Six Sigma Awareness Training

1. Six Sigma Awareness Training

2. 3 P’s • Purpose: • Introduction to Six Sigma methodology and roll out of I&CIM vision to all employees of Europe • Process • Presentation & exercises • Product • Common understanding of Six Sigma

3. Voice of Stake Holders

4. I&CIM Mission,Europe Aggressively Change the Way We Do Business with Sustained Improvements

5. What is Quality Quality is a state in which ‘Value Entitlement’ is realized for the customer and provider in every aspect of the business relationship In the world of six sigma ‘entitlement’ means that companies have a rightful level of expectation to produce quality products at the highest possible profits; for customers ‘entitlement’ means that they have a rightful level of expectations to buy high-quality products at lowest possible cost.

6. The Absolutes of Excellence • Focus: Your Customer • Performance Goal: Do it Right the First Time • Method: Innovation & Continuous Improvement • Control: Customer Feedback • People Caring • Style: Teamwork • Reward: Recognition and Security

7. Business Performance

8. Internal Performance FTQ = 10,000 -30,000 Supplier = We don’t Know Cost = Red Design FTQ= 200,0000-3000000 We lose More As We Grow More How do we work Customer Requirement + Various Internal Process Loss Performance at Customer PPM= 30-40 • Quality • Delivery • Price • New Launches 99 % Price = As per Customer SOP On time

9. Hidden Quality Costs Lost sales (Difficult to measure) Customer Sat 15-20% of Revenue Long cycle times Overtime Field Modifications (intangible) Late delivery T&L More Setups Excess inventory Expediting costs Lost Opportunity Lengthy Installs Customer Productivity Loss Lost Customer Loyalty Engineering change orders Employee Morale, Productivity, Turnover Six Sigma reveals hidden capacities and capabilities Where we lose money Inspection (Easily Identified) Scrap 1.5 % of Revenue Warranty Traditional Quality Costs Rework Rejects (tangible)

10. How much we lose s If X is a 3 Company, Cost of Failure is Estimated to Be at Least 15% of Sales 40% Cost of Failure (% Sales) 35% 30% 25% 20% 15% 10% 5% Defects per Million 308,537 3.4 233 66,807 691,462 6210 Sigma 6 5 4 3 2 1 A $0.8 Billion Cost Reduction Opportunity in Europe!

11. How do we Improve today Higher Lower Upstream Down Stream Random Down Stream Lower Hierarchy Upstream Down Stream Big $ Improvement in Down Stream Process & Lower in Hierarchy gets PULLED by the Upstream process & Higher in Hierarchy Present Focus Higher Lower Savings are recorded but does not HIT the Profit & Loss A/C Improvement are incremental & unsustainable in Nature & we Need BREAKTHROUGH & sustainable

12. Change

13. What to Change We all agree there is a Need to change the way we work But we need to Bring Speed in the change Change the thinking from Cost to profit $ $ $ $ $ $ $ € $ $ $ $ $ $ $ $ Don’t look at the cost of the person watering the plants, But look at the impact of the process on the results. $ $ $ $ There are many “Upstream Process” apples still waiting to get picked

14. What is the changed methodology Innovation & Continuous Improvement Methodology (I&CIM) is a X’s common global philosophy of doing business by implementing a rigorous, structured & Data driven Continuous Improvement Methodology which Focus on the Customer by driving perfection in the Business processes through Understanding & Eliminating All Sources of Variation. Business Process Variation is a termite in our growth

15. Success & Results

16. Major Projects in Europe Projects Estimated Savings • Claim Management process for Model Year & Engineering Changes • Connection Systems Capacity improvement • In-sourcing of components • Tapping Utilization • Cutting Machine Productivity • Costing Accuracy • Trucking efficiency • Cost of Value Streams • Design Process optimization • NC Cost in Mechatronics • Over dues A/C Receivables • Europe Wide FTQ reduction • $30-50Mi. • $2-3Mi. • $3-4Mi. • $1Mi. • $1-2Mi. • $3-4Mi. • $4-5Mi.

17. X Global Performance 2002 1.13% We are Here Achieved Plan

18. What is Six Sigma

19. The Many Facets of Six Sigma • Focus and commitment to quality must be driven by top leadership • Leadership must be fully engaged and accountable for success • Six Sigma provides classical problem solving tools enhanced with a fundamental knowledge of statistics and variation 6s Leadership Tools Process Metrics • Goal is defect free products and processes • Focus is on process capability (rolled throughput yield) rather than end of line yield • All decisions must be data driven • Focus is on statistical process capability and process variation analysis • Products must be designed to be manufactured within process capability • Process capability must be quantified

20. Boat is still there ?? I Shot the Boat!! Customer Supplier Average Customer Dissatisfaction Business Performance Target Organisations focus on internal performance

21. Customer Experience Target Variation of the Upstream to downstream processes creates variation to Customer output

22. Customer Specification Target After 6 s ! 1s 2s No Defects! 3s 4s 5s 6s What Is Six Sigma A 3 s process because 3 standard deviations fit between target and spec Before Target Customer 3 s Specification 1 s 0.27% Defects 2 s s 3 Reducing Variability Is The Key To Six Sigma

23. Why Six Sigma Quality as a Function of Part Count For Average Part Quality Level PPMs Product Quality Level No of Parts in the product 6 sigma Increases probability of shipment of defect free products

24. PPM 1,000,000 100,000 10,000 1,000 3 6 100 10 1 1 2 3 4 5 6 Why Today (with ± 1.5  shift) IRS - Tax Advice (phone-in) (140,000 PPM) Restaurant Bills Doctor Prescription Writing Payroll Processing Order Writeup Journal Vouchers Wire Transfers Airline Baggage Handling Purchased Material Lot Reject Rate Best-in-Class Average Company Domestic Airline Flight Fatality Rate (0.43 PPM) 7 Sigma Scale of Measure Adds Reliability and Competitive advantage

25. The Standard Deviation s = S (X – X)2 n m 1 Sigma - 68% 2 Sigma - 95% 3 Sigma - 99.73 % 1s p(d) Upper Specification Limit (USL) Target Specification (T) Lower Specification Limit (LSL) Mean of the distribution (m) Standard Deviation of the distribution (s) T USL 3s

26. What Variation Means to Business • Using mean-based thinking, we improve average performance, and we break out the champagne ... • But our customer only feels the variance and cancels the next order! • Shifting of the mean require heavy capital investment and does not significantly reduce the waste • Variation is enemy, just kill it. L H H L H L H L Cycle Time Reduction Higher Production Inventory Reduction Lower Price Corporate Initiatives Group - Europe

27. Stability Factor Capacity Gain Plant Capacity = 2000 / Year A Six Sigma Best Practice For Generating Free Capacity . . . Q1 = Quartile 1 (25%) Q3 = Quartile 3 (75%) Q3 Q1 Stability Factor = Q1/ Q3 Q3 IMPACT • Mfg Cycle • Inventory Turns • Promises Kept • Investment Efficiency • Labor Productivity • Delivered Quality (PPM) Q1 Plant Capacity = 1100 / Year SF >0.9, Technology Issue SF <0.9, Control Issue Stability factor can unfold hidden factories

28. The Focus of Six Sigma • Y • Dependent • Output • Effect • Symptom • Monitor f (X) Y • X1 . . . XN • Independent • Input-Process • Cause • Problem • Control Would you control shooter or target to get the Gold Medal at Sydney

29. The Necessity of Training Farm Hands for First Class Farms in the Fatherly Handling of Farm Live Stock is Foremost in the Eyes of Farm Owners. Since the Forefathers of the Farm Owners Trained the Farm Hands for First Class Farms in the Fatherly Handling of Farm Live Stock, the Farm Owners Feel they should carry on with the Family Tradition of Training Farm Hands of First Class Farmers in the Fatherly Handling of Farm Live Stock Because they Believe it is the Basis of Good Fundamental Farm Management. The Inspection Exercise Task: Count the number of times the 6th letter f the alphabet appears in the following text.

30. The Impact of Added Inspection If the likelihood of detecting the defect is 70% and we have 10 consecutive inspectors with this level of capability, we would expect about 6 escaping defects out of every 1,000,000 defects produced. 1,000,000 ppm 6 ppm 3.4 ppm You can save your self by producing quality not by Inspection

31. Six Sigma As A Goal Distribution Shifted ± 1.5s s PPM 2 3 4 5 6 308,537 66,807 6,210 233 3.4 Defects Per Million Opportunities ProcessCapability

32. Process Performance FTQ performance of manufacturing quality What are the over dues as % of the total Receivables What is the shipping window of the suppliers What is the % of pending payables What is the % compliance to the production plan What is the % compliance of the project completion date 5000-10000 PPM

33. Implementation

34. Purchasing 6 Sigma Methods Where in X….. ... Can Be Applied To Every Business Function Sales Engineering HR Finance Manufacturing, CS, PCL IS&S

35. Philosophy Behind Implementation We don’t know what we don’t know We can’t do what we don’t know We won’t know until we measure We don’t measure what we don’t value We don’t value what we don’t measure Six Sigma is a process of asking questions that lead to tangible, quantifiable answers that ultimately produce profitable results

36. 5 4 6 3 7 2 8 1 Six Sigma Road Map Customer Requirements Business Requirements • Identify Customer Requirements • Identify Business Requirements • Identify Broken Processes • Allocate resources and execute six sigma project • Permanent repair the process • Monitor the business performance as seen by customer Broken Process Business Process Organisation Weak Business Process Can’t Meet Customer Requirements

37. Six Sigma Road Map Celebrate -Reward & Recognition Keep Clear Focus Mentor, Coaching & Closure of Projects Grow MBBs Train Green Belts Train Black Belts Train Green Belts Get Master Black Belts Support with Organisation Structure Decide the Business Strategy Right Structure can only make it successful

38. Change Process Convincing Self 1 Convincing Others 2 DMAIC/DFSS Process 3 Break Through Improvement 4 Point 1 & 2 contribute 70-80% of the success

39. Organisation

40. Organisation Six Sigma Structure Coach/ MBB Financial Reviewer Black Belt / Green Belt Project Target “Y” Define clear roles of the people

41. Who Are These People? • Green Belt: • 5 days of training • Focused on DMAIC • Knowledge of PCSs • Part time team member • Black Belt: • 15 plus days of training • Normally, highly knowledgeable on a particular process. • Respected by peers • Full time position, managing 3-6 DMAICs and PCSs • “A rising star”

42. Who Are These People? (continued) • Master Black Belt: • Quality Professional • ~8 weeks of training including electives • The mentor to the BB • The facilitator of the entire process • Supports specific areas of the company • Can support 6-8 BBs, 12-20 DMAICs • Responsible for validating the linkages of the PCSs for his/her area • Does not report to any process owner • Sponsor: • The process owner • Supports the BBs in his/her area • Removes barriers for DMAIC teams • Responsible for the teams’ success • Accountable for SS in his/her area • Champion: • Responsible for multiple processes • Boss to a number of Sponsors • Provides the linkage to the business at the highest level • A member of Jim Spencer’s staff

43. Who Are These People? (continued) • The Business Leader • Jim Spencer • Ultimately, responsible for the quality of a particular business function • The Quality Leader • Mentor of the Business Leader with regards to Six Sigma Example Project Name: Reduce FTQ Deployment Champion- Champion- Site Manager Sponsor- Plant Manager MBB- BB- GB-

44. Project Selection

45. Project Selection COST Scrap Tickets Scrap Tickets FTQ or RRPPM Defect Start-Up (Start-Over) Labor for Replacement Failure Mode Quality Problem $$$$ Source $$$$ Unplanned Downtime Failure Mode Failure Mode Labor for Replacement COST

46. Project Selection Sales Engg PCL Pur Mfg Cs IT HR 53.1% 21.4% 8.8% 7.3% 1.6% Functional Baskets Gets filled by the Precipitated Cost of the Business Process

47. Project Selection

48. Project Selection

49. Project Selection BB Project

50. Certification Process