military Procedure MIL-P-1629, Procedures for Performing a Failure Mode Effects and Criticality Analysis.

1960: Kaoru Ishikawa introduces his now famous cause-and-effect diagram.

1818: Gauss uses the normal curve to explore the mathematics of error analysis for measurement, probability analysis, and hypothesis testing.

1970s: Dr. Noriaki Kano introduces his two-dimensional quality model and the three types of quality.

1986: Bill Smith, a senior engineer and scientist introduces the concept of Six Sigma at Motorola

1994: Larry Bossidy launches Six Sigma at Allied Signal.

1995: Jack Welch launches Six Sigma at GE.

Page 13: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Six Sigma Companies

Page 14: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Six Sigma and Financial Services

Page 15: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Topics

♦ Understanding Six Sigma

♦ History of Six Sigma

♦ Six Sigma Methodologies & Tools

♦ Roles & Responsibilities

♦ How YOU can use Six Sigma

Page 16: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

DMAIC – The Improvement

Methodology

Define Measure Analyze Improve Control

Objective:

CONTROL the

process

to sustain the gains.

Objective:

IMPROVE the

process to

eliminate root

causes

Objective:

ANALYZE the

root causes of

problems

Objective:

MEASURE current

performance

Objective:

DEFINE the

opportunity

Key Control

Tools:

• Control Charts

• Contingency

and/or Action

Plan(s)

Key Improve

Tools:

• Solution Selection

Matrix

• To-Be Process

Map(s)

Key Analyze

Tools:

• Histograms,

Boxplots, Multi-

Vari Charts, etc.

• Hypothesis Tests

• Regression

Analysis

Key Measure

Tools:

• Critical to Quality

Requirements

(CTQs)

• Sample Plan

• Capability

Analysis

• Failure Modes

and Effect

Analysis (FMEA)

Key Define Tools:

• Cost of Poor

Quality (COPQ)

• Voice of the

Stakeholder

(VOS)

• Project Charter

• As-Is Process

Map(s)

• Primary Metric

(Y)

Page 17: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

♦ What is the problem? The “problem” is the Output (a “Y”

in a math equation Y=f(x1,x2,x3) etc).

♦ What is the cost of this problem

♦ Who are the stake holders / decision makers

♦ Align resources and expectations

Define – DMAIC ProjectWhat is the project?

Six SigmaSix Sigma

Project Project

CharterCharterVoice of the StakeholderStakeholders

$

Cost of Poor

Quality

Page 18: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Define – As-Is ProcessHow does our existing process work?Move-It! Courier Package HandlingProcess

Acco

un

tin

gF

ina

lizin

gD

eliv

ery

Out-Sort SupervisorOut-Sort ClerkAccounts

SupervisorAccounts

Receivable ClerkWeight Fee ClerkDistance Fee ClerkIn-Sort SupervisorIn-Sort ClerkMail ClerkCourier

Observ e packageweight (1 or 2) onback of package

Look upappropriate

Weight Fee andwrite in top middlebox on package

back

Take packagesf rom Weight FeeClerk Outbox toA/R Clerk Inbox.

Add Distance &Weight Fees

together and writein top right box on

package back

Circle Total Feeand Draw Arrow

f rom total tosender code

Take packagesf rom A/R Clerk

Outbox toAccounts

Superv isor Inbox.

Write Total Feef rom package in

appropriateSender column onAccts. Supv .’s log

Add up Total # ofPackages and

Total Fees f romlog and createclient inv oice

Deliv er inv oice toclient

Submit log toGeneral Managerat conclusion of

round.

Take packagesf rom Accounts

Superv isorOutbox to Out-

Sort Clerk Inbox.

Draw 5-point Starin upper right

corner of packagef ront

Sort packages inorder of Sender

Code bef oreplacing in outbox

Take packagesf rom Out-Sort

Clerk Outbox toOut-Sort

Superv isor Inbox.

Observ e senderand receiv er

codes and makeentry in Out-SortSuperv isor’s log

Deliv er Packagesto customers

according to N, S,E, W route

Submit log toGeneral Managerat end of round

Submit log toGeneral Managerat end of round

Does EVERYONE

agree how the current

process works?

Define the Non Value

Add steps

Page 19: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Define – Customer RequirementsWhat are the CTQs? What motivates the customer?

Voice of the CustomerVoice of the Customer Key Customer IssueKey Customer Issue Critical to QualityCritical to QualitySECONDARY RESEARCH

PRIMARY RESEARCH

SurveysSurveys

OTM

Market Data

Indust

ry I

nte

lLis

tenin

g P

ost

s

Industry Benchmarking

Focus Groups

Customer Service

Customer Correspondence

Obser-vations

Page 20: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Measure – Baselines and

CapabilityWhat is our current level of performance?

♦ Sample some data / not all data

♦ Current Process actuals measured

against the Customer expectation

♦ What is the chance that we will succeed

at this level every time?50403020100

95% Confidence Interval for Mu

26.525.524.523.522.521.520.519.5

95% Confidence Interval for Median

Variable: 2003 Output

19.7313

8.9690

21.1423

Maximum3rd QuartileMedian1st QuartileMinimum

NKurtosisSkewnessVarianceStDevMean

P-Value:A-Squared:

26.0572

11.8667

25.1961

55.290729.610023.147516.4134 0.2156

1000.2407710.238483

104.34910.215223.1692

0.8540.211

95% Confidence Interval for Median

95% Confidence Interval for Sigma

95% Confidence Interval for Mu

Anderson-Darling Normality Test

Descriptive Statistics

Others

AmountLate

41779

4.017.079.0

100.0 96.0 79.0

100

50

0

100

80

60

40

20

0

Defect

Count

PercentCum %

Pe

rce

nt

Co

unt

Pareto Chart for Txfr Defects

Page 21: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Measure – Failures and RisksWhere does our process fail and why? Subjective opinion mapped into an “objective” risk profile number

Failure Modes and Effects Analysis (FMEA)

Process or

Product Name:Prepared by: Page ____ of ____

Responsible: FMEA Date (Orig) ______________ (Rev) _____________

Process

Step/Part

Number Potential Failure Mode Potential Failure Effects

S

E

V Potential Causes

O

C

C Current Controls

D

E

T

R

P

N

Actions

Recommended Resp. Actions Taken

S

E

V

O

C

C

D

E

T

R

P

N

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

Process/Product

X1

X2

X4

X3

etc

Page 22: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Six SigmaSix Sigma

Analyze – Potential Root CausesWhat affects our process?

y = f (xy = f (x11, x, x22, x, x33 . . . x. . . xnn))

Ishikawa Diagram (Fishbone)

Page 23: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Analyze – Validated Root CausesWhat are the key root causes?

Other s

AmountLate

41779

4.017.079.0

100.0 96.0 79.0

100

50

0

100

80

60

40

20

0

Defect

Count

PercentCum %

Perc

ent

Count

Pareto Chart for Txfr Defects

Six SigmaSix Sigma

y = f (xy = f (x11, x, x22, x, x33 . . . x. . . xnn))

Critical Xs

Other

Clerical

Currency

2 312

11.817.670.6

100.0 88.2 70.6

15

10

5

0

100

80

60

40

20

0

Defect

Count

PercentCum %

Perc

ent

Count

Pareto Chart for Amt Defects

Process

Simulation

Data Stratification

Regression Analysis

Experimental Design

Page 24: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Improve – Potential SolutionsHow can we address the root causes we identified?

♦Address the causes, not the symptoms.

y = f (xy = f (x11, x, x22, x, x33 . . . x. . . xnn))

Critical Xs

Decision

Ev

aluate

Clarify

Gen

erate

Divergent | ConvergentDivergent | Convergent

Page 25: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Improve – Solution SelectionHow do we choose the best solution?

Time

Quality

Cost

ScoreOtherCBATimeSigmaSolution

Six SigmaSix Sigma

Solution Solution

Implementation Implementation

PlanPlan

Solution Selection Matrix

XNice

Idea

Nice

Try☺

SolutionRight Wrong

Imple

menta

tion

Bad

Good

Page 26: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Control – Sustainable BenefitsHow do we ”hold the gains” of our new process?

♦ Some variation is normal and OK

♦ How High and Low can an “X” go yet not materially impact the “Y”

♦ Pre-plan approach for control exceptions

0 10 20 30

15

25

35

Observation Number

Indiv

idual V

alu

e

Mean=24.35

UCL=33.48

LCL=15.21

Process Owner: Date:

Process Description: CCR:

Measuring and Monitoring

Key

Measure

ments

Specs

&/or

Targets

Measures

(Tools)

Where &

Frequency

Responsibility

(Who)

Contingency

(Quick Fix)Remarks

P1 - activity

duration,

min.

P2 - # of

incomplete

loan

applications

Process Control System (Business Process Framework)

Direct Process Customer:

Flowchart

Customer Sales Branch ManagerProcessingLoan Service

Manager

1.1

Applic

ation &

Revie

w1.2

Pro

cessin

g1.3

Cre

dit r

evi

ew

1.4

Revie

w1.5

Dis

clo

sure

Apply forloan

Reviewappliation forcompleteness

ApplicationComplete?

Completemeeting

informationNo

Page 27: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

DFSS – The Design MethodologyDesign for Six Sigma

♦ Uses– Design new processes, products, and/or services from scratch

– Replace old processes where improvement will not suffice

♦ Differences between DFSS and DMAIC– Projects typically longer than 4-6 months

– Extensive definition of Customer Requirements (CTQs)

– Heavy emphasis on benchmarking and simulation; less emphasis on baselining

♦ Key Tools– Multi-Generational Planning (MGP)

– Quality Function Deployment (QFD)

Define Measure Analyze Develop Verify

Page 28: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Topics

♦Understanding Six Sigma

♦History of Six Sigma

♦Six Sigma Methodologies & Tools

♦Roles & Responsibilities

Page 29: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Champions

♦ Promote awareness and execution of Six Sigma within lines of business and/or functions

♦ Identify potential Six Sigma projects to be executed by Black Belts and Green Belts

♦ Identify, select, and support Black Belt and Green Belt candidates

♦ Participate in 2-3 days of workshop training

Page 30: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Black Belts

♦ Use Six Sigma methodologies and advanced tools

(to execute business improvement projects

♦ Are dedicated full-time (100%) to Six Sigma

♦ Serve as Six Sigma knowledge leaders within

Business Unit(s)

♦ Undergo 5 weeks of training over 5-10 months

Page 31: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

Green Belts

♦ Use Six Sigma DMAIC methodology and basic tools to execute improvements within their existing job function(s)

♦ May lead smaller improvement projects within Business Unit(s)

♦ Bring knowledge of Six Sigma concepts & tools to their respective job function(s)

♦ Undergo 8-11 days of training over 3-6 months

Page 32: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

♦ Subject Matter Experts

– Provide specific process knowledge to Six Sigma teams

– Ad hoc members of Six Sigma project teams

♦ Financial Controllers

– Ensure validity and reliability of financial figures used by Six Sigma project teams

– Assist in development of financial components of initial business case and final cost-benefit analysis

Other Roles

Page 33: Quantitative methods in process improvement – Six … methods in process improvement – Six Sigma (6σ) Diganta Borah Sr. Engineer (P&A)

THANK YOU