Six Sigma Introduction

1. Six Sigma Introduction Supply Chain Leadership Committee Nashville, TN November 4, 2005 Steve Freudenthal Milliken & Company

2. Six Sigma Introduction • Six Sigma Definition • Evolution of Six Sigma • The Six Sigma Process Today • The DMAIC Process • Consultant Selection

3. Key Principles of Six Sigma at Xerox ØEverything starts with the customer.  ØThe infrastructure for cultural change is the most powerful contribution of Six Sigma.  ØDecisions about which projects to pursue must be based at least in part on the potential impact on net present value.  ØSustained improvement is possible only with management engagement.  ØCEO goals are translated to frontline projects and coordinated through an organization of people and technical resources.  ØA standard problem-solving process and associated tool set provides the means for basing decisions on data.

4. ? Six Sigma Quality Lean Manufacturing Supply Chain Management Total Productive Maintenance Malcolm Baldrige National Quality Award Theory of Constraints Reengineering Continuous Improvement/Kaizen ISO 9000 Standards Quality Circles Statistical Quality Control Quality Initiatives ISO 9000:2000

5. What does “Six Sigma” mean? • Phase I • Early 1980’s • Pioneered at Motorola • Statistical approach • Measured DPMO • Variation is the enemy • Focused on: • Elimination of defects • Improving product and service quality • Reducing cost • Continuous process improvement

6. What does “Six Sigma” mean? • Phase II • Mid 1990’s • Revised by Jack Welch at General Electric • Linked Six Sigma to business strategy and customer needs • Strong measurement on bringing dollars to the bottom line • Strong financial community involvement • Project driven • High potentials selected to be Black Belts • Black Belts expected to deliver $250,000/year to bottom line (hard dollars) • Black Belts promoted up after two years • All senior leaders trained (Green Belt) • Projects are sponsored by business leadership (Top Down) • 2% of management committed full-time

7. What does “Six Sigma” mean? • Phase III • 2000’s • Lean Six Sigma • Caterpillar, Xerox, DuPont • Combined lean manufacturing techniques and Six Sigma • Benefit: High speed, low cost

8. Six Sigma Savings Averages by Area $500K $480K $450K $180K $100K $35K

9. Roles and Responsibility Deployment Manager Champions/ Sponsors Black Belts Master Black Belts Green Belts • Identification and Prioritization of Projects by Division • Assign and Review Activities of Black Belts • Facilitate Project Implementation • Key Stakeholder in Project Success • Lead 4-6 strategic improvement projects each year • Expert in Six Sigma techniques • Help local organization in Six Sigma disciplines • Full-Time Position • Mentor/coach Black Belts • Teach Six Sigma techniques • Full-time Corporate Position • Domain Experts • 20-30% on one Project

10. Johnson Controls Inc.

11. Project Candidates Improvements Start with High Value Projects • Customer Issues / Opportunities • Business Strategy • Goals / Objectives • Priorities • Project Selection • Structured Process • Links Business Strategy & Priorities • Led by Deployment Managers • Based on Benefit / Effort Analysis • Leadership Accountable for Prioritization Prioritized by Management Team Structured approach to project selection BENEFIT Low Med High EFFORT Low Med High Xerox

12. Six Sigma Improvement Model “DMAIC” Process • Define – describe the process, problem, opportunity • Measure– gather data • Analyze– listen to the data • Improve– develop solutions, design processes • Control– plan for stability

13. Six Sigma Design Model “DMADV” Process • Define – describe the process, problem, opportunity • Measure– gather data • Analyze– listen to the data • Develop– create the solution • Verify– does the solution work?

14. Project Focus $$ CCRs Team Charter Business Case Opportunity Statement Goal Statement Project Scope Team Selection Project Plan Gap Action Plan Sigma Goal (CCR) TASKS TASKS ACTIVITIES ACTIVITIES RESP. RESP. START START DUE DUE STATUS &ACTIONS STATUS &ACTIONS Define 1.0 Define Opportunities 5.0 Control Performance 2.0 Measure Performance 3.0 Analyze Opportunity 4.0 Improve Performance Main Activities Potential Tools and Techniques Objective • Validate/ Identify Business Opportunity • Validate/ Develop Team Charter • Identify and Map Processes • Identify Quick Win and Refine Process • Translate VOC • Develop Team Guidelines & Ground Rules • To identify and/or validate the improvement opportunity, develop the business processes, define critical customer requirements, and prepare themselves to be an effective project team.

15. Tools* are Essential , but Not Sufficient Define Measure Analyze Improve Control • Value Stream Map • Various Financial Analysis • Charter Form • Multi-Generational Plan • Stakeholder Analysis • Communication Plan • SIPOC Map • High-Level Process Map • Non-Value Added Analysis • VOC and Kano Analysis • Lean Quality Function Deploy-ment (QFD) • RACI & Quad Charts • Operational Definitions • Data Collection Plan • Pareto Chart • Histogram • Box Plot • Statistical Sampling • Measurement System Analysis • Setup Reduction • Generic Pull • Kaizen • Control Charts • Process Capability, Cp & Cpk • Pareto Charts • C&E Matrix • Fishbone Diagrams • Brainstorming • Detailed ‘As-Is’ Process Maps • Basic Statistical Tools • SupplyChainAccelerator Analysis • Non Value-Added Analysis • Hypothesis Testing • Confidence Intervals • FMEA • Simple & Multiple Regression • ANOVA • Queuing Therory • Analytical Batch Size • Brainstorming • Benchmarking • Process Improvement Techniques • Line Balancing • Process Flow Improvement • Constraint Identification • Replenishment Pull • Sales & Operations Planning • Poka-Yoke • FMEA • Solution Selection Matrix • ‘To-Be’ Process Maps • Piloting and Simulation • Control Charts • Standard Operating Procedures (SOP’s) • Training Plan • Communication Plan • Implementation Plan • Visual Process Control • Mistake-Proofing • Process Control Plans • Project Commissioning • Project Replication • Plan-Do-Check-Act Cycle * Tool array adapted from Lean Six Sigma for Service by Michael George Xerox

16. X X Input Process Output CCR Checksheets Input Indicator Process Indicator Process Indicator UCL Output Indicator Sigma= Sigma= CCR LCL Gap Measure 2.0 Measure Performance 5.0 Control Performance 1.0 Define Opportunities 3.0 Analyze Opportunity 4.0 Improve Performance Objective Main Activities Potential Tools and Techniques • To identify critical measures that are necessary to evaluate the success, meeting critical customer requirements and begin developing a methodology to effectively collect data to measure process performance. • To understand the elements of the six sigma calculation and establish baseline sigma for the processes the team is analyzing. • Identify Input, Process, and Output Indicators • Develop Operational Definition & Measurement Plan • Plot and Analyze Data • Determine if Special Cause Exists • Determine Sigma Performance • Collect Other Baseline Performance Data

17. Quantified Root Causes 50% Problem Statement 25% Analyze 3.0 Analyze Opportunity 2.0 Measure Performance 1.0 Define Opportunities 5.0 Control Performance 4.0 Improve Performance Objective Main Activities Potential Tools and Techniques • To stratify and analyze the opportunity to identify a specific problem and define an easily understood problem statement. • To identify and validate the root causes that assure the elimination of “real” root causes and thus the problem the team is focused on. • To determine true sources of variation and potential failure modes that lead to customer dissatisfaction. • Stratify Process • Stratify Data & Identify Specific Problem • Develop Problem Statement • Identify Root Causes • Design Root Cause Verification Analysis • Validate Root Causes • Comparative Analysis • Sources of Variation Studies • Failure Modes & Effects Analysis • Regression Analysis • Process Control • Process Capability • Design of Experiments Indicators & Problem Statement (effect)

18. 4.0 Improve Performance 4.0 Improve Performance 3.0 Analyze Opportunity 2.0 Measure Performance 5.0 Control Performance 1.0 Define Opportunities Main Activities Potential Tools and Techniques Objective • Response Surface Methods • Generate Solution Ideas • Determine Solution Impacts: Benefits • Evaluate and Select Solutions • Develop Process Maps & High Level Plan • Develop and Present Storyboard • Communicate Solutions to all Stakeholders • To identify, evaluate, and select the right improvement solutions. To develop a change management approach to assist the organization in adapting to the changes introduced through solution implementation.

19. Gap Sigma Goal (CCR) X Implemented Solution Error Modes and Effects Analysis Process Control System CCR Project Workplan Gap CCR Control 5.0 Control Performance 1.0 Define Opportunities 2.0 Measure Performance 3.0 Analyze Opportunity 4.0 Improve Performance Objective Potential Tools and Techniques Main Activities • To understand the importance of planning and executing against the plan and determine the approach to be taken to assure achievement of the targeted results. To understand how to disseminate lessons learned, identify replication and standardization opportunities/processes, and develop related plans. • Develop Pilot Plan & Pilot Solution • Verify Reduction in Root Cause Sigma Improvement Resulted from Solution • Identify if Additional Solutions are Necessary to Achieve Goal • Identify and Develop Replication & Standardization Opportunities • Integrate and Manage Solutions in Daily Work Processes • Integrate Lessons Learned • Identify Teams Next Steps & Plans for Remaining Opportunities

20. Six Sigma DMAIC Projects 5.0 Control Performance 1.0 Define Opportunities 2.0 Measure Performance 3.0 Analyze Opportunity 4.0 Improve Performance 5.0 Control Performance 5.0 Control Performance 1.0 Define Opportunities 2.0 Measure Performance 3.0 Analyze Opportunity 4.0 Improve Performance 5.0 Control Performance • Process cannot be improved: • Abort project • Recharter as Design Project

21. Manufacturing Performance is here Fully Deployed Room to Inject New Energy D E P L O Y M E N T No Major Gaps Business Processes are here Build on Energy Well Deployed Major Gaps Nothing • Nothing • Buzz (10+) • Push (5) • Skeptics (50%) • Pilots are Positive (80%) • Some Momentum • Balance of Push/Pull • Not at Tipping Point • More Pull Than Push • Internal & External • Positioning • Past the Tipping Point • Thriving • PULL! • Drives the Way • We Work • Ubiquitous “ENERGY & WILL”

22. Key Learnings 50% of all companies attempting to implement Six Sigma failed after the first two years of implementation.

23. Sustained Commitment A C F As many as 50% end up here at “F” Long Term Goal – Sustained Commitment & Results Key factors differentiating “A” curve from “F” curve • Business integration into “how we work” • Project selection link to business strategies • Project selection link to Customer Value • Ability to change Culture & Leadership Behavior • Full Value-Chain engagement • Ability to track results • Integrating DfLSS Six Sigma Net Business Benefit 0 1 2 3 4 Year Initial Leadership Commitment * * Chart adapted from Strategic Six Sigma: Best Practices from the Executive Suite by Dick Smith and Jerry Blakeslee Xerox

24. Reasons Six Sigma Deployments Fail • Apathy from senior leadership • Training not connected to projects • Projects not connected to strategy • Projects only focused internally • Selecting “available” people • Part time Black Belts • No financial validation to bottom line • People not recognized for their • contributions

25. A Six Sigma Deployment Cannot Be Done Without Consultants • Training Materials • Testing Materials • Professional Educators • Six Sigma Project Management Expertise • (Master Black Belts) • Credibility With Top Management • Can “Jump Start” The Deployment

26. If properly driven by Top Management, Six Sigma can have a dramatic impact on a company’s culture and how it aligns itself with its customers

27. Thank You!!