SESSION 2: YOUR COMPANY AND SIX SIGMA

1
SESSION 2 YOUR COMPANY AND SIX SIGMA

• INTRODUCTION TO
• IMPROVING BUSINESS PERFORMANCE SIX SIGMA, LEVEL
  1
• APRIL 16 - 18, 2007

2
SESSION OBJECTIVE

• Outline why Six Sigma is important to Your
  Organization

3
CRITICAL ELEMENTS OF MANAGEMENT

• Top Management Commitment
• Planning, policies and procedures
• Information Systems
• Technical Support
• Training and Education
• Promotion and Outreach
• Financing and Investment
• Monitoring and Evaluation

4
CRITICAL ELEMENTS OF SIX SIGMA

• Top Management Commitment
• Planning, policies and procedures
• (Define)
• Information
• (Measure)
• Technical Support
• (Analysis/Improve)
• Training and Education
• (Train personnel)
• Promotion and Outreach
• (Advertise/Market/Sell Concept)
• Financing and Investment
• (have to invest for Six Sigma implementation
  before ROI)
• Monitoring and Evaluation
• (Control and Sustain benefits)

5
TYPICAL LEVELS OF PERFORMANCE BY INDUSTRY
6
OTHER IMPORTANT SIX SIGMA CONCEPTS

• Commitment
• Process
• Defects
• Analytical

7
Commitment versus InvolvementThink Bacon and
Eggs!

• (Bacon either Turkey Bacon or Ham Bacon)
• The chicken is involved
• But the Turkey or Pig is totally committed!
• LEADERS SHOULD NOT BE CHICKEN!

8
ELIMINATING DEFECTS ARE FUNDAMENTAL TO LONG TERM
SURVIVAL FOR SMALL BUSINESS
9
PROCESS WHAT PROCESS? I DONT MAKE ANYTHING?

• Definition of Process
• Any repetitive steps - in a transactional,
  manufacturing, or services, environment - to
  achieve some result. The Six Sigma Methodology
  collects data on variations in outputs associated
  with each process, so that the process can be
  improved and those variations reduced.
• Examples include
• Steps in billing customers
• Taking customer orders
• Fulfilling customer orders

10
DEFECTS PROMOTE CUSTOMER DEFECTION

• SMALL BUSINESS IS HIGHLY DEPENDENT ON CUSTOMER
  RETENTION
• A travel agent screws up your reservations you
  use another agent next time or book online
• LARGE BUSINESS OFTEN OFSETS DEFECTS
• Airlines lose luggage but offer cheap vacation
  packages to attractive locations

11
DOES ANYONE HERE REMEMBER TQM?

• TQM a management approach focused on quality
  (credited to Deming although personally he
  never liked the term) - fundamentally, TQM views
  business as a system consisting of teams and
  processes and seeks continuous quality
  improvement company-wide
• adopted by Japanese industry after WWII
• US business introduced TQM in 1980s
• Prime focus, if not single focus, was Quality

12
TQM The Downside

• Fact Half to Three Quarters of Companies Abandon
  TQM Initiatives
• Why it Fails
• Management Commitment Drops
• Timing Wrong
• Dont plan/execute Training in right way
• Fail to monitor adequately to provide meaningful
  feedback
• Quote Richard P. Smith
• March 27, 1996

13
SIX SIGMA IS TQM REFINEMENT

• Six Sigma is a more systematic approach for
  achieving results
• Six Sigma was introduced by Motorola in response
  to increased technology complexity/capability
  that meant existing quality standards were no
  longer adequate
• Company set a 5 year goal of 3.4 defects per 1
  million opportunities 6 s, very close to
  perfection.
• Motorola saved 15 billion in the first 10 years
  of applying Six Sigma

14
SIX SIGMA MYTHS

• Six Sigma only works for Big Business
• Six Sigma only works in manufacturing services
  dont have processes
• Has been used successfully in
• Banking/Financial services
• Military
• Health care
• Fast food chains
• Airlines/hotels
• Retail stores etc.
• You need outside consultants
• It is complicated and requires a PhD in
  Statistics
• Its an accounting game theres no real savings
• Its just Training
• Its TQM all over again
• It has nothing to do with customers
• Its easy like taking medication Wrong - it
  needs commitment and requires hard work

15
SIX SIGMA CONSISTS OF FIVE KEY PHASES

• DEFINE PROJECT,GOALS, DELIVERABLES TO CUSTOMERS
• (INTERNAL/EXTERNAL) DESCRIBE/QUANTIFY
  DEFECT
• AND EXPECTED IMPROVEMENT
• MEASURE CURRENT PERFORMANCE OF PROCESS VALIDATE
  DATA
• CREDIBILITY AND SET BASELINES
• ANALYZE AND DETERMINE ROOT CAUSE OF DEFECTS
  NARROW CASUAL
• FACTORS TO THE VITAL FEW
• IMPROVE THE PROCESS TO ELIMINATE DEFECTS
  OPTIMIZE VITAL FEW AND
• THEIR INTERRELATIONSHIPS
• CONTROL THE PERFORMANCE OF THE PROCESS LOCK
  DOWN GAINS

16
HOW DOES IT WORK?

• It focuses on reducing defects and variations in
  processes by identifying those key attributes
  most important to customers or the
  Critical-to-Quality (CTQ) elements of the process
• The Six Sigma team then analyzes the capability
  of the process
• Next, the team attempts to stabilize the process
  by reducing or eliminating variations focusing on
  the vital few factors that make the most
  difference, applying the basic transfer function
• Y (X)
• But whats a function of what?
• After funneling out the vital few factors, the
  Team works on improving the quality of the
  process to reduce variation and cost
• Finally, the Team continues to monitor and
  control to ensure gains sustain

17
WHAT DOES IT COST?

• The following are costs associated with
  implementing Six Sigma
• Direct Payroll Costs people will be working on
  Six Sigma initiatives
• Consulting Costs Often, it may help to get
  outside help
• Training Costs Your staff will need to be
  trained, some extensively
• Improvement Costs There will be a cost to
  implement changes, some may be expensive

18
Remember, Insanity is often defined as asking the
same question over and over again and hoping for
a different answer Why not approach your
business by asking the right questions for the
right questions will take you to the most lasting
solution