Overview of Six Sigma

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Overview of Six Sigma

• MGS 8020 Business Intelligence

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What is Six Sigma

• Six Sigma is a disciplined, data-driven approach
  and methodology for eliminating defects in any
  process -- from manufacturing to transactional
  and from product to service.
• To achieve Six Sigma, a process must not produce
  more than 3.4 defects per million opportunities.
• A Six Sigma opportunity is then the total
  quantity of chances for a defect.

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What is Six Sigma

• This is accomplished through the use of two Six
  Sigma sub-methodologies DMAIC and DMADV.
• The Six Sigma DMAIC process (define, measure,
  analyze, improve, control) is an improvement
  system for existing processes falling below
  specification and looking for incremental
  improvement.
• The Six Sigma DMADV process (define, measure,
  analyze, design, verify) is an improvement system
  used to develop new processes or products at Six
  Sigma quality levels.
• Both Six Sigma processes are executed by Six
  Sigma Green Belts and Six Sigma Black Belts, and
  are overseen by Six Sigma Master Black Belts.

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What is Six Sigma

• According to the Six Sigma Academy, Black Belts
  save companies approximately 230,000 per project
  and can complete four to 6 projects per year.
• General Electric, one of the most successful
  companies implementing Six Sigma, has estimated
  benefits on the order of 10 billion during the
  first five years of implementation.

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Six Sigma DMAIC

• DMAIC
• Define the project goals and customer (internal
  and external) deliverables
• Measure the process to determine current
  performance
• Analyze and determine the root cause(s) of the
  defects
• Improve the process by eliminating defects
• Control future process performance
• When To Use DMAIC
• The DMAIC methodology, instead of the DMADV
  methodology, should be used when a product or
  process is in existence at your company but is
  not meeting customer specification or is not
  performing adequately.

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Six Sigma DMADV

• DMADV
• Define the project goals and customer (internal
  and external) deliverables
• Measure and determine customer needs and
  specifications
• Analyze the process options to meet the customer
  needs
• Design (detailed) the process to meet the
  customer needs
• Verify the design performance and ability to meet
  customer needs
• When To Use DMADV
• A product or process is not in existence at your
  company and one needs to be developed
• The existing product or process exists and has
  been optimized (using either DMAIC or not) and
  still doesn't meet the level of customer
  specification or six sigma level

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DMAIC Versus DMADV

• The Similarities of DMAIC and DMADV
• Six Sigma methodologies used to drive defects to
  less than 3.4 per million opportunities.
• Data intensive solution approaches. Intuition has
  no place in Six Sigma -- only cold, hard facts.
• Implemented by Green Belts, Black Belts and
  Master Black Belts.
• Ways to help meet the business/financial
  bottom-line numbers.
• Implemented with the support of a champion and
  process owner

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Six Sigma DMAIC Roadmap

• D - Define Phase
• Define Customers and Requirements (CTQs)
• Develop Problem Statement, Goals and Benefits
• Identify Champion, Process Owner and Team
• Define Resources
• Evaluate Key Organizational Support
• Develop Project Plan and Milestones
• Develop High Level Process Map

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Six Sigma DMAIC Roadmap

• M - Measure Phase
• Define Defect, Opportunity, Unit and Metrics
• Detailed Process Map of Appropriate Areas
• Develop Data Collection Plan
• Validate the Measurement System
• Collect the Data
• Begin Developing Yf(x) Relationship
• Determine Process Capability and Sigma Baseline

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Six Sigma DMAIC Roadmap

• A - Analyze Phase
• Define Performance Objectives
• Identify Value/Non-Value Added Process Steps
• Identify Sources of Variation
• Determine Root Cause(s)
• Determine Vital Few x's, Yf(x) Relationship

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Six Sigma DMAIC Roadmap

• I - Improve Phase
• Perform Design of Experiments
• Develop Potential Solutions
• Define Operating Tolerances of Potential System
• Assess Failure Modes of Potential Solutions
• Validate Potential Improvement by Pilot Studies
• Correct/Re-Evaluate Potential Solution

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Six Sigma DMAIC Roadmap

• C - Control Phase
• Define and Validate Monitoring and Control System
  
• Develop Standards and Procedures
• Implement Statistical Process Control
• Determine Process Capability
• Develop Transfer Plan, Handoff to Process Owner
• Verify Benefits, Cost Savings/Avoidance, Profit
  Growth
• Close Project, Finalize Documentation
• Communicate to Business, Celebrate

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Six Sigma Deployment

• For Define and Measurement phases
• Step 1
• Self-assessment of the organization and share the
  results with the top management and employees
• Step 2
• Re-evaluate all of the strategies and strategic
  objectives of the organization and identify new
  strategic objectives
• Step 3
• Identify all the organizations core processes
  and support processes
• Build strategy map to help communicate the
  strategy

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Kaplan and Norton's Balanced score card

• Building a strategy map encompassing Kaplan and
  Norton's Balanced score card spanning the four
  perspectives.
• The four perspectives
• Financial
• Customer
• Internal
• Learning

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The Four Perspectives
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A Six Sigma Case Study -Tutorial for IT Call
Center

• Benchmarking
• Industry data was purchased from a clearinghouse
  that gathers a number of measures about customer
  satisfaction and call center technical and
  business performance.
• Comparing their company to the benchmark average
  and to a select best-in-class group.
• We can find that customer satisfaction with their
  support services was just average or a bit below.
  (see the following slides.)

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Figure 1 Customer Satisfaction for the Company,
2001-2003

•  

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Figure 2 Customer Satisfaction for Average
Companies, 2001-2003
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Figure 3 Customer Satisfaction for
Best-in-Class Companies, 2001-2003
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A Six Sigma Case Study -Tutorial for IT Call
Center

• By analyzing the customer satisfaction data, we
  can find that Customer Satisfaction has positive
  influence to New Account Growth.

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A Six Sigma Case Study -Tutorial for IT Call
Center

• Transfer Average number of transfers (to
  different agents and help systems) during a
  service call.Wait Time Average wait time
  during a service call.Service Average service
  time during the call (the time spent getting the
  answer to the question, problem solving advice,
  etc.).
• From the regression model, we can find that the
  longer the wait time, transfer time and service,
  the lower the customer satisfaction.

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A Six Sigma Case Study -Tutorial for IT Call
Center

• From the data that gathered from industry, we
  found that the call centers waiting time is
  lower than industry average thus, there is space
  for improvement and it will help reduce the cost
  and increase customer satisfaction.
• From the data, we can find that the call centers
  cost is higher than average, so this project is
  doable.

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Define Phase

• D1. Project Charter
• Problem Statement "Competitors are growing their
  levels of satisfaction with support customers,
  and they are growing their businesses while
  reducing support costs per call. Our support
  costs per call have been level or rising over the
  past 18 months, and our customer satisfaction
  ratings are at or below average. Unless we stop
  or better, reverse this trend we are likely to
  see compounded business erosion over the next 18
  months."
• Business Case "Increasing our new business
  growth from 1 percent to 4 percent (or better)
  would increase our gross revenues by about 3
  million. If we can do this without increasing our
  support costs per call, we should be able to
  realize a net gain of at least 2 million."
• Goal Statement "Increase the call center's
  industry-measured customer satisfaction rating
  from its current level (90th percentile 75
  percent) to the target level (90th percentile
  85 percent) by end of the fourth quarter without
  increasing support costs."

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Define Phase

• D2. Customer Requirements
• A SIPOC table (Suppliers, Inputs, Process,
  Outputs and Customers) develops a detailed view
  of all the important customers, their
  requirements, and the related process step and
  supplier dependencies.
• Voice-of-Customer (VOC) Interviews Group
  interview the representative samples of the
  company's customers.
• Summarizing Customer Requirements

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SIPOC / COPIS Table Captures Important
Information About Customer-Process Dependencies
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Define Phase

• D3. High Level Process Map
• The process map will be helpful during
  the Measure phase, as the project team considers
  how and where to gather data that will shed light
  on the root cause of the issues most pertinent to
  the project's goals.

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Measure Phase

• M1. Refine the Project Y(s)
• During this step the team considered exactly how
  the project Y(s) would be defined and measured

Y(s) Measurement
Primary CustomerSatisfaction 1. By industry standard monthly survey2. The project will require additional, more frequent, case-by-case customer satisfaction data. A measurement system that tracks with the industry survey will be devised and validated.
Secondary   Supprt Cost(Per Call) The staff time connected with each call    - Call answering and discussion    - Case research    - Callback timewill be loaded with a distribution of benefits and infrastructure costs to compute overall support cost per call.
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Measure Phase

• M2. Define Performance Standards for the Y(s)

Measure Current Baseline Target
Primary Customer Satisfaction(Per Collins Industry Assessment) 90th Percentile / 70-80 Satisfied 90th Percentile / 85 Satisfied
Secondary   Support Cost Per Call 90th Percentile / 40 90th Percentile / 32
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Measure Phase

• M3. Identify Segmentation Factors for Data
  Collection Plan
• How is Y naturally segmented
• What factors may be driving the Y(s)?
• Y-to-x tree
• cause-and-effect diagrams
• cause-and-effect matrices

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Measure Phase

• M4. Apply Measurement Systems Analysis (MSA)
• Questions Usually Posed for Measurement Systems

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Measure Phase

• M5. Collect the Data A plan was formulated to
  gather data from the past year's database.
• M6. Describe and Display Variation in Current
  Performance
• How is the Y Distributed?
• Variation above and below the chart's control
  limits suggested that there were "special causes"
  in play worth understanding in more detail by
  the team in the Analyze phase.

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Analyze Phase

• A1. Measure Process Capability Before segmenting
  the data and "peeling the onion" to look for root
  causes and drivers, the current performance is
  compared to standards (established in step M2 of
  the Measure phase).
• A2. Refine Improvement Goals If the capability
  assessment shows a significant departure from
  expectations, some adjustment to the project
  goals may need to be considered.

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Analyze Phase

• A3 Identify Significant Data Segments and
  Patterns
• By segmenting the Y data based on the factors
  (x's) identified during the Measure phase the
  team looks for patterns that shed light on what
  may be causing or driving the observed Y
  variation.

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Analyze Phase

• A4 Identify (Refined/More Detailed List of)
  Possible x's
• Collecting the findings that came out of A3, the
  team posed strongest in the form of "why"
  questions
• Why do Problems and Changes cost more than other
  call types?
• Why are calls processed on Mondays and Fridays
  more expensive?
• Why do transfer rates differ by call type?
  (higher on Problems and Changes, lower on others)
  
• Why are wait times higher on Mondays and Fridays
  and on Week 13 of each quarter?

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Analyze Phase

• A5 Identify and Verify the Critical x's
• To sort out the real drivers from the "likely
  suspects" list built in A4, there is generally a
  shift from graphical analysis to statistical
  analysis.
• The figure shows that the influence of callbacks
  on a call's wait time

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Analyze Phase

• A6 Refine the Financial Benefit Forecast
• Given the "short list" of the real driving x's,
  the financial model forecasting "how much
  improvement?" may need to be adjusted.

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Improve Phase

• I1. Identify Solution Alternatives to Address
  Critical x's
• Consider solution alternatives from the
  possibilities identified earlier and decide which
  ones are worth pursuing further.

Driving Xs (from Analyze phase) Solution Alternatives
Staffing   Add staff Mondays and Fridays, reduce staff on Sundays  Develop staffing model  Create on-call list to fill-in for absentees
Web Service Percentage   Focus on services that can be done best on the Web  Define and communicate the value prop to customers  Evaluate incentives to move traffic to the Web
 Transfers and Callbacks   Improve call center processes to reduce transfers and callbacks     without impacting customer satisfaction
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Improve Phase

• I2. Verify the Relationships Between x's and Y(s)
  
• What are the dynamics connecting the process x's
  with the critical outputs
• Use regression analysis to verify the
  relationships

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Improve Phase

• I3. Select and Tune the Solution
• Using predicted performance and net value, decide
  what is the best solution alternative.
• Based on everything the team had learned, it
  recommended
• Start with Staffing (the "quick fix"). It is the
  fastest and surest way to stem the erosion of
  business growth. ("We recognize it is costly and
  not highly scalable (to other centers, other
  languages, etc.). This should be a first step,
  with the hope that it can be supplanted as the
  solution elements in other recommendations reduce
  staff needs.)
• Web Service Percent. Begin right away tracking
  the call volume and customer satisfaction with
  this service mode.
• Transfer and Callback reduction. Start right
  away. This is a "no brainer" net benefit that
  should work well in parallel with the first two
  solution elements.

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Improve Phase

• I4. Pilot / Implement Solution
• If possible, pilot the solution to demonstrate
  results and to verify no unintended side effects.
  
• Preparation and deployment steps for putting the
  pilot solution in place.
• Measures in place to track results and to detect
  unintended side effects.
• Awareness of people issues.
• Measure and compare the improvement of the
  solution

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Control Phase

• C1. Develop Control Plan
• The Control plans addressed two views
• Management control It often focus on the Y(s) or
  outcomes of the process and often some of the x's
  as well
• Operational control It concerned with the x's
  that are predictive of outcome Y(s).
• Operational control information included both
  controllable and "noise" variables
• Operational control information was provided more
  frequently than management control information

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Control Phase

• C2. Determine Improved Process Capability
• Use the same measures from Define and Measure in
  order to provide comparability and monitor impact
  in a consistent way.
• C3. Implement Process Control
• Create, modify and use data collection systems
  and output reports or dashboards consistent with
  the control plan.

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Control Phase

• C4. Close Project
• Prepare the implementation plan, transfer control
  to operations, conduct project post-mortem, and
  archive project results.