Six Sigma Introduction: 6σ

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Six Sigma Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho IX CUSTOMER & COMPETITIVE INTELLIGENCE FOR SYSTEMS INNOVATION & DESIGN S IGMA S DEPARTMENT OF STATISTICS DR. RICK EDGEMAN, PROFESSOR & CHAIR SIX SIGMA BLACK BELT [email protected] OFFICE: +1-208-885-4410

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Transcript of Six Sigma Introduction: 6σ

  • 1. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho IX C USTOMER & C OMPETITIVE I NTELLIGENCE FORS YSTEMS I NNOVATION & D ESIGN S IGMA S D EPARTMENTOF S TATISTICS D R.R ICKE DGEMAN,P ROFESSOR &C HAIR S IXS IGMAB LACKB ELT [email protected]: +1-208-885-4410

2. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho IX S IGMA S D EPARTMENTOF S TATISTICS I ntroduction toS ixS igma 3. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho IX S IGMA S D EPARTMENTOF S TATISTICS a highly structured strategy for acquiring, assessing, and applying customer, competitor, and enterprise intelligence for the purposes of product, system or enterprise innovation and design. 4. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Often, problems are knots with many strands, and looking at those strands can make a problem seem different. M r.R ogers 5. a highly structured strategy for acquiring, assessing, and applying customer, competitor, and enterprise intelligence for the purposes of product, system or enterprise innovation and design. Innovation Algorithm DMAIC(Define-Measure-Analyze-Improve-Control) Design for Six Sigma Algorithm DMADV(Define-Measure-Analyze-Design-Verify) Makes Integrative Use Of : Various strategies and tools from Statistics, Quality, Business, Engineeringand ??? Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho is 6. S ixS igmaO rganizations

  • GE All 300,000+ GE employees must be Six Sigma certified. All new GE products developed using the Design for Six Sigma (DFSS) approach .
  • 3M New CEO (from GE) requires all 3M employees to become Six Sigma certified.
  • Dupont
  • AlliedSignal
  • Sun Microsystems
  • Raytheon
  • Motorola
  • Boeing
  • Lockheed-Martin
  • Bank-of-America
  • American Express
  • HSBC
  • SAS Institute
  • Rapidly Increasing Areas of Application.
    • Healthcare GE Heathcare - SLC
    • Financial,
    • Military NSWC, Pentagon, etc.
  • Fueled by :
  • Strategic Contexts.
  • Notorious bottom-line orientation & results.
  • Adaptable to multiple bottom lines.
  • Process orientation: rigorous and systematic approaches to innovation and design.
  • Focus on the customer.
  • Successful track record elsewhere.
  • Industry Buzz.

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho While Six Sigma is new at, for example, 3M its benefits at others of these organizations is measured in themulti-billionsof US dollars. 7. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Qualityis a state in which value entitlement is realized for the customer and provider in every aspect of the business relationship. Business Qualityis highest when the costs are at the absolute lowest for both the producer & consumer. Six Sigmaprovides maximum value to companies in the forms of increased profits and maximum value to consumers with high-quality products and services at the lowest possible cost. 8. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho The Villain Cost of Poorly Performing Processes levelDPMOCP 3 2 308,537Not Applicable 3 66,80725%-40% of sales 4 6,21015%-25% of sales 5 2335%-15% of sales 6 3.4 < 1% of sales Each sigma shift provides a 10% net income improvement Cost of Poorly Performing Processes (CP 3 ) Sigma ( ) is a measure of perfection relating to process performance capability the bigger the better. A process operating at a Six Sigma level produces only 3.4 defectsper million opportunities ( DPMO ) for a defect.Without dedication of significant and appropriate attention to a process, most processes in leading companies operate at a level between 3 and 4 sigma. Why is Six Sigma Important? 9. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho C ost of Poorly Performing Processes

  • The cost to deliver a quality product can account for as much as 40% of the sales price.
  • For example, a laser jet printer purchased for $1,000 may have cost the manufacturer $400 in rework just to make sure that you took home an average-quality product.
  • For a company whose annual revenues are $100 million and whose operating income is $10 million, the cost of quality is roughly 25% of the operating revenue, or $25 million.
  • If this same company could reduce its cost of achieving quality by 20%, it would increase its operating revenue by $5 million or 50% of the current operating income.

10. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho and the Hero

  • We dont know what we dont know.
  • We cant do what we dont know.
  • We wont know until we measure.
  • We dont measure what we dont value.
  • We dont value what we dont measure.
  • Typical Results:companies that properly implement Six Sigma have seen profit margins grow 20% year after year for each sigma shift (up to about 4.8s to 5.0s.Since most companies start at about 3s, virtually each employee trained in Six Sigma will return on average $230,000 per project to the bottom line until the company reaches 4.7s. After that, the cost savings are not as dramatic.
  • However,improved profit margins allow companies to create products & services with added features and functions that result in greater market share.

What Does Six Sigma Tell Us? 11. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho

  • Six Sigma Affects Six Areas Fundamental to Improving a Companys Value:
    • Process Improvement
    • Product & Service Improvement
    • Investor Relations
    • Design Methodology
    • Supplier Improvement
    • Training & Recruitment

12. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Six Sigma vs. TQM TQM Terminology Six Sigma Improvement Terminology

  • Identify the Project
  • Establish the Cause
  • Define
  • Diagnose the Cause
  • Measure
  • Analyze
  • Remedy the Cause
  • Improve
  • Hold the Gains
  • Control
  • Replicate Results
  • Nominate New Projects
  • Replicate

13. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Values of Six Sigma Organizations Issue Classical Focus Six Sigma Focus Analytical Perspective point estimate variability Management cost & time quality & time Manufacturability trial & error robust design Variable Search one-factor-at-a-time design of experiments Process Adjustment tweaking process control charts Problems fixing prevention Problem solving expert based system based Analysis experience data Focus product process Behavior reactive proactive Suppliers cost relative capability Reasoning experience based statistically based Outlook short-term long-term Decision Making intuition probability Approach symptomatic problematic Design performance producibility 14. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Values of Six Sigma Organizations Issue Classical Focus Six Sigma Focus Aim company customer Organization authority learning Training luxury necessity Chain-of-command hierarchy empowered teams Direction seat-of-the-pants benchmarking/ metrics Goal setting realistic perception reach out & stretch People cost asset Control centralized localized Improvement automation optimization 15. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho T heSIPOC M odel Suppliers Customers Inputs Outputs Process Steps Inform Loop 16. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Six Sigma COPIS M odel C ustomers S uppliers O utputs I nputs P rocess Steps TheVoice of the Customer(VOC) is aggressively sought and rigorously evaluated and used to determine needed outputsand hence the optimal process configuration needed to yield those outputs and their necessary inputs for which the best suppliers are identified and allied with. From Concept to Market: the Voice of the Customer How does Six Sigma Work? 17. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho The DMAIC Model Define Control Measure Improve Analyze Voice of the Customer Institutionalization 18. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho K ano C ustomerN eedM odel Dissatisfiers Those needs that are EXPECTED in a product or service.These are generally not stated by customers but are assumed as given.If they are not present, the customer is dissatisfied. Satisfiers Needs that customers SAY THEY WANT. Fulfilling these needs creates satisfaction. Exciters / Delighters New or Innovative features that customers do not expect. The presence of such unexpected features leads to high perceptions of quality. 19. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Kano Customer Need Model Delighted Disgusted Absent Fully Implemented Stakeholder Satisfaction TIME Degree of Execution 20. D imensions of Q uality -G arvins E ight

  • Quality is usually abundleof characteristics
  • We need to disaggregate this composite notion
  • This decomposition will help us to
    • make our notion of quality more precise
    • make comparisons possible
    • facilitate measurement
  • Only the customer determines the relative importance of these dimensions

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho 21. G arvinsE ightD imensions

  • Performance
  • Features
  • Conformance
  • Aesthetics
  • Reliability
  • Durability
  • Serviceability
  • Perceived Quality

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho 22. WhattheTerms Mean (1)

  • P ERFORMANCE
    • Primary operating characteristics of a product
  • F EATURES
    • bells & whistles
    • secondary characteristics that supplement the basic functioning
  • C ONFORMANCE
    • degree to which product meets pre-established standards (meeting specs)

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho 23. WhattheTerms Mean (2)

  • R ELIABILITY
    • Probability of product remaining functional over a specified period of time
  • D URABILITY
    • amount of use one gets out of a product before it physically deteriorates
  • S ERVICEABILITY
    • speed and ease of repairs (or resolution of problems)

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho 24. WhattheTerms Mean (3)

  • A STHETICS
    • look, feel, and sound of a product
    • reflects individual preferences
  • P ERCEIVED Q UALITY
    • perceptions of quality based on other cues and indirect measures
    • reputation or affiliation often key

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho 25. Competing on Quality

  • It is not often feasible to pursue all 8 dimensions
  • Trade-offs are necessary
  • Quality niches can be defined and defended
  • A firm can define what quality means for its product
  • Must focus on the right quality measure: those one(s) that matter to the consumer

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho 26. D imensions ofS erviceQ uality

  • R ELIABILITY :consistency, error-free dependability
  • R ESPONSIVENESS :willingness to help the customer
  • T ANGIBLES :environment for the service presented
  • C OMPETENCE :the right skills and knowledge required

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho 27. S erviceQ uality (cont.)

  • C OURTESY :suppliers behavior
  • S ECURITY :freedom from danger or risk
  • A CCESS :ease of making contact
  • C OMMUNICATION :understandable to the customer
  • E MPATHY :adopting the customers viewpoint

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho 28. Aggregation

  • Often need to reduce the number of dimensions.Reduced list is:
    • Reliability
    • Responsiveness
    • Empathy
    • Tangibles
    • Assurance

Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho 29. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Six Sigma Road Map:R DMAICSI Breakthrough Stage Strategy Phase Objective Identification Recognize Identify Key Business Define Issues Characterization Measure Understand Current Analyze Performance Levels Optimization Improve Achieve Breakthrough Control Improvement Institutionalization Standardize Transform How Day-to Integrate Day Business is Conducted Breakthrough Strategy Black Belt Projects 30. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho D efine C ontrol I mprove A nalyze M easure S ix S igma I nnovation&the DMAIC Algorithm D efinethe problem and customer requirements. M easure defect rates and document the processin its current incarnation. A nalyze process data and determine the capability of the process. I mprove the process and remove defect causes. C ontrol process performance and ensure that defects do not recur. Common sense doesnt mean commonly done or when done, done well. Six Sigma: How Do We Innovate? 31. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Six Sigma from the GE Perspective Six Sigma is a highly disciplined process that helps a company focus on developing and delivering near-perfect products and services. Why sigma?The word is a statistical term that measures how far a given process deviates from perfection. The central idea behind Six Sigma is that if you can measure how many defects you have in a process, you can systematically determine how to eliminate those and approach zero defects. Six Sigma has changed the DNA at GE it is the way that GE works in Everything that GE does and in every product GE designs. What is Six Sigma? The Roadmap to Customer Improvement www.ge.com/sixsigma/makingcustomers.html 32. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Design for Six Sigma Applications of Six Sigmathat focus on thedesignor significant redesignof products and services and their enabling processes so that from the beginning customer needs and expectations are fulfilled are known as Design for Six Sigmaor DFSS . The focal aim of DFSS is to create designs that are resource efficient, capable of exceptionally high yields, and are robust to process variations. This aim leads to the DFSS algorithm D efine- M easure- A nalyze- D esign- V erify (DMADV). 33. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho D efine V erify D esign A nalyze M easure D esign forS ix S igma (DFSS) Allnew products at GE are designed using a DFSS algorithm. D efine customer requirements and goals for the process, product or service. M easure and match performanceto customer requirements. A nalyze and assess the design forthe process, product or service. D esign and implement the array ofnew processes required for the newprocess, product or service. V erify results and maintainperformance. Six Sigma: How Do We Design? 34. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Design for Six Sigma at GE: DFSS is changing GE. With it GE can build on all of its capabilities and take all of its product and process designs to a new level of world-class performance and quality. The essence of DFSS is predicting design quality up front and driving quality measurement and predictability improvement during the early design phases- a much more effective and less expensive way to get to Six Sigma quality than trying to fix problems further down the road. What We Do . GE Corporate Research and Development Formerly posted at: www.crd.ge.com/whatwedo/sixsigma.html 35. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho

  • Another View of Design for Six Sigma:
  • DFSS is the change in the product design organization from a deterministic to a
  • probabilistic culture. Our people were trained to incorporate statistical analysis of
  • failure modes, both in products and processes.They began to incorporate design
  • changes that modify & eliminate design features with a probability of failure within a
  • predefined range of operating environments and conditions. The design organization
  • changed from a factor-of-safety mentality to one in which there was a quantitative
  • assessment of design risk. Four elements of design are most critical to the effort:
  • Design for producibility(design for manufacturing and assembly);
  • Design for Reliability ;
  • Design for Performance(technical requirements); and
  • Design for Maintainability .
  • Design for Six Sigma: 15 Lessons Learned,
  • Quality Progress , Vol. 35, No. 1, pp. 33-42, January 2002.

36. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho

    • Improvement & Innovation Focuses on high priority problems in business processes. This uses the DMAIC methodology: Define, Measure, Analyze, Improve, and Control.
    • DesignDesign For Six Sigma (DFSS) addresses new or fundamentally poor processes. The methodology is called the DMADV or DMADOV model :Define, Measure, Analyze, Design, Optimize ,and Verify.
    • Business Process Management aids in definition and management of operations and activities in terms of core and enabling processes. The resulting process management systems provide a foundation of process definition and baseline data for all process design and improvement activities.

37. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Six Sigma Strategy&Methods Appendix 1 :Corporate Leadership 38. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Six Sigma and General Electric

  • General Electric CEO, Jack Welch, describes Six Sigma as the most important initiative GE has ever undertaken. GEs operating income, a critical measure of business efficiency and profitability, hovered around 10% for decades. In 1995 Welch mandated that each GE operation from credit card services to aircraft engine plants to NBC-TV work toward achieving Six Sigma. GE was averaging about 3.5 when it introduced the program.
  • With Six Sigma embedding itself deeper into GEs processes, they achieved the previously impossible operating margin of 16.7% in 1998 up from 13.6% in 1995.
  • In dollar amounts, Six Sigma delivered more than $300 million to GEs 1997 operating income and more than $600 million in 1998.

39. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Six Sigma and Raytheon

  • Former AlliedSignal executive Daniel P. Burnham, who became Raytheons CEO in 1998, has made Six Sigma a cornerstone of the companys strategic plan.
  • By pursuing Six Sigma quality levels throughout the company, Burnham expects Raytheon to improve its cost of doing business by more than $1 billion annually by 2001.

40. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Six Sigma and theService SectorRobert Galvin: Former Motorola CEO

  • Failing to implement Six Sigma in commercial areas with the same force that the company implemented it in its industrial sectorscost Motorola $5 billionover a four-year period.

41. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho H owB ig is theS erviceS ector?

  • 79% of the U.S. Workforce is employed by commercial businesses.
  • 90% of those employed in manufacturing are actually doing service work such as finance, marketing, sales, distribution and purchasing.
  • So: 79% + (.9)*(21%) = 98% of the U.S. Workforce is involved in service work.
  • MISTAKEN BELIEFS:
  • Some companies still believe that improving commercial processes is less important than improving industrial processes or that seemingly intangible commercial processes cant be controlled.
  • BOTH ARE WRONG:
  • Customers are more likely to take their business elsewhere because of poor service than poor products.
  • Companies like GE have shown that improving internal and external commercial processes adds to the bottom line and to customer satisfaction significantly

42. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho AlliedSignal

  • 70,000 Employees
  • Chemicals, Fibers, Plastics, Aerospace Products, Automotive Products.
  • Larry Bossidy came from GE to become CEO in 1991
  • Market Value = $4 billion in 1991
  • Market Value = $29 billion by the end of 1998
  • Market Value = $38 billion by 2000.

43. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho AlliedSignal

  • TODAYS GOALS :
  • 6% productivity increase
  • Reduced Inventory
  • Full-Capacity Utilization
  • Little or no Overtime
  • Reliable Products
  • 5s Manufacturing
  • 5s Designs
  • Predictable Cash Flow
  • 5s Suppliers
  • BY END OF 1998 :
  • Total Impact of Six Sigma Within AlliedSignal Reached $2 Billion.
  • Six Sigma Profits in Service Areas including:
    • Order Processing
    • Shipping
    • Procurement
    • Product Innovation

44. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho We cant tell other organizations how to do Six Sigma, but we can tell them how not to do it. Allied has made mistakes along the way and, in the process, learned some tremendous lessons.

  • Lesson 1 : The Organizations Leadership Must Own Six Sigma
  • Upper management supported Six Sigma, managers below those at the top saw it as a flavor of the month.
  • Black Belts seen as a nuisance.
  • Black Belts were using Six Sigma jargon while managers were using business vocabulary. This led to confusion.
  • SOLUTION: Introduce ALL levels of management to Six Sigma.
  • Management had weeklong training sessions to understand the methods of the Breakthrough Strategy and how Black Belt training and experience could be leveraged. ALSO how various initiatives fit together.
  • BEGAN TO FOCUS ON PROCESSES NOT PEOPLE as the source of problems. Also, understanding of the Breakthrough Strategy provided a plan of action, rather than just a command to make something happen.

45. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Six Sigma Changed the Company Culture and

  • One of the flaws at Allied is that we hadtoo much vertical mobility .Managers inch up the same smokestack,learning more and more about less and less .But companies that train promising individuals as Black Belts circumvent the vertical flow and move people around horizontally, having them serve time in as many major businesses or divisions as possible to give them a kaleidoscopic view of the organization and the benefit of being mentored by a variety of new blood.

Linked AlliedSignals Goals, Vision & Activities. 46. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Lesson Two: A Beginning Without an End

  • Having recognized the need to train managers in the Six Sigma Breakthrough Strategy, Allied dedicated the next year to training 1,000 leaders in the organization in how Six Sigma worked, and in its potential financial impact.
  • Training sessions lasted 3.5 days and emphasized Six Sigmas impact on:
    • Profitability through improved processes;
    • The Crucial role of Black Belts, RATHER THAN teaching statistical processes involved in achieving Six Sigma.
  • Initially trained top managers at each of Allieds 11 Strategic Business Units and gradually worked their way down the organization to middle management, line supervisors, and so on.
  • COMPLAINTS FROM BLACK BELTS WITHIN SIX MONTHS: Management turnover and too much promotion of Black Belts into management before benefit from the training and skills could be realized.SO training had to be ongoing.

Allied is not in the business of measuring activity. We are in the business of measuring results. IF something doesnt have a positive impact on customer satisfaction,our shareholders, and employees,and in the process makes a lots of money, THEN we just flat out arent going to do it.RICHARD A. JOHNSON, Director of Six Sigma at AlliedSignal 47. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Lesson Three: Black Belt Retention

  • AlliedSignals goal: send Black Belts with a minimum of 18-24 months experience mastering the Breakthrough Strategy back into the organization to create Six Sigma behavior & thinking.
  • 40% of Black Belts were promoted to departmental or plant managers. Others left AlliedSignal for higher-paying jobs at suppliers. Others completed only one or two projects before they were pulled back into their previous assignments with leadership not properly reviewing projects and properly acting upon financial opportunities created by Black Belts so that managers felt that Six Sigma wasnt particularly important.
  • 50% of Black Belts were absorbed back into the organization within six months.
  • NOW BLACK BELTS must work at least 18-24 months on a series of Six Sigma projects prior to a change of roles. TIME & EXPERIENCE ARE VIEWED AS CRITICAL TO SIX SIGMA SUCCESS AND THE MATURITY OF THE BLACK BELT.

48. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Lesson Three - Continued

  • AlliedSignals Champions & Master Black Belts
  • 3.5 Day Executive Overview followed by the traditional Four-Month Black Belt training process.
  • MASTER BLACK BELTS are selected from the best of the Black Belts.
  • Each of these trains and mentors 10 Black Belts
  • Each Black Belt trains and mentors 10 Green Belts.
  • NOW : All Salaried Employees are Expected to Undergo the 26 Hours of Training Required for Green Belt Certification by 2000.
  • CHAMPIONS 20
  • Master Black Belts70
  • Black Belts2000+
  • Green Belts18,000
  • Total # of Employees70,000

49. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Lesson Four: Supplier Capability is Critical to the Success of the Breakthrough Strategy

  • The Majority of AlliedSignals Suppliers were operating at about three sigma.
  • This prevented the company from realizing the full benefits of Six Sigma.
  • AlliedSignal recognized that they needed to view suppliers as their partners.
  • AlliedSignal began TRAINING its suppliers and offering other technical assistance.
  • To achieve Six Sigma it is important to minimize the number of suppliers, limiting these to those that have been trained in the Breakthrough Strategy.
  • Not only does AlliedSignal provide training, BUT then follows up by dedicating ITS OWN BLACK BELTS to mentor and work with critical suppliers. AlliedSignal estimates that for every 300 Black Belts it trains, 100 are either customers or suppliers.

W. Edwards Deming : End the Practice of Awarding Business on Price Tag Alone. 50. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Lesson Five: There is No Such Thing as Operator Error

  • It is PROCESSES not PEOPLE that Fail.
  • This maps to one ofDemings 14 Points for Management : DRIVE OUT FEAR .
  • Focus on Processes implies that people are not accused, but rather, that they are able to investigate processes and be part of the solution.

51. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Lesson Six: Focus on Bottom-Line Improvement

  • The number one source of failure in deploying Six Sigma is the result ofLack of Commitment FROM THE Organizations Leadership .
  • TheFinance Departmentmust be involved so that the impact of Six Sigma Projects on the Bottom-Line is apparent.
  • Black Belts, the Finance Department, and Executive Leadership must work in tandem.
  • WhileBlack Beltscreate opportunities for cost reduction and increased profitability, the companysLeadershipmust make sure that Black Belts focus on the right projects and take action on the savings opportunities they generate.Financeprovides closure to the effort by ensuring that the savings are returned to the organizations bottom line.

52. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Lesson Seven: Initiative Overload

  • LARRY BOSSIDY, CEO:One of the things I have trouble with is non-financial objectives. Often theyre just as obscure and vacuous as they sound.
  • FIVE ACTIONS TO PERPETUATE SIX SIGMA:
  • TRAINING : Allieds employee base changes enough every nine toten months that maintenance of Six Sigma culture requires that new employees be trained in the Breakthrough Strategy.
  • Senior management involvement.
  • Continued on-site leadership training, and alignment of goals among divisions to reinforce Breakthrough Strategy thinking and goals.
  • Requiring Black Belts to dedicate a minimum of two years to working on Six Sigma projects.
  • Supplier involvement and improvement in Six Sigma initiatives.

Products and services should be improved ONLY to the degree that customer value is increased. SixSigma is a program designed to generate money for the company, either through savings resulting from reduced costs, or from boosting sales byincreasing customer satisfaction. 53. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho AlliedSignal: Hindrances to Six Sigma Success

  • Working on too many improvements at the same time.
  • Not having someone accountable for the problem.
  • Not being a process-based company.
  • A lack of trained and experienced people.
  • Middle managers who fear uncertainty about future roles.
  • Lack of metrics focused on customer value-added processes.
  • Lack of integrated information and financial systems.
  • Fragmented, staff-driven approaches.

54. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Six Sigma Strategy&Methods Appendix 2: People of Six Sigma 55. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Six Sigma Champions

  • Create the vision of Six Sigma for the company.
  • Define the path to implement Six Sigma across the organization.
  • Develop a comprehensive training plan for implementing the Breakthrough Strategy.
  • Carefully select high-impact projects.
  • Support development of statistical thinking.
  • Ask Black Belts many questions to ensure that they are properly focused.
  • Realize the gains by supporting Six Sigma projects through allocation of resources and removal of roadblocks.
  • Hold the ground by implementing Black Belt recommendations.
  • Make sure that project opportunities are acted upon by the organizations leadership and the finance department.
  • Recognize people for their efforts.

56. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Master Black Belts

  • Understand the big business picture.
  • Partner with the Champions.
  • Get certified as Master Black Belts.
  • Develop and deliver training to various levels of the organization.
  • Assist in the identification of projects.
  • Coach and support Black Belts in project work.
  • Participate in project reviews to offer technical expertise.
  • Help train and certify Black Belts.
  • Take on leadership of major programs.
  • Facilitate sharing of best practices across the corporation.

57. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Black Belts

  • Act as Breakthrough Strategy experts and be Breakthrough Strategy enthusiasts.
  • Stimulate Champion thinking.
  • Identify the barriers.
  • Lead and direct teams in project execution.
  • Report progress to appropriate leadership levels.
  • Solicit help from Champions when needed.
  • Influence without direct authority.
  • Determine the most effective tools to apply.
  • Prepare a detailed project assessment during the Measurement phase.
  • Get input from knowledgeable operators, first-line supervisors, and team leaders.
  • Teach and coach Breakthrough Strategy methods and tools.
  • Manage project risk.
  • Ensure that the results are sustained.

58. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Green Belts

  • Function as Green Belts on a part-time basis, while performing their regular duties.
  • Participate on Black Belt project teams in the context of their existing responsibilities.
  • Learn the Six Sigma methodology as it applies to a particular project.
  • Continue to learn and practice the Six Sigma methods and tools after project completion.

59. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Black Belt Activities

  • MENTORS : Cultivates a network of Six Sigma individuals at the local organization or site.
  • TEACH : Provides formal training of local personnel in new strategies and tools.
  • COACH : Provides one-on-one support to local personnel.
  • TRANSFER : Passes on new strategies and tools in the form of training, workshops, case studies, and local symposia.
  • DISCOVER : Finds application opportunities for Six Sigma strategies and tools, both internal and external (e.g. suppliers and customers).
  • IDENTIFY : Highlights / surfaces business opportunities through partnerships with other organizations.
  • INFLUENCE : Sells the organization on the use of Six Sigma strategies and tools.

60. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho Personal & Professional Characteristics of a Black Belt

  • Highly respected by superiors, peers, and subordinates.
  • Understands the big picture of the business.
  • Focuses on results and understands the importance of the bottom line.
  • Speaks the language of management (money, time, organizational dynamics, etc.)
  • Committed to doing whatever it takes to excel.
  • Sponsored by a vice president, director, or business unit manager.
  • Is an expert in his or her specific field.
  • Possesses excellent communication skills, both written and verbal.
  • Inspires others to excel.
  • Challenges others to be creative.
  • Capable of consulting, mentoring, and coaching.
  • Drives change by challenging conventional wisdom, developing and applying new methodologies, and creating innovative strategies.
  • Possesses a creative, critical, out-of-the-box intellect.
  • Allows room for failures and mistakes with a recovery plan.

61. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho

  • Accepts responsibility for choices.
  • Views criticism as a kick in the caboose that moves you a step forward.
  • Encourages commitment, dedication, and teamwork.
  • Unites and inspires a team to a core purpose.
  • Able to communicate all sides of an issue.
  • Solicits diverse ideas and viewpoints.
  • Empathizes.
  • Promotes win-win solutions.
  • Disagrees tactfully and does not overreact.
  • Acts decisively under pressure.
  • Anticipates and confronts problems early and corrects causes..
  • Effectively identifies priorities from a business standpoint.
  • Manages limited resources in a highly efficient and effective manner.
  • Careful not to assign an unrealistic number of tasks to any team member.

Personal & Professional Characteristics of a Black Belt 62. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho

  • Understands and respects that people have limitations.
  • Displays a genuine concern and sensitivity toward others.
  • More concerned about business success than personal gain.
  • Does not lord her or his expertise over others.
  • Recognizes that results count more than fancy titles.
  • How Many Black Belts Does an Organization Need?
  • Revenues/(1 million) = Number of Black Belts
  • Number of Black Belts/(10) = Number of Master Black Belts

Personal and Professional Characteristics of a Black Belt 63. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho IX S IGMA S D EPARTMENTOF S TATISTICS E nd ofS ession 64. Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & Design Dr. Rick L. Edgeman, University of Idaho IX S IGMA S C lient,C ompetitive and Enterprise Intelligence for Product, Process and Systems Innovation & Design End of Session