Organizing Six Sigma

1. Organizing Six Sigma Christopher J. Zampogna Operations Management 380 Boise State University

2. What will be covered • The History of Six Sigma • Six Sigma Defined • Brainstorming Exercise • The Six Sigma Roadmap • Organizing Six Sigma • A Real-World Example • An Exercise • Summary • Reading List • References

3. The History of Six Sigma • “Six Sigma” originated at Motorola in 1982 • Early adoptors • Allied Signal (Honeywell) • General Electric • Six Sigma management philosophy today • A well-developed, thorough approach to quality improvement • Uses statistics and management by fact • Is effective in manufacturing and services firms

4. Defining Six Sigma (6) “Six Sigma: A comprehensive and flexible system for achieving, sustaining and maximizing business success. Six sigma is uniquely driven by a close understanding of customer needs, disciplined use of facts, data, and statistical analysis and diligent attention to managing, improving, and reinventing business processes.” - Peter S. Pande6

5. Defining Six Sigma (6) • The Greek symbol (sigma) refers to the amount of variation in a process around the mean value for that process • Processes have acceptable upper and lower limits • Six Sigma is concerned with reducing the variations to get more output within those limits

6. Defining Six Sigma (6) • In the chart below, 64.6% of the measures are between the upper and lower limits • This is a 1 process • Reducing the variations in the process will bring a higher percentage within the acceptable limits

7. The 6 Difference What is the Six Sigma difference ? • one typo per page (3 sigma) vs. one typo per library (6 sigma) • playing golf at a 6 sigma level means missing one putt every 163 years

8. Brainstorming Exercise:Where are the variations? Identify six processes in your business that have variations in the output. (HINT: manufacturing, purchasing, inventory, forecasting, product design, customer service, accounting...)

9. The Six Sigma Roadmap • Five steps to implementing Six Sigma9 • Identify core processes and key customers • Define customer requirements • Measure current performance • Prioritize, analyze, implement improvements • Expand and integrate the Six Sigma system

10. Organizing Six Sigma • Key Roles10 • Leadership Team • Champions • Mentors (master black belts) • Experts (black belts) • Participants (green belts)

11. Key Six Sigma Roles • The Leadership Group • Be actively involved from outset • Develop a strategic plan • Establish Roles and Infrastructure • Establish supporting policies • Job descriptions • Reward/Compensation systems • Career paths

12. Key Six Sigma Roles • The Leadership Group (cont’d) • Select projects • Prioritize projects and allocate resources • Facilitate, guide, manage

13. Key Six Sigma Roles • The Champions17 • Find appropriate projects • Represent projects to the leadership • Provide coaching • Ensure allocation of resources • Resolve issues

14. Key Six Sigma Roles • Master Back Belts • Coach and support project leads • Work as a change agent • Train others in the use of six sigma tools

15. Key Six Sigma Roles • Black Belts • Highly trained experts • Manage project leaders • Lead project teams

16. Key Six Sigma Roles • Green Belts • Trained in the use of statistical tools • Lead project teams • Participate on project teams

17. A Real-World Example • General Electric’s 6 results: - reduced invoice defects and disputes with a key customer by 98% - saved $1 million annually in contract review process (GE Capital) - developed breakthrough technology that reduced medical scan times to 30 seconds from 3 minutes - improved a key call center performance measure from 76% 99% - reduced vibrations in Power System rotors by 300% - saved $320 million in less than two years, $750 million in three years

18. Exercise • If you have a 2 sigma process, what percentage of the output is within spec ? • Six Sigma originated at Honeywell –T/F • Six Sigma focuses on the customer –T/F • What does the Greek symbol sigma represent? • Six Sigma utilizes fact-based decision making – T/F • Continuous improvement requires feedback and adjustments to ensure achievement of business objectives – T/F ANSWERS: 1) 94.38%, 2) False, 3)True, 4)Standard deviation, 5) True, 6) True

19. Six Sigma Summary • Project-driven management philosophy • Relies on fact-based decision making (statistical tools) • Requires top-down support • Requires an infrastructure that can support quality project management • Has been shown to have markedly positive impacts on business performance

20. Suggested Reading • Breyfogle, F.W., III, Cupello, J.M., & Meadows, B. (2003). Managing Six Sigma: A Practical Guide to Understanding, Assessing, and Implementing the Strategy that Yields Bottom-Line Success. New York, New York: John Wiley & Sons. • Eckes, George. (2001) The Six Sigma Revolution: How General Electric and Others Turned Process into Profits. New York, New York: John Wiley & Sons. • Eckes, George. (2003) Six Sigma for Everyone. New York, New York: John Wiley & Sons. • Foster, S. Thomas. (2004). Managing Quality: An Integrative Approach. Upper Saddle River, New Jersey: Pearson Prentice Hall. • Kerzner, Harold. (2003). Project Management: a systems approach to planning, scheduling, and controling. Upper Saddle River, New Jersey: Pearson Prentice Hall. • Kinicki, A, & Kreitner, R. (2003). Organizational Behavior: key concepts, skills & best practices. New York, New York: McGraw Hill. • Pande, P.S., Neuman, R.P., & Cavanagh, R.R. (2000). The Six Sigma Way: How GE, Motorola and other Top Companies are Honing Their Performance. New York, New York: McGraw Hill.

21. Bibliography • Eckes, George. (2001) The Six Sigma Revolution: How General Electric and Others Turned Process into Profits. p.5. New York, New York: John Wiley & Sons. • Eckes, The Six Sigma Revolution. p.6. • Ibid. • Eckes, The Six Sigma Revolution. pp.9-10. • Costanzo, Chris. (2002). At Suntrust, Six Sigma is Middle Management’s Baby. American Banker, June 12, 2002, Vol. 167, Issue 112. • Pande, P.S., Neuman, R.P., & Cavanagh, R.R. (2000). The Six Sigma Way: How GE, Motorola and other Top Companies are Honing Their Performance. New York, New York: McGraw Hill. 7) Breyfogle, F.W., III, Cupello, J.M., & Meadows, B. (2003). Managing Six Sigma: A Practical Guide to Understanding, Assessing, and Implementing the Strategy that Yields Bottom-Line Success. p.6. New York, New York: John Wiley & Sons.

22. Bibliography 8) Vasilash, Gary S. (1999). Missing One Putt Every 163 Years. Automotive Manufacturing and Production, Dec99, Vol. 111, Issue 12. • Pande, p.67. • Eckes, The Six Sigma Revolution. p.25. • Pande, chapters 7 and 8. • Pande, p.110. • Eckes, George. (2003) Six Sigma for Everyone. pp.15-26. New York, New York: John Wiley & Sons. 14) Pande, pp. 96-103. 15) Gale, Sara F. (2003). Building Frameworks for Six Sigma. Workforce, May2003, Vol. 82, Issue 5.

23. Bibliography • Kerzner, Harold. (2003). Project Management: a systems approach to planning, scheduling and controlling. Upper Saddle River, New Jersey: Pearson Prentice Hall. • Pande, p.119. • Eckes, The Six Sigma Revolution. p.43. • Pande, pp.123-127. • Ibid. • Foster, S. Thomas. (2004). Managing Quality: An Integrative Approach. P.404. Upper Saddle River, New Jersey: Pearson Prentice Hall. • Eckes, The Six Sigma Revolution. p.43. • Foster, pp.404-405. • Breyfogle, p.146.