1 st Middle East Six Sigma Forum Six Sigma – A Strategy for Achieving World Class Performance

1. 1st Middle East Six Sigma ForumSix Sigma – A Strategy for Achieving World Class Performance 7th to 9th December, Dubai Sunil ThawaniManager – Business Process ImprovementUnion National Bank, Abu Dhabi Sthawani@unb.com

2. Purpose of Presentation • Share concepts and application of Six Sigma with a case study; • Deployment of Six Sigma as a strategy to achieve World Class Performance; • Integration of Six Sigma with EFQM framework; • Lessons Learnt

3. World Class Performance Source: The Six Sigma Way by Peter Pande and Others

4. What is Six Sigma ? • Based on teachings of Dr. Walter Shewhart, Dr. W. E. Deming & Dr. J. Juran. • Process Control; • Plan Do Check Act; • Common and Special Causes; • Improvement can be done project by project • Statistical tools • Hawthorne Plant Experiences • Developed by Bill Smith at Motorola in 1980s

5. Degree of variation; Level of performance in terms of defects; Statistical measurement of process capability; Benchmark for comparison; Process improvement methodology; It is a Goal; Strategy for change; A commitment to customers to achieve an acceptable level of performance  What Is Six Sigma? Sigma is a letter in the Greek Alphabet

6. Six Sigma Definitions • Business Definition • A break through strategy to significantly improve customer satisfaction and shareholder value by reducing variability in every aspect of business. • Technical Definition • A statistical term signifying 3.4 defects per million opportunities.

8. Bank of America – SS Experience • Goals • # 1 in Customer Satisfaction • Worlds’ most admired company • Worlds’ largest bank • Strategy - “ Develop business process excellence by applying voice of the customer to identify and engineer critical few business processes using Six Sigma • Created Quality & Productivity Division Source: Best Practices Report

9. Bank of America – SS Experience • Wanted results in 1 year; • Hired more than 225 MBB & BBs from GE, Motorola, Allied Signal for rapid deployment • Developed 2 week Green Belt training programs • Introduced computer simulation of processes • Trained 3767 Green Belts, certified 1230 - Minimum value target per GB project – $ 250K • Trained 305 Black Belts, certified 61 - Minimum value target per BB project – $ 1 million • Trained 43 MBB, • 1017 in DFSS • 80 % of Executive Team trained in GB and 50 % Certified

10. Bank of America – SS Experience Results of first 2 years: • Reduced ATM withdrawal losses by 29.7 % • Reduced counterfeit losses in nationwide cash vaults by 54% • Customer delight up 20%; • Added 2.3 million customer households • 1.3 million fewer customer households experienced problems • Stock value up 52% • Y 2002 – BOA named Best Bank in US & Euro money's Worlds Most Improved Bank

11. High Level Business Metrics • Revenue • Capital Utilization • Return on Assets • Profits • Quote Time • Defect Rate • Waste • On Time Delivery • Inventory; • Machine Utilization Operating Level Metrics Strategically:Used by Leadership as a vehicle to develop sustainable culture of Customer, Quality, Value and Continuous improvement. Operationally:By Quality Managers to reduce cycle times, costs, errors, rework, inventory, equipment downtime. Deployment across all types of processes and industries - worldwide

12. Enablers Results Innovation and Learning Six Sigma & EFQM/ DQA Framework Recognizing People Competency Productivity People Results People Key Perf Results Establishing Process management System to be used Personally actively Involved in improvement Developing Team skills Aligning Individual & Organization Goals Satisfaction Involvement Gross margins Net profit Sales Market Share Recognition Implementing Process Measures Customer Results Encouraging & enabling people To participate in Improvement Identifying & designing processes to deliver strategy Response Time to customers Process cycle time Process costs Defect rates Productivity Delivery, Value, reliability Repurchase satisfaction Time to Market Policy & Strategy Cash flow Maintenance cost Return on assets Improving processes to satisfy and Generate value For customers Recognizing Individual & Team effort Utility consumption Timeliness Inventory Society Results Partnerships Resources Leadership Processes

13. Who is Implementing Six Sigma • At least 25% of the fortune 200 claim to have a serious six sigma program - Michael Hammer. • Financial - Bank of America, GE Capital, Electronics - Allied Signal, Samsung, Sony • Chemicals - Dupont, Dow Chemicals • Manufacturing - GE Plastics, Johnson and Johnson, Motorola, Nokia, Microsoft, Ford. • Airline - Singapore, Lufthansa, Bombardier • And hundreds of others in Americas, Europe, Sub Continent.

14. Six Sigma Results Six Sigma Savings as % of revenue vary from 1.2 to 4.5 % For $ 30 million/yr sales – Savings potential $ 360,000 to $ 1.35 million. Investment: salary of in house experts, training, process redesign.

15. Six Sigma Project Methodology Project Phases Control Define Measure Analyze Improve • Improvement strategy • Develop ideas to remove root causes • Design and carry out experiments, • Optimize the process. • Final solutions • Collect data on size of the selected problem, • identify key customer requirements, • Determine key product and process characteristic. • Analyze data, establish and confirm the “ vital few “ determinants of the performance. • Validate hypothesis • Establish standards to maintain process; • Design the controls, implement and monitor. • Evaluate financial impact of the project • Identify, evaluate and select projects for improvement • Set goals • Form teams.

16. Six Sigma – Case Study Service Organisation Background • M/s Alpha Inc. manages out bound cargo from a distribution centre to different stores. • Deliveries made on trucks - owned and hired. • Customers dissatisfied at delivery schedules. • Leadership decision to deploy Six Sigma; • Team of 1 Black Belt and 3 Green Belts formed • Sponsor of the project – Distribution Manager

17. Focus on customers generating annual revenue of USD 400,000/-. Define - Critical to Quality (CTQ) Current process sigma level - 2.43 or 175889 DPMO

18. Define- Goal Statement • Reduce number of delayed deliveries by 50 % by 31st December Y 2002 to better meet customer requirement of timely delivery defined as within +/- 1 hour of scheduled delivery.

19. Define- Performance Standards

20. Define- SIPOC Diagram • Detailed process maps drawn

21. Measure and Analyze • Driver and Distance identified as key factors influencing delivery performance. • Driver selected for focus. • Potential root causes as to why Driver influenced the time: • Size of the vehicle • Type of engine • Type of tyres • Fuel capacity

22. Improve • Experiments designed and conducted using truck type and tyre size. • Findings: • Larger tyres took longer time at certain routes where area was cramped and time lost in maneuvering. • High incidence of tyre failures since tight turns led to stress on tyres thus increasing number of flat tyres. • Team modified planning of dispatch process by routing smaller trucks at more restrictive areas.

23. Control • Test implementation. • Process sigma level up from 2.43 or 175889 DPMO to 3.94 or 7353 DPMO. • Performance still fell short of best in class 4.32 or 2400 DPMO. • Improvement led to significant customer satisfaction. • Process continually monitored and data on new cycle times, tyre failure collected as per defined methods and frequency, analysed and monitored. • Customer satisfaction measured and monitored.

24. Key Lessons Learnt • Define • Difficulty in identifying the right project and defining the scope; • Difficulty in applying statistical parameters to Voice of the Customers; • Trouble with setting the right goals; • Measure • Inefficient data gathering; • Lack of measures; • Lack of speed in execution;

25. Key Lessons Learnt • Analyse • Challenge of identifying best practices • Overuse of statistical tools/ under use of practical knowledge • Challenge of developing hypotheses • Improve • Challenge of developing ideas to remove root causes • Difficulty of implementing solutions • Control • Lack of follow up by Managers/ Process Owners • Lack of continuous Voice of the Customer feedback • Failure to institutionalize continuous improvement.

26. Key Lessons Learnt • “ Define “ ranked most important step but gets the lowest resource allocation • Project scoping and its definition is critical to its success/ failure; • “Measure” is considered most difficult step and also gets the highest resources Source: Greenwich Associates Study Y 2002

27. What Makes Six Sigma Different? • Versatile • Breakthrough improvements • Financial results focus • Process focus • Structured & disciplined problem solving methodology using scientific tools and techniques • Customer centered • Involvement of leadership is mandatory. • Training is mandatory; • Action learning (25% class room, 75 % application) • Creating a dedicated organisation for problem solving (85/50 Rule).

28. Benefits of Six Sigma • Generates sustained success • Sets performance goal for everyone • Enhances value for customers; • Accelerates rate of improvement; • Promotes learning across boundaries; • Executes strategic change

29. Thank you Q & A