MCTS-Surabaya

By Bambang MurtjahjantoThe Senior Consulting Engineer

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Origins of Six Sigma

1987 Motorola Develops Six Sigma Raised Quality Standards

Other Companies Adopt Six Sigma GE

Promotions, Profit Sharing (Stock Options), etc. directly tied to Six Sigma training

Dow Chemical, DuPont, Honeywell, Whirlpool

What is Six Sigma?

Normal distribution Mean () Standard deviation (σ)

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What is Six Sigma?

Standard Normal distribution

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What is Six Sigma?

Standard Normal distribution

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What is Six Sigma?

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Assumes 1.5 sigma process drift Defect levels decrease

exponentially as sigma levels increase from one value to the next

Six sigma is 3.4 defects per million

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Implemented Six Sigma

Six Sigma Challenge

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• 20,000 lost articles of mail per hour

• Unsafe drinking water for almost 15 minutes each day

• 5,000 incorrect surgical operation per week

• Two short or long landing at most major airports each day

• 200,000 wrong drug prescriptions each year

• No electricity for almost seven hours each month

• 20,000 lost articles of mail per hour

• Unsafe drinking water for almost 15 minutes each day

• 5,000 incorrect surgical operation per week

• Two short or long landing at most major airports each day

• 200,000 wrong drug prescriptions each year

• No electricity for almost seven hours each month

99% Good (3.8 σ)

• Seven articles lost per hour

• One unsafe minute every seven month

• 1.7 incorrect surgical operation per week

• One short or long landing at most major airports every 5 year

• 68 wrong drug prescriptions each year

• One hour no electricity for almost every 34 years

99.99966% Good (6 σ)

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Sigma SignificanceSigma Significance

Sigma Defects numbers per million

1.5 500,000 2.0 308,300 2.5 158,650 3.0 67,000 3.5 22,700 4.0 6,220 4.5 1,350 5.0 233 5.5 32 6.0 3.4

0

100,000

200,000

300,000

400,000

500,000

600,000

1.5 2.5 3.5 4.5 5.5

# of Sigmas

# of D

efec

t per

Milli

on

How to Count defects:

Unit : Unit declarations, parts, etc

Defect : Any Non Conformities in investigated area

Opportunity: Anything you can possible measure or test

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How to calculate six sigma

Calculate defect per unit (DPU)

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DPU = Total # defects

Total # of Units

Calculate defect per million opportunities for error (DPMO):

DPMO = DPU X 1,000,000

# of Opportunity per Units

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Assume that the product in question is a television which contain800 opportunities for error. Total production 2,500 units, found

450 defects. What is six sigma level?

DPU calculation =Total # of Defect

Total # of Units

= 450450

2,5002,500= 0.18= 0.18

Thus, Thus,

DPU X 1,000,000

Opportunity for Error

= 0.18 X 1,000,0000.18 X 1,000,000

800800= 225= 225DPMO = DPMO =

From the next table, found that sigma level : 5 < σ < 6

Sigma (σ) conversion Table:

If your yield is: Your DPMO is: Your Sigma is:

30.9% 690,000 1.0

62.9% 308,000 2.0

93.3 66,800 3.0

99.4 6,210 4.0

99.98 320 5.0

99.9997 3.4 6.013

Six Sigma Elements (Tools)

Basic Tools (Green Belts)Process Mapping - Putting ideas on paper. (QFD) Quality Function Deployment- Matrix of

features & competitor offerings. (FMEA) Failure Mode and Effects Analysis -

mapping of failures, likelihood & severity

More Advanced (Black Belts) (DOE) Design of Experiment - Method for

designing experience to determine the influential factors in a process.

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Six Sigma Elements (Tools)Statistical Techniques

Weibul distributionControl Charts

Graphical TechniquesAffinity DiagramFishbone DiagramPareto

Group Conceptual Tools Brain StormingCreativity / Thinking Out Of The

Box

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Six Sigma Elements (Tools)Effective Tools (processes)

Work Out Process Balanced Score Card Benchmarking DMAIC DFSS/DMADV Kaizen Lean Manufacturing Taguchi - Robust

Really need a good tool for decision making.

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Improve Quality

ReduceCost

ProductivityImproves

CaptureMarket

Provides jobs andmore jobs

Models of the relationships affecting qualityand business performance

Deming’s Model:

less rework, less scrap

Increase cycle time,increase throughput

better quality,lower price

Overall societybenefits

COST OF POOR QUALITY (COPQ)

•External Failure Costs

–Warranty Adjustments

–Repairs

–Customer Service

–Returned Goods

–Returned Repaired Goods

–Product Recalls

–Product Liability Suits

–Opportunity Costs……………

•Internal Failure Costs

–Scrap

–Rework

–RE-INSPECTION of Rework

–Downgrading Because of Defects

–Losses Caused by Vendor Scrap

–Downtime Caused by Defects

–Failure Analysis……………..

•Appraisal Costs

–Receiving Inspection

–In-process Inspection

–Laboratory Inspection

–Outside Laboratory Endorsements

–Setup for Testing

–Maintenance of Test Equipment

–Quality Audits

–Calibration of Quality Equipment………..

•Prevention Costs

–Quality Engineering

–Design and Development of Quality Equipment

–Design Verification and Review to Evaluate the Quality of New Products

–Quality Training

–Quality Improvement Projects

–Quality Data Gathering Analysis and Reporting

–Other Process Control Activities Used to Prevent Defects………………

Lost Opportunity

Scrap

Rework

Inspection

WarrantyRejects

Lost sales

Late delivery

Engineering change orders

Long cycle times

Expediting costs

Excess inventory

The Cost of Poor Quality (COPQ) “Iceberg”

Traditional Quality Costs

Additional Costs of Poor Quality

(intangible)

(tangible)

4-8%

25-35%

(Easily Identified)

(Difficult or impossible to measure)

Lost Customer LoyaltyMore Setups

Six Sigma Philosophy• We are in business to make money

• We make money by satisfying needs• We are able to satisfy needs by doing• Every need/do pair is an interaction• The aim of customer focus is on improving need/do interaction• Repetition of the same action constitute a process•Improve our business means improvement of our processes•Customers need products/services on-time, with zero defects, with lower cost• As process capability improves, the product quality increases• As quality increases, costs and cycle-time go down…………...• The reduction of defects, cycle-time, cost leads to improved customer satisfaction• As customer satisfaction improves, the likelihood of doing business increases• As business increases, we (as individual and society) grow and prosper

What is Six Sigma?

Sigma is a statistical unit of measure which reflects process capability. The sigma scale of measure is perfectly correlated to such characteristics as defects-per-unit, parts per million defective (PPM), and a probability of a failure/error. The sigma value indicates how often defects are likely to occur. The higher the sigma value, the less likely a process will produce defects. As sigma increases, costs go down, cycle time goes down, and customer satisfaction goes up.

What is the meaning of quality???

99% Good (3.8 Sigma) 99.9997% Good (6 Sigma)20,000 lost articles of mail per hour Seven articles of mail lost per hour

Unsafe drinking water for almost One unsafe minute every seven months 15 minutes each day

5,000 incorrect surgical operations 1.7 incorrect operations per weekper week

2 short or long landings at most major one short or long landing every fiveairports each day years at each airport

200,000 wrong drug prescriptions per year 68 wrong drug prescriptions per year

No electricity for seven hours each monthOne hour without electricity every34 years

Six Sigma Is….Six Sigma is disciplined methodology for continuous improvement for• Reducing process variability and keeping it reduced• achieve benefits from improvements in:

• better product/process quality• reduce scarp and rework• reduce cycle time• better product/process design• reduce major expanses

• A tool set to make that change practical• Empowered people have the control they need to improve the way they work• A common language for discussing, measuring and comparing process capabilities• A powerful competitive advantage……….

-6 X +1

Normal DistributionShifted 1.5

Process Capability (Sigma) PPM Yield2 308,537

69%3 66,807 93.3%4 6,210 99.3%5 233 99.98%6 3.4

99.9997%

Sigma Measures - Process Capability

PerformanceLevel SIGMA % Yield

# of Defects perMillion (DPM)

A+ 6 99.99966 3.4

A 5 99.9767 233

B 4 99.3790 6,210

C 3 93.3 66,807

D 2 69 308,537

F 1 31 691,462

Cost ofQuality %

<1% of sales

5 - 15% of sales

15 - 25% of sales

25 - 40% of salesC 93.3 66,8073

•Establish organizational measurements

• Identify the sigma level

• Establish COPQ measurement process

• Identify the major areas for improvement

• 3 to 4 sigma means 15 % to 25% cost of sales:

- Which means if your sales is $100 millions, you can save up to $25 millions by implementing Six Sigma program.

• The savings is continuous basis year over year

What is the Benefits of Six Sigma ???

Output Measurement

• Failure rate (internal and external)

• Warranty cost

• Repair cost per unit

• Cycle time per unit

• Cycle time for new product development

• # of engineering changes

• Supplier issues

• WIP inventory cost

• Finished goods inventory

• Defects product arrival at customer

• # of service events

Learn how the companies like General Electric, AlliedSignal, Motorola, Lockheed Martin, American Express, J.P. Morgan & Chase, and others use Six Sigma methodologies to reduce defects, improve processes, lower cost, higher profit, increase customer satisfaction, and drive improvement to a new levels.

“The Six Sigma Quality initiatives has lowered GE’s costs by dramatically reducing rework, simplifying processes, and reducing direct material costs. Design for six sigma has been a key to the introduction of numerous high-quality new products with significantly enhanced features.”

John F. Welch jr., General electric Chairman and ChiefExecutive Officer, GE Annual Report 2000.

bKnowledgeManagement

KnowledgeManagement

b

Business ResultsOps Review, Strategy Review

LeadershipValues, Vision, Mission

Learning and Growth

Strategy ManagementBalanced Scorecard

Process Management

Customer Management

K

now

ledg

e M

anag

emen

t Quality

Managem

ent

QMS

The Six Sigma System

Customers

Requirements

Satisfaction

Customers

Continuous improvement ofthe quality management system

Managementresponsibility

Resourcemanagement

Productrealization

Measurement analysis and improvement

ProductInput Output

Six Sigma

Process

CustomerSatisfaction

• Increase revenue and profit• Increase market share• Decrease cost

Quality Management System VS Six Sigma

Quality Management System Six Sigma System

CustomerSatisfaction

BusinessObjectives

BusinessStrategy

Process Improvement

Business Governance Model

Delivery Return RateWarranty $

Problem ResolutionNew prod Performance

Cust. SurveyMfg Quality

Supplier Performance

Delivery Return RateWarranty $

Problem ResolutionNew prod Performance

Cust. SurveyMfg Quality

Supplier Performance

RevenueCost Profit

Market ShareGrowth

RevenueCost Profit

Market ShareGrowth

BusinessResults

Assessment

• PDP• Product LCM• Supplier Development• Planning• Marketing• Customer Service• Manufacturing

ISO/QS 9000 Process Six Sigma Process

QIA Six Sigma

Six Sigma Implementation Model

Understanding ofSix Sigma Process

(Executive Training)

Define BusinessStrategy (Values, Vision, Mission)

Adopt Six Sigma Process as Long Term Business

Strategy for Continuous

Improvement(QMS Process)

Develop Measurements

and Goals (Balanced

Scorecard) for the Business

Gap Analysis (Understand the strength & weakness), Areas for Improvement

Develop Business

Governance Model to Monitor

Business Performance

Define Roles & Responsibilities for Six Sigma Deployment

Develop the Roadmap for

Six Sigma Process

Deployment

Identify Resource

Requirements

Develop Six Sigma

Governance Process

Develop Six Sigma Training and Certification program (SSL, MBB, BB, GB)

Identify Projects for

Improvements

Assess Business

Performance related to Six

Sigma Process(QMS Process)

Six Sigma Continuous Improvement Priorities

Overall focus will:• Dramatically reduce the Cost of Quality by

improving:• process improvement• product and service improvement• design improvement• supplier improvement• training

• Develop and implement a systematic approach to drive performance improvements throughout the business

• Make Customer Satisfaction a driving force in all business decisions

• Implement a balanced score card that measures the success of our efforts

Leader/Champion

Master Black Belt(MBB)

Black Belts (BB)

Green Belts (GB)

Project Team Members

Six Sigma - Roles & Responsibilities

Is responsible for coordinating a business roadmap to achieve 6. Selects projects, executes control, and alleviates roadblocks for the 6 projects in his or her area of responsibility.

Is mentor, trainer, and coach of Black Belts and others in the organization. Brings the broad organization up to the required 6 competency level.

Is a leader of teams implementing the 6 methodology on projects. Introduces the methodology and tools to team members and the broader organization.

Delivers successful small, focused departmental projects using the success strategy.

Participates on the project teams. Supports the goals of the project, typically in the context of his or her existing responsibilities. Is expected to continue to utilize learned 6 methodology and tools as part of his or her normal job.

We can help you to grow your business by introducing you a world class business strategy by combining your existing Quality Management System (QMS) with Six Sigma continuous improvement process.

This strategy helps you to provide best quality products and services to your customer, which will help you to significantly improve customer satisfaction, business growth, lower cost and higher profits.

WHAT WE CAN DO FOR YOU!!!

Our Six Sigma Training & Certification Program

• An Executive Overview of Six Sigma Program

• Six Sigma Leader/Champion

• Master Black Belt

• Black Belt

• Green Belt

What is Next?•Six Sigma executive training

•Adopt Six Sigma process as long term business strategy •Business gap analysis (identify strengths and weaknesses)• Benchmark• Develop business strategy and governance model• Develop measurement processes• Develop roadmap for Six Sigma deployment • Identify resource requirements• Identify training roadmap for Six Sigma• Develop six sigma training program•Identify improvement projects•Assess business success…………….

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One case : Costs/Benefits to GE

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Commitment Required

Example: GE Incentives GE ties 40% of executive incentives to Six

Sigma achievements GE requires Black Belt training to be

considered for promotion GE puts Master Black Belts in variable

incentive compensation plans Resources

Black Belt project leaders are assigned full time to improvement efforts

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…………..

Why do Six Sigma?

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“The central idea behind Six Sigma is that if you can measure how many “defects” you have in a process, you can systematically figure out how to eliminate them and get as close to “zero defects” as possible. Six Sigma has changed the DNA of GE in everything we do and in every product we design.”

How to implement Six Sigma?Where is it applied? (1G)Improving customer satisfaction Reducing cycle time Reducing defects

2G – Parameter Improvement3G – Value Creation

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How to implement Six Sigma?Who is involved?

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How to implement Six Sigma? How to do?

Identify customer-driven critical-to-quality (CTQ) characteristics. Identify key processes that cause defects in a CTQ characteristic. Create the opportunity for

project. For each process project – DMAIC

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How to implement Six Sigma?DMAIC

Define numerical definition of project scope, objectives, resources and constraints

Measure capability of current process performance, comparing with the benchmark --critical customer requirements

Analyze the problems to find out root causes Improve… identify potential solutions and begin

to implement themControl the performance to continue to achieve

higher results

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Example: Shipping Logistics

Situation: GE Appliance products, such as

microwave ovens and air conditioners, are being produced in Asia and shipped to US customers, such as Wal-Mart

Delivery performance is very erratic and the average on-time delivery is about 85%

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Success story: GE Shipping Logistics

Situation:Product arrives in

the US at Los Angeles

From the port, the product is taken either to a GE distribution center or to a customer designated forwarder

Product is then cross docked and sent on to final distribution centers via rail, truck-on-rail, or truck

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Example: Shipping Logistics

Process Mapping

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Example: Shipping LogisticsDMAIC Steps

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Define Phase: •A team is assembled to attack this problem. The team includes suppliers, 3rd party vendors, GE logistics people, finance, sales, and customers•The supply chain process is mapped from the supplier to the end customer

Measure Phase: The current performance is measured by looking at data from the previous 6 months. Capability of this process is 1.5 sigma currently

Analyze Phase: All of the many inputs are examined and it appears that 2 areas are the vital inputs, the shipping decision by the supplier and getting the product through the port of LA

Improve Phase: Further investigation by the team yields some changes in procedure that reduces the problem

Control Phase: Documentation and procedures are updated

Example: Shipping LogisticsProcedure improvement

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Old Procedure   New Procedure

GE specifies when products produced and shipped

GE specifies when products produced and delivered to US

Supplier would comply by selecting first ship going to the US

Supplier complies by selecting the “right” ship

Shipping time 8 to 18 days Shipping time 8 days

Supplier notifies GE system (often delayed) and freight forwarder with paperwork

Supplier notifies freight forwarder with paperwork, and freight forwarder communicates through GE system

Example: Shipping Logistics

Results:On time delivery increased to 97%Transportation costs reduced by

$300,000Inventory (cash flow) reduced by

$1,000,000Capability Raised to 3.5 Sigma

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Customer-driven design of processes with 6 capability.

Predicting design quality up front.

Top down requirements flowdown (CTQ flowdown) matched by capability flowup.

Cross-functional integrated design involvement.

Drives quality measurement and predictability improvement in early design phases.

Utilizes process capabilities to make final design decisions.

Monitors process variances to verify 6 customer requirements are met.

THE DMADVMETHODOLOGY AND TOOLS

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Define Measure Analyze Design Verify

Under-standcustomerneeds andspecifyCTQs

Developdesignconceptsand high-level design

Developdetaileddesign andcontrol/testplan

Testdesign andimplementfull-scaleprocesses

Initiate, scope,and plan theproject

DESIGN FOR SIX SIGMA

DELIVERABLES

TeamCharter

CTQs High-levelDesign

DetailedDesign

Pilot

TOOLS

Mgmt Leadership Customer Research FMEA/ErrorproofingProject QFD Process Simulation

Management Benchmarking Design Scorecards

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DFSS DESIGN PROJECT

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CASE 1CASE 1 CASE 2CASE 2 CASE 3CASE 3

Base Line Performance OK

CurrentProduct

CurrentProduct

DPMOCOPQ

DesignDesign

CurrentProcesses

ManufacturingManufacturing

DistributionDistribution

ServiceService

MarketingMarketing

REDESIGN

Cp, CpkCOPQ

DPMOCOPQ

CurrentProduct

CurrentProduct

NewProcesses

NEW PROCESS DESIGN

Product Base Line Performance OK(May be of little value)

NewProduct

NewProduct

NewProcesses

NEW PRODUCT ANDPROCESS DESIGN

No Base Line Performance

CTQ’sCTQ’s

High-level Design

High-level Design

CTQ GAP“Base Line

Performance”

CTQ GAP“Base Line

Performance”

DesignScorecard

DesignScorecard

But:

No Current Product or Process

DesignDesign

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See you at better place and time with MCTS

Dr. Joseph M. Juran, The Father of Breakthrough Improvement

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QUESTIONSPLEASE

?