Satyendra K Singh, IISE

1
WHAT IS SIX SIGMA ?

2
Basics

 A new way of doing business

 Wise application of statistical tools within a
structured methodology
 Repeated application of strategy to individual
projects
 Projects selected that will have a substantial impact
on the ‘bottom line’

3
Page I – 2 Guaranteed
Success

4
Page I – 2 Define the Problem

5
Six Sigma Definitions

• Business Definition
 A break through strategy to significantly improve
customer satisfaction and shareholder value by
reducing variability in every aspect of business.
• Technical Definition
 A statistical term signifying 3.4 defects per million
opportunities.

6
Alternative Six Sigma Definitions
 “Six Sigma is a business improvement
approach that seeks to find and eliminate
causes of mistakes or defects in business
processes by focusing on process outputs
that are of critical importance to customers.”
(Snee, 2004).
 “Six Sigma is a useful management
philosophy and problem-solving methodology
but it is not a comprehensive management
system. “ (McAdam & Evans, 2004)

7
Alternative Six Sigma Definitions
 “A Six Sigma initiative is designed to change the
culture in an organisation by the way of
breakthrough improvement in all aspects of the
business.” (Breyfogle III et al., 2001)
 “Six Sigma is a programme that combines the
most effective statistical and non-statistical
methods to make overall business.” (Pearson,
2001)

8
 Alternative Six Sigma Definitions
 “Six Sigma is a highly disciplined process that helps us
focus on developing and delivering near-perfect products
and services. The central idea behind Six Sigma is that you
can measure how many defects you have in a process, you
can systematically figure out how to eliminates them and get
as close to ‘zero defects’ as possible. Six Sigma has
changed the DNA of GE – it is the way we work - in
everything we do in every product we design” (General
Electric at www.ge.com)

9
 Six Sigma

A scientific and practical method to achieve improvements in a

company

Scientific:
• Structured approach. “Show me
• Assuming quantitative data. the data”
”Show me
the money” Practical:
• Emphasis on financial result.
• Start with the voice of the customer.

10
 Where can Six Sigma be applied?

Service
Design
Management

Purchase

Administration Six Sigma

Methods Production

IT
Quality
Depart.
HRM M&S
11
Overview

 Vision and motivation

 What is Six Sigma?

12
 World Class Performance

With 99 % With Six Sigma

Quality Quality
For every 300000 3,000 misdeliveries 1 misdelivery
letters delivered
For every week of TV 1.68 hours of dead air 1.8 seconds of dead air
broadcasting per
channel
Out of every 500,000 4100 crashes Less than 2 crashes
computer restarts

Source: The Six Sigma Way by Peter Pande and Others

13
What is Six Sigma ?
• Based on teachings of Dr. Walter Shewhart,
Dr. W. E. Deming & Dr. J. Juran.
• Process Control;
• Plan Do Check Act;
• Common and Special Causes;
• Improvement can be done project by project
• Statistical tools
• Hawthorne Plant Experiences
• Developed by Bill Smith at Motorola in 1980s

14
σ What Is Six Sigma?

Sigma is a letter • Degree of variation;

in the Greek • Level of performance in terms of
Alphabet defects;
• Statistical measurement of process
capability;
• Benchmark for comparison;
• Process improvement methodology;
• It is a Goal;
• Strategy for change;
• A commitment to customers to achieve
an acceptable level of performance

15
Sigma Defects Per Million Rate of
Level Opportunities Improvement
1σ 690,000
2σ 308,000 2 times
3σ 66,800 5 times
4σ 6,210 11 times
5σ 230 27 times
6σ 3.4 68 times

16
 The Many Facets of Six Sigma

σ
 Metric
 Benchmark
 Vision
 Philosophy
 Method
 Tool
 Symbol
 Goal
 Value

17
Six Sigma is a Process for
Improvement
 Six Sigma is different than the procedures
that preceded it
 Emphasizes that you must have top
management involvement from the start
 Always has a limited time frame
 Has a written goal
 Has determined a means to measure
success
18
Six Sigma is about Measuring

Six Sigma is all about measuring to prove

results and improved profit. It is also
about shaking things up. An organization
not willing to change is not prepared to
start a Six Sigma project

19
Make no Arbitrary Decisions

 Six Sigma is based on measured values

 Many of those measurements are statistical
 “… there are many degrees of probability,
some nearer the truth than others …”
 Christian Huygen 17 century from
 Absolute Zero, Shachtman, 1979

20
Not every problem is a Six Sigma
issue

 Daily issues are no Six Sigma issues

 Opened ended problems are not Six
Sigma issues

21
Six Sigma issues have defined
periods
 Part of defining a Six Sigma issues
is setting a time limit for the Six
Sigma effort.
 Typical time period is 3 months
 Some have less time
 Rarely does a Six Sigma effort have
more than 9 months

22
Where to Start

 Look for KIPV (Key Input Variables)

 That effect KOPV (Key Output Variables)

• KIPV
• Things that influence KOPV
• KOPV
• Things that are important to your customers

23
External Six Sigma Results

Company Annual Savings

General Electric $2.0+ billion
JP Morgan Chase *$1.5 billion (*since inception in 1998)
Texas Instruments $600 million
Johnson & Johnson $500 million
Honeywell $600 million

Sun has launched a Six Sigma program “SunSigma” focused on

improving product quality and reliability (software & hardware)

24
What Is Six Sigma?

Six Sigma is a project based problem solving approach

that focuses on reducing/preventing defects resulting
in increased customer satisfaction and lower costs.
Key components are:
 Project Selection

 People

 Disciplined project methodology

 DMAIC- Problem solving

 DMADI- Product design and Prevention

 Data analysis and collection tools

25
Project Selection

Attributes of a good Six Sigma project:

 Strong tie to business deliverables
 Enhances customer satisfaction and loyalty
 Strategic importance
 Impact on profit (hard and soft benefits)
 Results are visible or easily link to a key executive
metric
 Meaningful results within 6 months (DMAIC only)
 Goals can be quantified and measured
 Project is feasible
 Team can commit time to project
 Potential solutions are relatively low cost

26
Six Sigma People
 Executive sponsorship
 Clear link between project and critical business goal
 Executive is visible and supportive of team efforts
 Executive breaks down barriers to improvement
 Dedicated project manager
 Black Belt for large or difficult projects, or projects that
require statistical analysis
 Green Belt for a smaller project within her/his team
 Virtual team
 Represents the people directly impacted by the problem
and will be involved in the improvements
 Cross-discipline and cross-group as needed
 Data driven decisions greatly enhance cross-group work

27
 Six Sigma Project Methodology

Project Phases and Deliverables

Define Measure Analyze Improve Control

 Project selection  Key output variables  Key causes (vital  Improvement  Lock in the results
 Project charter (metrics or Y’s) few) of defects (X’s) strategy (control plan)
 Critical to Customer  Possible causes of  Prioritize solutions •Mistake proofing
(CTQ) needs defects (X’s)  Tested & measured •Control points
 High level process  Data collection and solutions •Monitoring Plan
map presentation plan  Final solutions •Positive hand off
 Current Performance of control plan
 Internal/ external  Financial impact of
benchmarking the project

28
 Design for Six Sigma
Methodology
Project Phases and Deliverables

Define Measure Analyze Design Implement

 Product opportunity  Secondary and  Conceptual design(s)  Functional design  Implement product/
 Project charter/goals primary customer  Risk assessment  Resource plan service
 Project plan research Customer  Simulation  Validated product/
 Critical customer Implementation  Design Scorecard service
requirements  High level •TDPU  Project closure
 Key Product/Service implementation  Control plan Final control plan
requirements process Test plan
 Product performance Risk mitigation
 Competitive
benchmarks

29
Six Sigma Toolbox
Green Belt tools Black Belt tools
 Benchmarking  Activity analysis
 Brainstorming  Affinity diagram
 Cause- Effect diagrams  Data Presentation
 Critical to Customer Tree
 Histogram
 Box Plot
 Data Collection Plan  Line Graphs
 FMEA( Failure modes and effect)  Run Charts
 Improvement strategy  Control Charts
 Interviews/ Precision questioning  Pareto Chart
 Prioritization matrices  Bar Graphs
 Project Charter
 Stacked Bar Graphs
 Pie Charts
 Project plan template  Design of experiments
 SIPOC- Process flow  Full factorial
 Surveys  Reduced fractions
 Workflow mapping  Screening designs
 Hypothesis tests
 t- test
 Paired t-test
 ANOVA
 Chi Square
 Process sigma
 Kano modeling
 Quality Functional Deployment(QFD)
 Regression
 Rolled throughput and final yield
 Sampling
 Stratification

30
Project Best Practices
 Projects impact the business scorecard, key
initiative, lowlights
 Executive sponsor status updates at the end of
each project phase
 Weekly updates with Business Process owner
and team
 Dedicated resources (Black/Greenbelts) to
manage the project
 Detailed project plans developed and
communicated to team and sponsors
 Project status on a website to share learning

31
 What Is Six Sigma? Process Philosophy

 Know What’s Important ?

to the Customer (CTQ)

 Reduce Defects (DPMO)

 Center Around Target

(Mean)

 Reduce Variation
(Standard Deviation)
GE Company Proprietary 32
November 1998
Six Sigma as a Goal
Defects
Defectsper
σσ
per
Million
Million
opportunities
opportunities

2 308,537

3 66,807

4 6,210
5 233
6 3.4 .

Process Sigma is a statistical unit of

Process measure w
Capability
CapabilityReflects process capability. 33
Six Sigma -- Practical Meaning
99% Good (3.8 Sigma) 99.99966% Good (6 Sigma)
• 20,000 lost articles of mail per • Seven articles lost per hour
hour

• Unsafe drinking water for • One unsafe minute every seven

almost 15 minutes each day months

• 5,000 incorrect surgical

operations per week • 1.7 incorrect operations per week

• Two short or long landings at • One short or long landing every

most major airports each day five years

• 200,000 wrong drug

prescriptions each year • 68 wrong prescriptions per year

• No electricity for almost seven • One hour without electricity

hours each month every 34 years

34
Dissecting Process Capability
 Premise of 6σ Sources of variation can be:
 Identified
 Quantified
 Eliminated or Controlled
Unstable Parts &
Inadequat
Inadequat Materials
e Design
e Process Margin
Capability
LSL USL

Defects Acceptabl Defects

e

Process Capability
35
The Strategy
LSL USL

• Characterize
T

LSL USL

T
• Optimize

LSL USL

• Breakthrough
T
LSL’ USL’

Customer Focused - Both Internally & Externally

36
What is Cost of Poor Quality?
• In addition to the direct costs associated with finding and
fixing defects, “Cost of Poor Quality” also includes:
– The hidden cost of failing to meet customer expectations the first
time
– The hidden opportunity for increased efficiency
– The hidden potential for higher profits
– The hidden loss in market share
– The hidden increase in production cycle time
– The hidden labor associated with ordering replacement material
– The hidden costs associated with disposing of defects
• For most companies today, the cost of poor quality is likely
to be 25 % of sales.
• In almost every company where the COPQ is unknown, the
COPQ exceeds the profit margin.

37
Which Business Function Needs It?
SERVICE DESIGN

ADMIN. PURCH.
6 Sigma
Methods Marketing

QA MFG.

MAINT.

As long as there is a process that produces an output, whether it is

a manufactured product, data, an invoice, etc…, we can apply the
Six Sigma Breakthrough Strategy. For these processes to perform
to a customer standard they require correct inputs!!!

38
Ken Lewis’ “Vision”

Why Six Sigma?

“Six Sigma will enable Bank of America to make the

breakthrough improvements in customer satisfaction and
shareholder value that we must achieve to reach our goal
of becoming one of the world’s most admired companies.
That’s why I’m committed to using it as a performance
management discipline throughout our company.”
Ken Lewis,
Chairman and Chief Executive Officer
Bank of America

39
 Strategic Alignment - From Strategy to Action
Hoshin Plan
Hoshin Strategy
nd
2 Draft

Bank of America
Ken Lewis, Chairman and CEO

VISION
“Be Rec ognized As One of the World’s Most
Admire d Compan ies”

1.1 Provide a world-class customer/client experience through

GOALS Breakthrough Strategies

CUSTOMER
1.1 Provide a world-class customer/client experience
through easy access and efficient, error -free service
C. Goslee / B. Desoer
1.2 Attract and retain prof itable customers/clients…and
Provider of Choice
92% Customer Satisfaction continuously reward them for keeping and bringing more
of their business to us G. Taylor / R. DeMa rtini / A . Brinkley
E. Br own
1.3 Become the trusted advisor for financial solutions
R. D eMartini
E. Brown

easy access and efficient, error-free service

1.4 Develop and deliver innovative new products and
solutions which make financial services work in ways it
never has before A. Br inkley / B. Desoer
E. Brown

ASSOCIATE 2.1 Attract and retain a world -class work force

S. Alphin
2.2 Define and align Associate roles, measures and rewards
to our strategy S. Alphin
Employer of Choice 2.3 Provide the support and tools Associates need to excel
90% Associate Satisfaction B . Desoer
2.4 Enable Associates to achieve professional growth
balanced with personal goals B. Desoer
2.5 Reflect the diversity of the communities and customers
we serve in our work force S. Alphin

Customer Segment Customer Segment Root Cause

PROBLEM STATEMENT: Kodak's aggregate corpora te cust omer satisfaction i s at 76 %, which is lower than world cla ss ben chmarks of 90%+.

MBF 1. Too many problems (“error free banking”)

This gap of 15-20 pp represents a $1B-2B revenue opportunity for the compan y.
Cu sto mer S at isfa ction B en chm ark Customer Satisfaction Score
100 % 93.2% 9 3.2%
100 %
% S atisfac tion

No rdst rom , Lex us 92% 79.7% 80. 0% 81.6% 82.5%

Per cent Sat i sf act i on

76. 5% 76. 9%
90% Op p ort unity Ga p 71. 3% 71.8% 70.4% 70.4%
65.1% 65.5% 64. 6% 64.9%
BM W M erce des 86%
76% 77%
80% Co ke 84 % 50 %
69% 68%
70%

60%
0%
50%
EK 97* E K 98* E K 99** E K 1Q 00
CI HI KPR O EI DI D&A I C&G S E K O ve ral l
*O ld M etr ic : O ve ra ll C u s t o m er S a t
Im prov ement
**N e w M et r ic : Cu s to m e r S a tis fa cti on S c or e
Y E9 9 1Q00

Wt. 0.25 W t. 0 .50 W t. 0.25

Assigned to Payment and Deposits Golden Thread

O ver all C us to me r S ati sfac tio n (Key D rivers ) Overall Product Quality/Per f. Overall Customer Sa tisfactio n Overall Service Qua lity
1 00 % Benchmark 10 0% 1 00%
Benchma rk Benchmark
% S atisfac ti on
% Satisfac ti on

% Sa ti sfactio n

8 1. 0% 78 %
69% 72 %
P er cent of B U ' s

100%
75% 50% Not 5 0% Not 50 %
50%
P lanned Planned
25%
0% 0% 0% 0%
Pr od. Per f .
Svc . / Tec h.

Sales/ M kt g.

Pr od. Av ail
Valu e/ Pric e

Ease Doing

YE 99 1Q 00 2 Q0 0 3 Q0 0 4Q 00
Cust .

Y E99 1Q0 0 2Q 00 3Q 00 4 Q0 0 Y E9 9 1Q 00 2Q00 3Q 00 4Q00

( O&D)
Supp.

Bus .
Supp.

Pr iori ti z ation & R oo t C au se Co un te r M eas ures & Act ivi ti es W ho Wh en Pr o ces sC ap ability
Exp ecte d T arge t A ch ieved ?/Imp a ct

Teams
B en ef its/Im p act
1. V alue for Mo ney
1. De cli ning m a rket perc ep tion c om pa red to c om pe tit io n. 1. In creas e cu sto mer perc e pt io n of v al ue p rovided C I, KPR O, EI , H I t hru
2. Inadequa te ma rgins, di scou nt s, pro fit abi li ty , p rom ot ion s, as 2. Of fer s im pli f ie d/comp et it i ve pri ce/pa ymen t p la ns C I, KPR O,EI, D I
pe rceiv ed by cust o m ers /channel partn er s
3. Of fer diffe rent ia te d le ad ersh ip p roducts KPR O ,D &AI ,C I 12 pp.
4. Im p rov e e ffe ctive nes s o f p romo tions , adve rti s ing C I,D I
5. Im p rov e o pe rat in g co sts a nd e f fi ciencies C &G S 20 00
2. C us to mer Ser vi ce /T e chni ca l S up po rt
1. Pr oce ss no t c u stom er-fo cuse d 1. Re-s tr u ct ure /re -en gi ne er or g. t o m eet needs; cus to m er foc us ed int egrate d pro cess im pro vement
KPR sO ,D &AI ,D I,H I t hru

2. La ck of c los ed l oo p proc es s t o c orrec t cust om er pro bl em s 2. Additio nal te chnic al su ppo rt H I,D &AI,G C SS
3. Un sat is f a ctor y resp on se tim e , pr oblem re solut ion 3. Cus to m er esca la t ion pr oc ess ; pro blem res olu tion; tec hn ica l tr ain in g EI 20 00
3. P rod uct P e rfor m ance
1. Pr od uct s/ serv ic e s do no t p erf orm to V OC re qu ir e ment s 1. Im p rov e p rod uc t pe rformanc e a nd re li ab il ity; drive to six sig m a quality st and ards C I,K PR O , C &GS, D & AI, on-g oi ng
D I,E I
2. Pr od uct /servi ce p erform anc e mo nit ori ng vs . V OC do es no t o cc ur2 . In sti tut e pos t-la un ch m onitoring fo r all m ajo r pro duc t int rod uc tions C I,K PR O t hru 2000

3. Pr od uct s/ serv ic e s perf o rmanc e are not ea s y to u se 3. Foc us on ea se of us e a spec ts for pro duct de sig n D &AI ,C I on-g oi ng
4. S ales /Mar ketin g S u ppor t
1. Ins uf fici en t b usi ne ss gro wt h s up po rt 1. Red esi gn /r estruct ure S F, training, tar get k ey, cus to m er rel ati ons hip m anagem en t C I,E I,K PRO , DI,H I, t hru
2. Inadequa te c ont a c t- new product /progra m in fo rm atio n, 2. Expand altern ativ e veh ic les of delivery C I,H I, KPRO 10 p p
m erc handi sin g, IM
3. Ins uf fici en t kn ow le dge : Bu s.-Te ch. 3. Cus to m er training EI
4. Cus to m er comm u ni cations D I, EI,C &GS 20 00
5. E ase of D o ing Bu sines s
1. Cu ts a c ross p erforma nc e a rea s (Sales, O & D, Bil ling & Cre dit , Cu1.st.Im p rov e s upply ch ai n m an agem en t (see I SC MB F for de ta ils) All BU 's (&Region s) t hru U S &CR o rde r tra ns act ion
Sv c., Te ch. S upport) s ur vey s s how ~9pp
i mpro vem e nt ( 1Q 00 )
2. Un respons ive , l ack of follow -t hro ugh , funct ional sil os w ith li mit ed2. Res pon sibil ity/ acco unta bi lity , T rai ning, C omm un ica tion s D I,C I,E I,GC SS
sc op e
3. Un sat is f a ctor y pro blem res olu tion 3. Re-e ng in ee r, re -s tructure org an iza ti on t o me et cust om e r nee ds C I,K PR O ,U S& CR , 11 p p
EAM ER
4. Sim plif y/im p rov e pro cesse s, incl ud e pro bl em resolut ion , co nt ra c ts , ac c ount s m a na ge m ent H I,D I,U S &CR ,EAM E R, G 20 00
C SS
6. P rod uct A v ailab il i ty
1. No n-integrated sup pl y c hai n re s ul ts in sub- op ti m al o rder/ de liv ery1 . See IS C M B F f or de ta il s All BU 's thru 20 00
Ben ch m ark: 9 0% +

Deposits Golden Thread Deposit Golden Thread Root Cause PROBL EM STATEMENT: Kod ak's aggregate corpo rate customer satisfact ion is at 76%, which is lower than world class benchmarks of 90%+.

MBF 2.1 Complexity of Teller Processes

This gap of 15-20 pp represents a $1B-2B revenue opportunity for the company.
Customer Satisfaction Benchmark Customer Sat isfaction Score
% Sa tis fac tion

100% 93.2% 93.2%

10 0 %
Per cent Sat i sf ac t ion

No rdstrom, Le xus 92% 79.7% 80.0% 81 .6% 82.5% 76. 5% 76 .9%

90% Opportunity Gap 71.3% 71.8% 70.4% 70.4%
65.1% 65.5% 64.6% 64.9%
BMW Merce des 86 %
76% 77%
80% Co ke 84% 5 0%
69 % 68%
70%

60%
0%
50%
EK 97* E K 98* EK 99** EK 1Q0 0
CI HI KPRO EI DI D&AI C&G S EK Overall
*O ld M etr ic: Ove ra ll C us to mer Sa t
Improvement
**N e w M e tr ic: C u sto m er Sa tis fa cti on Sc or e
YE99 1Q00

Wt. 0.25 W t. 0.50 W t. 0.25

contributes to processing errors

Overall C ustome r Satis fac tion (Ke y Dri ve rs ) Overall Product Quality/Per f. Overall Customer Satisfaction Overall Service Quality
100% B enchmark 10 0% 100%
% Sa tis fac tion

Benchmark Benchmark
% Sat isfa c tion

% Sa tis fac tio n

81.0% 78%
69% 72%
P er cent of BU ' s

100%
75% 50% Not 5 0% Not 50%
50%
P lanned Plan ned
25%
0% 0%
Pr od . Per f .

0% 0%
Svc. /Tech.

Sa les/M kt g.

Pr od. Avail
Value/ Pric e

Ease Doing

YE 99 1Q00 2Q00 3Q00 4Q 00

Cust .

( O&D)

YE99 1Q00 2Q00 3Q00 4Q0 0 YE99 1Q00 2 Q00 3Q00 4Q00
Supp.

Supp.

Bus.

Prioritization & Root Cause Counter Measures & Activities Who Whe n Process C ap ability
Expected Target Ach ieved?/Impact
Benefits/Impact
1. Value for Money
1. De clini ng ma rket pe rception compa red to c ompet ition. 1. Increa se cu sto mer pe rce ptio n of value p rovi de d CI , KPRO, EI, HI t hru
2. In adeq ua te ma rgins, discou nt s, pro fi tabi li ty, promoti on s, as 2. Offer si mplif ie d/ comp etiti ve price/ paymen t pla ns CI , KPRO,EI, DI
pe rceived by custo mers/chann el part ners
3. Offer di fferen tiate d le ad ersh ip p rod uct s KPR O,D&AI,CI 12 pp.
4. Imp rove e ffect iveness o f p romotion s, a dve rtising CI ,D I
5. Imp rove o peratin g co sts a nd ef fi cie nci es C&GS 2000
2. Customer Service/Techni cal Support
1. Proce ss not cu stomer-focuse d 1. Re-s tru cture/re-engi neer or g. to me et needs; customer focused int eg rate d process impro vemen ts KPR O,D&AI,DI,HI t hru

2. La ck of c losed loop pro cess to correct cust ome r pro blems 2. Addit io nal technica l suppo rt HI ,D &AI ,GCSS
3. Un sat isf a cto ry respon se time , pr obl em re solut io n 3. Custo mer escala tion pro cess; probl em resolu tion; te chn ica l tr ainin g EI 2000
3. Product Performance
1. Prod ucts/ serv ices d o not p erfo rm t o VOC require ments 1. Imp rove p rod uct performan ce a nd reliab ility; d rive to six sig ma qu ality stand ards CI ,KPRO, C&GS,D&AI, o n-going
DI ,EI
2. Prod uct/ servi ce perf ormance monit ori ng vs. VOC does no t occur 2. Insti tute po st-laun ch mon it oring fo r all major product in troductions CI ,KPRO th ru 20 00

3. Prod ucts/ serv ices p erf o rmance are not ea sy to use 3. Fo cus on ease of use a spe cts for product de sig n D&AI,CI o n-going

Six Sigma Change Process

4. Sales/Marketing Support
1. In suf ficient b usiness growth support 1. Redesign /r estructu re SF, t raini ng , tar get key, cus to mer rel ati onship mana ge men t CI ,EI ,KPRO, DI,H I, t hru
2. In adeq ua te contact- new pro duct /pro gram informatio n, 2. Expan d al tern at ive vehicl es of de li very CI ,H I, KPRO 10 p p
merchandi sing, IM
3. In suf ficient kn owledge : Bu s.-Tech. 3. Custo mer t raining EI
4. Custo mer commu nications DI , EI,C&GS 2000
5. Ease of Doing Business
1. Cu ts a cross p erf ormance a rea s (Sales, O&D, Billing & Cre dit , Cust . 1. Imp rove su pply chain man agemen t (se e ISC MBF fo r de ta il s) All BU's (&Re gi ons) t hru US&CR o rder transact io n
Svc., Te ch. Support) su rveys sh ow ~9pp
improvement ( 1Q00)
2. Un responsive , lack of follow -t hro ugh , fu nctio na l silos wi th limited 2. Resp onsib ility/ acco unta bilit y, Training , Commun ica tion s DI ,C I,EI,GC SS
scop e
3. Un sat isf a cto ry probl em reso lut ion 3. Re-e ng inee r, re-structur e organ ization to me et cust ome r needs CI ,KPRO,US&CR , 11 p p
EAM ER
4. Simplify/imp rove pro cesse s, incl ud e pro bl em resolut ion , co nt ra cts, accoun t s ma nagement HI ,D I,US&CR,EAME R,G 2000
CSS
6. Product Avail abili ty
1. No n-integrated sup pl y chai n resul ts in sub -optimal orde r/delivery 1. See I SC MBF for de tails All BU's t hru 20 00

Green Belt Project Definition

Benchmark: 9 0%+

Green Belt Project Improve number of counter deposit slips

Problem Definition
Green Belt Project Application
(What is the Defect? What is the magnitude of the defect?
goal (at least 50% improvement) and timeframe for this project?) :
What is the improvement presented for processing but did not post in
Primary Metric (measure of defect): Secondary Metric (counterbalancing measure):
time in _____________ (Mid-Atlantic, Kansas
What will be the impact of the improvement from a customer’s standpoint?

What is the expected savings or revenue increase?

City, or Tampa) from ________% to ______%.
High Level Process Map and Multilevel Pareto are attached. _______

Financial Director Sign ature: _____________________________________________________________ Date:

(Agrees that the potential financial benefits can be achieved and measured)

Customer Segment Leader Signature_______________________________________________________ Date:

Champ ion’s Signature: ___________________________________ _______________________________ Date:

Complete after project is approved for class enrollment

Name of Green Belt Candidate:

Project Team Members:

40
 Two Approaches
Change Integration

Ownership & Commitment

GB/BB Improvement (Current)

Define
Define Measure
Measure Analyze
Analyze Improve
Improve Control
Control

$ $
DFSS Development
(New)
Project Management

• Two approaches to reaching the Six Sigma goal:

- Improving existing products and processes
- Developing new products and processes

• Different tools and steps, but focus and flow is the same

AACommon
Common Tollgate
TollgateApproach
Approach
41
What Makes Six Sigma Different?

• Leadership Commitment, Competence, &

Involvement
• Methodology & Tools
• Data Driven
• Statistically Validated
• Best People 100% Dedicated to Defect
Reduction
• Project Focused
• Aligned to Strategic Goals (Hoshin, MBF)
• High ROI Expectations

42
Six Sigma & Leadership

Six Sigma only works when Leadership is

passionate about excellence and willing to change.
 Fundamentals of Leadership
 Challenge the process
 Inspire a shared vision
 Enable others to act
 Model the way
 Encourage the heart
 Six Sigma is a catalyst for leaders

43
 Executive Commitment
The Bank of America executive officer team are all
certified Green Belts

Bank of America Executive Officer team

• Ken Lewis – certified Green Belt
• Jim Hance – certified Green Belt
• Amy Brinkley – certified Green Belt
• Ed Brown – certified Green Belt
• Rich DeMartini – certified Green Belt
• Barbara Desoer – certified Green Belt
• Gene Taylor – certified Green Belt

44
 Results

“Sustaining the intensity of our Six Sigma work is critical for Bank of
America to achieve its strategic goals. Six Sigma has enabled us
to generate more than $300MM in first-year productivity
gains for the company. It has also had a significant impact upon
the leadership team with our personal education and certification as
Six Sigma Green Belts. As we look to the future, our leadership charge
is to keep Six Sigma a top priority and use it to produce organic
customer revenue growth.”

Ken Lewis (10/9/02)

45
Initiative

 Breakthrough Improvement
 Systematic, Focused Approach
 Projects Linked to Business Strategy
 Key People Selected & Trained
 Project Management & Reviews
 Results
 Strategic Process Improvement
 Financial Results
 Sustain the Gains

46
Method and Tools
 Process Thinking
 Process Variation
 Facts, Figures, Data
 Critical Few Drivers
 Customer Satisfaction
 Cycle Time

47
Six Sigma Applies to All
Processes in All Industries
 Customer Service  Manufacturing
 Design  Financial
 Purchasing  Telecommunications
 Manufacturing  Health Care
 Sales
 Government
 Marketing
 Education
 Administration

48
What is Different? Why Does
Six Sigma Work?
 Driven by top leadership
 Top-down deployment - integrated with business strategies
 Bottom-line cost-benefit
 Disciplined approach
(Define-Measure-Analyze-Improve-Control)
 Sense of urgency (4-6 month projects)
 Well defined roles & infrastructure (Champion, MBB, BB, GB, etc)
 Statistical and data based decisions
 Customer and process focus

49
Define-Measure-Analyze-
Improve-Control
 Define: Define the problem, measures and process
associated with the problem; quantify benefits; and
identify project team.
 Measure: Determine the capability of the current
process and the measurement system.
 Analyze: Analyze data to assess patterns and
trends between inputs and outputs.
 Improve: Verify critical inputs and determine
optimum settings. Implement.
 Control: Implement controls to “sustain the gains.”

50
DMAIC

DMAIC is an acronym that stands for the 5 major

steps within the Six Sigma program.

D - Define
M – Measure
A - Analyze
I - Improve
C - Control

51
DMAIC
 DMAIC is a structured, disciplined and aggressive
approach to process improvement that consists of
the above five phases.
 Each phase is linked logically to the previous phase,
and to the next phase at the same time.
 The purpose of this rigorous methodology is to
achieve the overall goal of Six Sigma, which is 3.4
defects per million parts, or opportunities.

52
PHASE ONE - DEFINE
 In this phase, the project's purpose and scope are
defined. Customer information and background
information on the process is collected. The output
of this phase is:
 1. A clear statement of the intended improvement.
2. A high-level map of the process (SIPOC - defined
further later).
3. A list of what is important to the customer (Voice
of the customer).

53
PHASE TWO - MEASURE
 The goal of the Measure phase is to focus the
improvement effort by gathering information on the
current situation. The output of Measure is:
 1. Baseline data on current process performance.
2. Data that pinpoints problem location or
occurrence.
3. A more focused problem statement.

54
PHASE THREE - ANALYZE

 The goal of the Analyze phase is to identify

root cause(s) and confirm those with data.
 The output is a theory that has been tested
and confirmed.
 The verified cause(s) will form the basis for
solutions in the next phase.

55
PHASE FOUR - IMPROVE
 The goal of the Improve phase is to do trials
and implement solutions that address the
identified root cause(s).
 The output is planned, tested actions that
should eliminate or reduce the impact of the
identified root cause(s).
 A plan is also created as to how the results
will be evaluated in the next phase.

56
PHASE FIVE - CONTROL

 The goal of the Control phase is to

evaluate the solutions and the plan,
maintain the gains accomplished by
standardizing the process, and outline
steps for on-going improvements
including opportunities for replication.

57
 It is also important to consider if this
improvement affects similar lines of
production. The output is:
 1. Before and after analysis.
2. A monitoring system.
3. Completed documentation of results,
learning's, and recommendations.

58
 Customer Focused
ON TIME DELIVERY (sample)
The percentage of sales order line items that ship complete on or before the original customer promise date, for
all line items shipped in the month.

On-Time Delivery
Pareto of Drivers

Our Performance Compared to Competitors 100%

90%

80%
100%

75%

% Impact
70%
60% 50%
50%

• Complete
25%
40%
Importance to Customers

30% 0%

xyz Cell

Credit Hold

Engineering
Unrealistic

on part abc
Deliveries

Orders on
Always
Supplier

Low Yield
Promise
20%

Late

Change
Orders
Late

Date
Target
10%
0%

• Quality • OTD
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Reason

Top 5 Action Items

Original Due Current

High
Driver Action Description Status Status Description Ow ner Date Due Date
Late Supplier Deliveries Monthly reporting to suppliers on delivery & On Report Cards Implemented. Adam 5/21 5/21
quality metrics. track

Late Supplier Deliveries Arrange face to face meetings with top On Meetings Complete with top 10 Beth 6/15 6/15
offenders. track Suppliers.

Late Supplier Deliveries Review and approve supplier's corrective action Caution Corrective Action Plan in Place for 2 Carlos 7/15 9/15
plan. major Suppliers

xyz Cell Always Late
Unrealistic Promise Date
Kaizen Event to focus on improving throughput On Event held 5/1. 25% throughput Doreen 5/21 5/21
by 40% and improve labor efficiency by 35% track improvement in May. Labor Efficiency
Increase of 30%
Focus on custom products to provide realistic Problem Continued lack of progress. Re- Earnest 6/15 8/15
ATP based on inventory and leadtime of structured and focused team.
components. Developing detailed plan.

• Training
Moderate-
• Price
• Shared Goals • Complaints to-’Low’

We’re Better They’re Better

59
 Data Driven Decisions

Y= f (X)
To get results, should we focus our behavior on the Y or X ?

• Y • X1 . . . XN
• Dependent • Independent
• Output • Input-Process
• Cause
• Effect
• Problem
• Symptom
• Control
• Monitor • Factor
• Response

Why should we test or inspect Y, if we know this relationship?

60
Breakthrough performance
(Distribution Shifted ± 1.5σ )
gains
σσ PPM
PPM
2
2 3
30
08
8,5
,5 337
7
3
3 6
66
6 ,8
,8 0
07
7
4
4 66 ,21
,20
10
5
5 2
23
3 33
6
6 3
3.4
.4
Process
Process Defects
Defectsper
perMillion
Million
Capability
Capability Opportunities
Opportunities

Sigma is a statistical unit of measure which reflects process capability. The

sigma scale of measure is perfectly correlated to such characteristics as
defects-per-unit, parts-per million defective, and the probability of a
failure/error.

61
 Basic Implementation
Roadmap
Identify Customer Requirements

Understand and Define

Entire Value Streams
Vision (Strategic Business Plan)
Deploy Key Business Objectives
- Measure and target (metrics)
- Align and involve all employees
- Develop and motivate
Continuous Improvement (DMAIC)
Define, Measure, Analyze, Improve
Identify root causes, prioritize, eliminate waste,
make things flow and pulled by customers

Control
-Sustain Improvement
-Drive Towards Perfection

62
 ON TIME DELIVERY (sample)
The percentage of sales order line items that ship complete on or before the original customer promise date, for
all line items shipped in the month.

On-Time Delivery
Pareto of Drivers
100%
90%
100%
80% 75%

% Impact
70%
60% 50%
50%
25%
40%
30% 0%

Engineering
Credit Hold
xyz Cell
Deliveries

Unrealistic

on part abc
Orders on
Always

Low Yield
Supplier

Promise
20%

Late

Change
Orders
Late

Date
Target
10%
0%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Reason

Top 5 Action Items

Original Due Current
Driver Action Description Status Status Description Ow ner Date Due Date
Late Supplier Deliveries Monthly reporting to suppliers on delivery & On Report Cards Implemented. Adam 5/21 5/21
quality metrics. track

Late Supplier Deliveries Arrange face to face meetings with top On Meetings Complete with top 10 Beth 6/15 6/15
offenders. track Suppliers.

Late Supplier Deliveries Review and approve supplier's corrective action Caution Corrective Action Plan in Place for 2 Carlos 7/15 9/15
plan. major Suppliers

xyz Cell Always Late Kaizen Event to focus on improving throughput On Event held 5/1. 25% throughput Doreen 5/21 5/21
by 40% and improve labor efficiency by 35% track improvement in May. Labor Efficiency
Increase of 30%
Unrealistic Promise Date Focus on custom products to provide realistic Problem Continued lack of progress. Re- Earnest 6/15 8/15
ATP based on inventory and leadtime of structured and focused team. 63
components. Developing detailed plan.
 Does it work?.
The top companies in Customer Satisfaction grow MVA at
nearly twice the rate of their poor-performing counterparts.

In Billions $
50
$42
Market Value Added

1999
40
73
companies 30 $23
Ralston
Purina
Quaker Oats
20
Hilton Hotels
Coca-Cola 10
Unilever
etc. 0
Low High
Customer Satisfaction Index Score
Source: American Customer Satisfaction Index, U Michigan, HBR, 2001
64
What about Lean, TOC, TQM

 Six Sigma
• Remove defects, minimize variance
 Lean
• Remove waste, shorten the flow
 TOC
• Remove and manage constraints
 TQM
• Continuous Improvement

65
Making it happen
Three major roles
 Implementer
• Learns the tools
• Works the process
• Solves day to day problems
 Manager Where do you
• Learns the methodology need to focus?
• Manages a value stream
• Reviews project teams
 Leader
• Establishes the vision for the future
• Sets priorities
• Encourages

66
Six Sigma

What It is
How It Affects Human
Resources

67
What is Six Sigma ?

 Measure of how well a process is performing

- Six Sigma process produces 3.4 defects per
million opportunities
- Most companies are at 3-4 sigma level
 Philosophy of reducing defects so we can
improve customer satisfaction and reduce costs
 Business Strategy that increases process
performance resulting in enhanced customer
satisfaction and improved bottom line ($$).

68
What is Six Sigma?
INITIATIVE
 Improvement
 Breakthrough
 Systematic, Focused Approach
 Right Projects - Linked to
Business Goals
 Right People
- Selected & Trained
 Project Management
- Management Reviews
 Sustaining Gains
- Identify New Projects
 Right Results
- Process & Financial($$)
METHODS & TOOLS
 Process Thinking
 Process Variation
 Facts, Figures, Data
 Define, Measure, Analyze,
Improve, Control
 8 Key Tools
- Linked and Sequenced
 Statistical Tools
 Minitab
 Critical Few Variables
69
 ROLES OF LEADERS
Management
Team

Master Project
Black Belt Champion
Green
Belt

Functional Groups Black Belt

HR, Finance, IT and
Engg, QA, etc. Team

70
Six Sigma Improvement
Strategy
 Phase 0: Process Definition
 Phase I: Process Measurement
 Phase II: Process Analysis
 Phase III: Process Improvement
 Phase IV: Process Control

71
8 Key Six Sigma Tools
 Maps and Metrics
 Cause and Effect Matrix
 Gage R&R Study
 Capability Analysis
 Failure Mode and Effects Analysis
 Multi-Vari Analysis
 Design of Experiments
 Control Plans including Statistical Process Control
Advanced tools are used as needed to speed up improvement

72
Some Manufacturing Black
Belt Projects
 Increase process yield $300k
 Increase process capacity $400k
 Increase dryer throughput $130k
 Reduce process downtime and scrap $320k
 Reduce caustic use of Process Z $2000k
 Material loss: Reduce scrap & increase yield $150k
 Reduce wet milling operations costs $300k

73
Topics of Non-Manufacturing
Projects Logistics - Transportation


 Billing  Customer Service

 Energy Reduction  Maintenance
 Engineering  Planning and Scheduling
 Environmental  Product Design
 Finance & Accounting  Purchasing
 Human Resources  QC Lab
 Information Technology  Safety
 Internal Audits  Sales
 Inventory Reduction  Shipping
 Legal

74
Projects in Human Resources
 Reduce cycle time on hiring process
 Increase “hit rate” on job applicants
 Employee turnover reduction
 Overtime reduction
 Reducing staffing shortages
 Cycle Time Reduction for
Long-Term Disability Application Process

75
Long Term Disability Application Process
Alternative
Approval / Denial Site Determines Condition
Prevents Employee from Employee Requests
Site to Initiate an
Returning to Work
Application

Site
Human Site
Employee
Resources Medical

Medical
Case Determination Medical
Evaluation Report
Letter Authorization
Supporting
Enter Total & Medical Info
Permanent Code
Medical
Authorization

Weekly Disability Independent

Benefits Supplier
Claim Notification Medical
Review Process
Process Evaluation

Transferrable Skills
Analysis & Labor
Market Survey

76
Improvements
 Supplier Processes
- Renegotiate sub-contractors’ terms
- New case management reporting
- Review of case turn-around time performance
 Dupont Processes
- Greater use of email and intranet
- Case tracking and reporting database added
- Use of performance metrics at SBU and sites
- Ongoing communication, training and education

77
Benefits
 Average Cycle Time reduced 50-70%
 Process performance now meeting customer
requirements of decisions in <45 days.
 Hard savings of $192,000.
- Reduction in extended short-term disability
payments.
- 70% reduction in Independent Medical Evaluation
fees paid to Supplier.
- Reduction of ongoing administrative fee paid to
Supplier.

78
RECOGNITION AND
REWARD FOR
SIX SIGMA

79
 Recognition Vehicles -



Company T
Written feedback via e-mail
Written feedback via recognition board
 Verbal feedback via
- Voice mail
- One-on-one
- Shift meetings
 Company totems
 Gift certificates/luncheons/coffee/donuts
 Annual recognition program
 Quiz money
 Performance evaluation
 Customer trips
 Career plans
80
Recognition and Reward at
General Electric
“As with every initiative, we backed Six Sigma up with our
rewards system”
Jack Welch, CEO

 40% of annual bonus related to Six Sigma activities

 Stock option grants for Black Belts
 Green Belt certification required for promotion
“With Six Sigma permeating much of what we do, it will be
unthinkable to hire, promote or tolerate those who cannot,
or will not, commit to this way of work”
Jack Welch, CEO
General Electric
USATODAY 2/27/98

81
Black Belt Compensation at
Company
 Base Pay Z
- Potential increase at time of selection
- Retain current salary grade
- Common job code for full-time participants
- Normal group performance review and merit pay
 Incentive Compensation
- Special plan for Black Belts
- Target award at 15% of base pay
- Performance rating on 0 - 150% of scale
- Measured against key project objectives
- Participation ends at end of Black Belt assignment

82
SIX SIGMA RECOGNITION
PROGRAM OR
ORGANISATION

83
Six Sigma Recognition or
Organization
 Champions
 Master Black Belts
 Black Belts
 Green Belts

84
 Champions

 Provide direction and resources.

 Facilitate the identification and selection of
projects with senior leadership.
 Track progress of projects.
 Breakdown barriers.
 Create support systems.
 Six Sigma Catalysts

85
 Master Black Belts

 Internal experts in Six Sigma methods and

tools.
 Train and mentor Black Belts.
 Develop and deliver training.
 Assist Champions.
 Leverage best practices.
 Six Sigma Experts

86
Black Belts

 Project Lead
 Strategic high impact multi-functional
projects
 2-4 projects per year

87
Black Belts
cont’d….
 Mentor and coach Green Belts
 Dedicated role for 18 – 30 months
 Six Sigma Change Agents

88
Black Belts

 Six Sigma practitioners who are employed by

the company using the Six Sigma methodology
 work full time on the implementation of problem
solving & statistical techniques through projects
selected on business needs
 become recognised ‘Black Belts’ after embarking
on Six Sigma training programme and completion
of at least two projects which have a significant
impact on the ‘bottom-line’

89
Black Belt requirements

90
Black Belt role!

91
What Makes a Good Black
Belt?
 Open mind.
 Desire to find out why things happen.
 Ability to lead and direct people.
 Ability to handle conflict.
 Capable of self-directed activity.
 Sense of urgency.
 Good grasp of computer skills and a basic
understanding of math.

92
Examples of Black Belt
Projects
 Increase process throughput
 Reduce cycle time of assembly
 Reduce process downtime and scrap
 Reduce freight costs
 Reduce costs of waste disposal
 Reduce bulk material transportation costs
 Reduce amount of accounts receivable
 Material loss: Reduce scrap & increase yield
 Reduce warranty costs 50%

93
Examples of Black Belt
Projects (Actual)
 Reduce road construction change orders 20%.
 Improve sewage plant efficiency by 25%.
 Reduce lime usage in water softening at city water
plant by 20%.
 Reduce invoice to cash cycle time by 50%.
 Reduce processing time of billing customers for
3rd party orders.
 Reduce overpayment of benefits.
 Reduce document retention for legal cases.
 Reduce cycle time of legal transcript transmittals.

94
Green Belts

 Lead day-to-day functional projects and

support strategic Black Belt projects
 Maintain current role in organization with
20-50% of time dedicated to a Six Sigma
project
 Sustain the gains
 Six Sigma Institutionalizers

95
Characteristics of a Good
Project
 Problem is clearly connected to business
priorities
 Improvement in process metrics > 50%
 Financial impact
 People will support a project they understand and see as
important

96
Characteristics of a Good Project
(cont’d….)

 Clear quantitative measures of success

 Reasonable scope – 4-6 months
 Has the support and approval of
management needed to get resources and
remove barriers

97
Champions or ‘enablers’

 High-level managers who champion Six

Sigma projects
 they have direct support from an executive

management committee
 orchestrate the work of Six Sigma Black

Belts
 provide Black Belts with the necessary

backing at the executive level

98
Further down the line - after initial Six
Sigma implementation package
 Master Black Belts
 Black Belts who have reached an acquired level of
statistical and technical competence
 Provide expert advice to Black Belts

 Green Belts
 Provide assistance to Black Belts in Six Sigma
projects
 Undergo only two weeks of statistical and problem
solving training

99
Black Belt Recognition
 Selection
- Six Sigma Pin
 Certification
- $5,000 Certification Bonus
- Six Sigma Diploma/Plaque
 Project Completion Bonus Awards
- $500 to $5,000 in cash or stock options available
> Granted by Project Champion
> Approved by Six Sigma Recognition Committee

100
Black Belt Recognition (cont.)
 Six Sigma Spirit Awards
- Made by Project Champion
- Recognizes and rewards efforts and achievements during
projects with individual and team awards
> theater/movie tickets,dinners, t-shirts, spot cash bonuses, etc.
 Six Sigma Success Plaque
- Awarded at completion of first project
> Engraved placard for project
> Plaque designed to add multiple projects as completed

101
Company K - Recognition Program(Cont’d)

 Green Belt Recognition

- Similar to Black Belt recognition
- No certification bonus
 Project Team Member Recognition
- Similar to BB and GB Recognition
- No certification awards
 Annual Six Sigma Recognition event
- Presentation of key projects
- Dinner reception with senior leadership

102
 Education
Maste Mentor, trainer, and coach of Black Belts and others
in the organization.
r
Black
Belt
Leader of teams implementing the six sigma
methodology on projects.
Black Belts
Champions

Delivers successful focused projects usin

the six sigma methodology and tools.
Green Belts

Participates on and supports the

Team Members project teams, typically in the
context of his or her existing
Quality Fundamentals/ Kaizen Now
responsibilities.

Deployment Responsible for supporting the Deployment

Strategy within Line of Business/Customer
Champions
Segment or Golden Thread 103
 Summary
 Six Sigma
- It is different
- It works if you follow the process
- Produces significant bottom line results
 Change is required by all persons who get involved with
the initiative
 Six Sigma will last as long as it produces bottom line
results ($$)

SHOW ME THE MONEY($$)

104
Show Me The Money ($$)

105
 The Six Sigma Initiative
integrates these efforts

Knowledge
Management

106
‘Six Sigma’ companies

 Companies who have successfully adopted

‘Six Sigma’ strategies include:

107
GE “Service company” -
examples
 Approving a credit card application
 Installing a turbine
 Lending money
 Servicing an aircraft engine
 Answering a service call for an appliance
 Underwriting an insurance policy
 Developing software for a new CAT product
 Overhauling a locomotive

108
 General Electric
• In 1995 GE mandated each employee to work
towards achieving 6 sigma
• The average process at GE was 3 sigma in 1995
• In 1997 the average reached 3.5 sigma
• GE’s goal was to reach 6 sigma by 2001
• Investments in 6 sigma training and projects
reached 45MUS$ in 1998, profits increased by
1.2BUS$
“the most important initiative
GE has ever undertaken”.
Jack Welch
Chief Executive Officer
General Electric

109
 MOTOROLA
“At Motorola we use statistical methods daily
throughout all of our disciplines to synthesize an
abundance of data to derive concrete actions….
How has the use of statistical methods within
Motorola Six Sigma initiative, across disciplines,
contributed to our growth? Over the past decade
we have reduced in-process defects by over 300
fold, which has resulted in cumulative
manufacturing cost savings of over 11 billion
dollars”*. Robert W. Galvin
Chairman of the Executive Committee
Motorola, Inc.
*From
*From the
the forward
forward to
to MODERN
MODERN INDUSTRIAL
INDUSTRIAL STATISTICS
STATISTICS by
by Kenett
Kenett and
and Zacks,
Zacks, Duxbury,
Duxbury, 1998
1998
110
Positive quotations
 “If you’re an average Black Belt, proponents say you’ll
find ways to save $1 million each year”
 “Raytheon figures it spends 25% of each sales dollar
fixing problems when it operates at four sigma, a lower
level of efficiency. But if it raises its quality and efficiency
to Six Sigma, it would reduce spending on fixes to 1%”
 “The plastics business, through rigorous Six Sigma
process work , added 300 million pounds of new
capacity (equivalent to a ‘free plant’), saved $400 million
in investment and will save another $400 million by
2000”

111
Negative quotations

 “Because managers’ bonuses are tied to Six

Sigma savings, it causes them to fabricate
results and savings turn out to be phantom”
 “Marketing will always use the number that
makes the company look best …Promises are
made to potential customers around capability
statistics that are not anchored in reality”
 “ Six Sigma will eventually go the way of the
other fads”

112
 Barriers to implementation

Barrier #1: Engineers and managers are not interested in mathematical statistics
Barrier #2: Statisticians have problems communicating with managers and
engineers
Barrier #3: Non-statisticians experience “statistical anxiety” which has to be
minimized before learning can take place
Barrier # 4: Statistical methods need to be matched to management style and
organizational culture

113
 MBB
Master BlackMBB
Statisticians BB
BB
Belts
Black Belts
Technical
Skills

Quality Improvement
Facilitators

Soft Skills

114
Reality

 Six Sigma through the correct application of

statistical tools can reap a company enormous
rewards that will have a positive effect for years
or
 Six Sigma can be a dismal failure if not used
correctly
 ISRU, CAMT and Sauer Danfoss will ensure the

former occurs

115
BANK OF AMERICA

SS Experience
 Goals
 # 1 in Customer Satisfaction
 Worlds’ most admired company
 Worlds’ largest bank
 Strategy - “ Develop business process
excellence by applying voice of the customer to
identify and engineer critical few business
processes using Six Sigma
 Created Quality & Productivity Division
Source: Best Practices Report

116
Bank of America – SS Experience
 Wanted results in 1 year;
 Hired more than 225 MBB & BBs from GE, Motorola,
Allied Signal for rapid deployment
 Developed 2 week Green Belt training programs
 Introduced computer simulation of processes
 Trained 3767 Green Belts, certified 1230 - Minimum
value target per GB project – $ 250K
 Trained 305 Black Belts, certified 61 - Minimum value
target per BB project – $ 1 million
 Trained 43 MBB,
 1017 in DFSS
 80 % of Executive Team trained in GB and 50 %
Certified

117
Bank of America – SS Experience

Results of first 2 years:

 Reduced ATM withdrawal losses by 29.7 %
 Reduced counterfeit losses in nationwide
cash vaults by 54%
 Customer delight up 20%;
 Added 2.3 million customer households
 1.3 million fewer customer households
experienced problems
 Stock value up 52%
 Y 2002 – BOA named Best Bank in US &
Euro money's Worlds Most Improved Bank

118
 • Revenue
• Quote Time • Capital Utilization
• Defect Rate • Return on Assets
• Waste • Profits
• On Time Delivery
• Inventory;
• Machine Utilization

Strategically: Used by Leadership as a vehicle to develop

sustainable culture of Customer, Quality, Value and Continuous
improvement.

Operationally: By Quality Managers to reduce cycle times, costs,

errors, rework, inventory, equipment downtime.

Deployment across all types of processes and industries -

worldwide

119
 Six Sigma & EFQM/ DQA Framework
Enablers Results

Personally People Recognizing Establishing People Competency

Key Perf
Productivity
People Process Results
actively Results
Involved in management
improvement Aligning System to be
Developing Individual & Satisfaction Gross margins
used Recognition
Team skills Organization Involvement Net profit
Goals Sales
Market Share

Implementing Customer Results

Identifying & Process Response
Encouraging Delivery, Process cycle time
& enabling people designing Measures Value, Time to
customers Process costs
To participate in processes to deliver reliability Defect rates
Improvement strategy Productivity
Time to
Repurchase
satisfaction
Market
Policy & Strategy Cash flow
Maintenance cost
Improving Return on assets
processes
Recognizing
to satisfy and
Individual &
Generate value
Team effort
For customers Utility
Partnerships Society consumption
Resources Results Timeliness
Inventory
Leadership Processes

Innovation and Learning

120
 Who is Implementing Six Sigma
 At least 25% of the fortune 200 claim to have a
serious six sigma program - Michael Hammer.
 Financial - Bank of America, GE Capital
 Electronics - Allied Signal, Samsung, Sony
 Chemicals - Dupont, Dow Chemicals
 Manufacturing - GE Plastics, Johnson and Johnson,
Motorola, Nokia, Microsoft, Ford.
 Airline - Singapore, Lufthansa, Bombardier
 And hundreds of others in Americas, Europe, Sub
Continent.
121
 Six Sigma Results
Company Annual Savings
General Electric $2.0+ billion
JP Morgan Chase *$1.5 billion (*since inception in 1998)
Motorola $ 16 billion (*since inception in 1980s)
Johnson & Johnson $500 million
Honeywell $600 million
Six Sigma Savings as % of revenue vary from 1.2 to 4.5 %
For $ 30 million/yr sales – Savings potential $ 360,000 to $ 1.35 million.
Investment: salary of in house experts, training, process redesign.

122
Six Sigma

 The precise definition of Six Sigma is not

important; the content of the program is
 A disciplined quantitative approach for
improvement of defined metrics
 Can be applied to all business processes,
manufacturing, finance and services

123
Focus of Six Sigma*
 Accelerating fast breakthrough performance
 Significant financial results in 4-8 months
 Ensuring Six Sigma is an extension of the
Corporate culture, not the program of the
month
 Results first, then culture change!

*Adapted from Zinkgraf (1999), Sigma Breakthrough

Technologies Inc., Austin, TX.

124
Six Sigma: Reasons for Success

 The Success at Motorola, GE and

AlliedSignal has been attributed to:

 Strong leadership (Jack Welch, Larry Bossidy

and Bob Galvin personally involved)
 Initial focus on operations
 Aggressive project selection (potential savings in
cost of poor quality > $50,000/year)
 Training the right people

125
The right way!
 Plan for “quick wins”
 Find good initial projects - fast wins
 Establish resource structure
 Make sure you know where it is
 Publicise success
 Often and continually - blow that trumpet
 Embed the skills
 Everyone owns successes

126
EXPERIENCES WITH
LEVERAGING SIX SIGMA
TO IMPLEMENT
CMMI LEVELS 4 AND 5

 CMMI Technology Conference and User

Group (17-20 November 2003)

127
What is the Essence of Level
4?
 In our last Peer Review, we:
 Reviewed 40 SLOC / Review Hour
 Others have been able to review >100 SLOC/hour
 Found 15 defects with 1½ hours of prep time and
4 reviewers
 Reviewed 75 SLOC

As a manager,
do I make any
changes???

128
 What is the Essence of Level
4?
250
 71% reduction in # of
SLOC reviewed per
200
prep hour
150 UCL = 145.48  Average # of SLOC
135.8 (previous review)
reviewed / hour is
SLOC/Prep. Hour

100

about 54
50 CL = 53.71
40.0 (current review)
 Run of data from
0
0 5 10 15 20 25 30
LCL = 0 previous 15 reviews
 Control chart with
As a manager, do I make any control limits
 This is Level 4
changes yet??? knowledge!

129
What Kind of Skills are
Needed?
To accomplish Levels 4 and 5, you must be capable of:
 Statistical thinking
 Analyzing causes
 Process thinking
 Focusing on what is important to the customer
 Understanding “capability”
 Affecting improvement

These skills are essential for successfully implementing

Levels 4 and 5
Six Sigma provides the foundation for how to solve relevant
problems!!

130
 CMMI Levels 4 and 5
(Required Skills)
Process knowledge Side effects of

Process performance
register usage

Process variation 16
Pass 1
architecture
Can’t keep track
Number of Noncompliances

12 Actual Poor
UCL 14 Expected Can’t isolate documentation
10 95% limits
Register
12 allocation
Lack of defect
8 10 processor
_ knowledge
ESSENCE 6
X
8

6
Incorrect processor
register usage
OF 4
4
2 UCL 1
LEVELS 2
UCL 2
0
4 AND 5: 0

Projects Audited in First Quarter 1 2 3 4 5 6 7 7C 8B 8B 8C 8D 8F 20 21 22 23

LCL 2
LCL 1

Control Predict Improve

Level 4 Level 5
1) Project’s process capabilities based on process 1) Improvement goals based on future business
performance baselines needs
2) Control process variation (removing “assignable 2) Eliminate problem and defect causes
causes”) (“common causes”)
3) Predict results using process performance models 3) Select, predict, and measure improvements to
4) Manage to achieve goals change the process performance baselines
- Shift the mean; tighten the variance
4) Manage change

131
 What is Six Sigma??
Six Sigma: A best-in-class change strategy for accelerating
improvements in processes, products, and services
What Six Sigma is:
 Method/tools
 Mindset/way of thinking
 A way of doing business

132
6σ DMAIC Process
Develop Charter and
Institutionalize Improvement
Business Case
Control Deployment
Map Existing Process
Quantify Financial Results
Collect Voice of the
Present Final Project Results Customer
and Lessons Learned
Specify CTQs / Requirements
Close Project
Control Define

Improv Measur Measure CTQs / Requirements

Select Solution (Including e e
Trade Studies, Determine Process Stability
Cost/Benefit Analysis) Analyz
Determine Process Capability
e
Design Solution Calculate Baseline Sigma
Pilot Solution Refine Problem Statement
Implement Solution

Identify Root Causes

Quantify Root Causes
Verify Root Causes

DMAIC = Define, Measure, Analyze, Improve and Control

133
Aligning the 6σ DMAIC Process
with the CMMI
Improved
Capability Objectives
Improved
Processes Data
Control Define
Level 5 Level 4
Improving Improv Measur Establishing
e e
Capability Analyz
Capability
e
Root Baselines
Causes
Models
Problems
134
Aligning the 6σ DMAIC Process
with CMMI Practices for the
Project
6σ technologies QPM SP 1.1
Establish the
QPM SP 1.2
Compose the
(noted in Red) QPM SP 1.4 Project’s Defined Process
assist with these Manage Project Objectives
activities Performance
QPM SP 1.3
Select the Subprocesses
that Will Be Statistically
Managed
CAR SP 2.3
Record Data
Control Defin
Illustrated e

QPM
QPM SP 2.1
CAR

examples Select Measures and

Analytic Techniques
CAR SP 2.2 Improv Measur
Evaluate the Effect of e e
QPM SP 2.2
Changes Analyz Apply Statistical Methods
e to Understand Variation

CAR SP 2.1 QPM SP 2.3

Monitor Performance of
Implement the Action
the Selected
Proposals
Subprocesses
CAR SP 1.2 CAR SP 1.1 QPM SP 2.4
Analyze Causes Select Defect
Record Statistical
Data for Analyses
Management Data

135
Special Cause Analysis
(QPM SP 2.2)
Project proposal periods in both
charts had no assigned budgets.
These gaps show where this ‘special
cause’ data was removed as it did not
represent the Sys Eng process.

Example Data
System Engineering Cost System Engineering
data seems to vary Schedule data appears
normally in the period abnormal, and needs more
under study ‘special cause’ study.

136
Control Charts (QPM SP 2.3)

Tool: Minitab used across 6σ and CMMI projects

137
 CAR Watchlist (CAR SP 1.1)

Causal Analysis & Resolution (CAR) Watch ListSP 1.1aSP 1.1bSP 1.2aSP 1.2b SP 2.1 SP 2.2 SP 2.3

Final Resu lts

Defect Types

Implemented
Defect Data

Submitted
Disposition

Evaluated
Proposed
Gathered

Analyzed
Selected

Actions

Actions
Causes

Effects
Orig.
# Date Title Comments
1 1/10/03 Reliability Closed        6σ project done.
2 3/14/03 Test Planning Closed        6σ project done.
Collecting data from
3 2/18/03 Late CDRL Delivery Open      improved delivery
process.
4 8/24/03 SRS Requirements in Test Procedures Open  J ust starting

138
 CAR Worksheet (CAR SP 2.3)
C ausal An alysis & R esolution (C AR ) W o rksh eet
C A R ID EN TIFIC A TIO N

C AR Problem S hort Title S PR D efects

C AR Problem D escription Q uantity ofS PR sprevents working off enough

SP Rsbefore scheduled C M turnover • CAR briefing
P oint of Contact/Project P roject M anager template
W O R K ST EPS EV IDE N C E accompanies
S P 1.1a:G ather relevant problem d ata
SPR D efect_T ype field data this CAR
S P 1.1b :D eterm ine w h ich defects and worksheet
other problem s w ill be Pareto chart show ing distrib ution of SPR defect types counted
far, andsoshow ing
analyzed (pareto chart) “program m ing language m isuse” caused the m ajority
SPR s of • Can be used in
S P 1.2a:Analyze causes (Fishbone …Fishbone
) D iagram for “program m ing language m isuse”, showing
ning caused
Trai m ost of the lieu of a Six
costlySP Rs
• Procure advanced PL training
Sigma tollgate
S P 1.2b :P ropo se actions add ressing
root causes
• Increase m entoring SbyPM s briefing for
• Institute code inspections
CAR status
S P 2.1:Im plem ent action proposal(s)T raining bought from A bs SW C orp. 3/12/03

Proportion of
S PR swhich are “program m ing language m isuse” decreases 39% to 19%
• Organized by
S P 2.2:Evaluate effect of changes
(4/12/03) CAR specific
S P 2.3:Subm it final resu lts D ata sent to organization
practices
C A R ST A T ISTIC S
Actual H ours S pent 1300 hours

139
Six Sigma Training
 Excerpts from standard Green Belt Six Sigma training:
 Business Case development

 Voice of the Customer (Critical to Quality items)

 Basic Statistics and Sampling

 Data distributions
 Representative samples
 Patterns in Data – Variation

 Special vs common causes

 Stratification of data
 Run charts, control charts
 Organizing Causes

 Hypothesis Testing / Regression Analysis

Use of statistical analysis tools are included throughout this

training!

140
Using the Six Sigma
Fundamentals
 The fundamentals of Six Sigma can be used
without running a “formal” Six Sigma project
 Statistical analysis and control of Level 3 data
 Capability
 Statistical control
 Regression
 Improvement in “capability” can be identified
 Root cause analysis techniques can be applied
 Regression
 Fishbone diagrams
 Pareto analysis
 Affinity diagrams

141
The Bottom Line
 Northrop Grumman was able to accelerate
achievement of Levels 4 and 5 using Six Sigma
 Six Sigma training was essential to changing the
culture of process improvement
 Six Sigma methodology was institutionalized
 5 months after achieving their Level 3 rating,
Northrop Grumman achieved their Level 4 rating
 4 months after achieving their Level 4 rating,
Northrop Grumman achieved their Level 5 rating

142
Six Sigma for the Organizational
Process Areas

 Organizational Process Areas

 Level 4: Organizational Process Performance (OPP)
 Level 5: Organizational Innovation and Deployment (OID)
 The same Six Sigma methodology was used by
Northrop Grumman for the OPP and OID process
areas

143
SIX SIGMA – CASE STUDY
SERVICE ORGANISATION
Background

 M/s Alpha Inc. manages out bound cargo from

a distribution centre to different stores.
 Deliveries made on trucks - owned and hired.
 Customers dissatisfied at delivery schedules.
 Leadership decision to deploy Six Sigma;
 Team of 1 Black Belt and 3 Green Belts
formed
 Sponsor of the project – Distribution Manager

144
Achieving Performance Improvement in Service Organizations

The Recipe for Implementing Performance Improvement Efforts in Service

Organizations

QxA=E
Quality Acceptance Effective
Methodology And Support Results

Work-Out

145
 Define - Critical to Quality (CTQ)
 Focus on customers generating annual
revenue of USD 400,000/-.

Customer Improved delivery

needs performance
Level 1 CTQ Timely delivery
Level 2 CTQ On time delivery to schedule
Level 3 CTQ Delivery within +/- 1 hour of
scheduled delivery time
Current process sigma level - 2.43 or 175889 DPMO

146
 Define - Goal Statement

 Reduce number of delayed deliveries by

50 % by 31st December Y 2002 to
better meet customer requirement of
timely delivery defined as within +/- 1
hour of scheduled delivery.

147
 Define - Performance Standards
Output unit A scheduled delivery of freight
Output characteristic Timely delivery

Project Y measure Process starts when an order is received

Ends when goods are received & signed for at
customers desk.
Process measurement – Deviation from
scheduled delivery time in minutes.
Specification limits LSL = -60 minutes
USL= +60 minutes
Target Scheduled time or zero minutes deviation

Defect Delivery earlier or later than 1 hour.

No. of defect 1 opportunity for a defect per scheduled
opportunities per unit delivery of freight.

148
Define - SIPOC Diagram
Supplier Stores Manager

Input Stores Order

Process Steps (high Receive order
level) Plan delivery
Dispatch Driver with goods
Deliver goods to stores
Receive delivery

Output Received freight with Documents

Customer Store Manager

• Detailed process maps drawn

149
Measure and Analyze

 Driver and Distance identified as key

factors influencing delivery performance.
 Driver selected for focus.
 Potential root causes as to why Driver
influenced the time:
 Size of the vehicle
 Type of engine
 Type of tyres
 Fuel capacity

150
Improve
 Experiments designed and conducted
using truck type and tyre size.
 Findings:
 Larger tyres took longer time at certain
routes where area was cramped and time
lost in maneuvering.
 High incidence of tyre failures since tight
turns led to stress on tyres thus increasing
number of flat tyres.
 Team modified planning of dispatch
process by routing smaller trucks at
more restrictive areas.
151
Control
 Test implementation.
 Process sigma level up from 2.43 or
175889 DPMO to 3.94 or 7353 DPMO.
 Performance still fell short of best in class
4.32 or 2400 DPMO.
 Improvement led to significant customer
satisfaction.
 Process continually monitored and data on
new cycle times, tyre failure collected as
per defined methods and frequency,
analysed and monitored.
 Customer satisfaction measured and
monitored.
152
Key Lessons Learnt
 Define
 Difficulty in identifying the right project and
defining the scope;
 Difficulty in applying statistical parameters to
Voice of the Customers;
 Trouble with setting the right goals;
 Measure
 Inefficient data gathering;
 Lack of measures;
 Lack of speed in execution;

153
Key Lessons Learnt
 Analyse
 Challenge of identifying best practices

 Overuse of statistical tools/ under use of practical

knowledge
 Challenge of developing hypotheses

 Improve
 Challenge of developing ideas to remove root
causes
 Difficulty of implementing solutions

 Control
 Lack of follow up by Managers/ Process Owners

 Lack of continuous Voice of the Customer

feedback
 Failure to institutionalize continuous improvement.

154
 Key Lessons Learnt

 “ Define “ ranked most important step but gets

the lowest resource allocation
 Project scoping and its definition is critical to its
success/ failure;
 “Measure” is considered most difficult step and
also gets the highest resources

Source: Greenwich Associates Study Y 2002

155
What Makes Six Sigma Different?
 Versatile
 Breakthrough improvements
 Financial results focus
 Process focus
 Structured & disciplined problem solving
methodology using scientific tools and techniques
 Customer centered
 Involvement of leadership is mandatory.
 Training is mandatory;
 Action learning (25% class room, 75 %
application)
 Creating a dedicated organisation for problem
solving (85/50 Rule).

156
Benefits of Six Sigma

 Generates sustained success

 Sets performance goal for everyone
 Enhances value for customers;
 Accelerates rate of improvement;
 Promotes learning across boundaries;
 Executes strategic change

157
THE SIX SIGMA METRIC

158
Consider a 99% quality level

 5000 incorrect surgical operations per week!

 200,000 wrong drug prescriptions per year!
 2 crash landings at most major airports each
day!
 20,000 lost articles of mail per hour!

159
Not very satisfactory!

 Companies should strive for ‘Six Sigma’

quality levels
 A successful Six Sigma programme can
measure and improve quality levels across all
areas within a company to achieve ‘world
class’ status
 Six Sigma is a continuous improvement
cycle
160
Improvement cycle

 PDCA cycle

Plan

Act Do

Check

161
 Alternative interpretation
Prioritise (D)

Hold Measure (M)

gains (C)

Improve (I) Interpret

(D/M/A)
Problem (D/M/A)
solve
162
Statistical background

Some Key measure

Target = µ

163
Statistical background
‘Control’ limits

+/ − 3σ

Target = µ

164
 Statistical background
Required Tolerance

LSL USL
+/ − 3σ

Target = µ

165
 Statistical background

Tolerance

LSL USL
+/ − 3σ

Target = µ

+/ − 6σ

Six-Sigma
166
 Statistical background

Tolerance

LSL USL
+/ − 3σ

1350 1350
ppm ppm

Target = µ

+/ − 6σ

167
 Statistical background

Tolerance

LSL USL
+/ − 3σ

1350 1350
ppm ppm
0.001 0.001
ppm ppm

Target = µ

+/ − 6σ

168
Statistical background

 Six-Sigma allows for un-foreseen

‘problems’ and longer term issues when
calculating failure error or re-work
rates
 Allows for a process ‘shift’

169
 Statistical background

Tolerance
LSL USL
1.5σ

3.4 66803
0 ppm ppm ppm 3.4
ppm

+/ − 6σ

170
 Performance Standards

σ PPM Yield
2 308537 69.1%
3 66807 93.3%
4 6210 99.38% Current
Currentstandard
standard
5 233 99.977%
6 3.4 99.9997%
World
WorldClass
Class

Process
Process Defects
Defectsper
per Long
Longterm
term
performance
performance million
million yield
yield

171
 Performance standards

First Time Yield in multiple stage process

Number
Numberofofprocesses
processes 3σ
3σ 4σ
4σ 5σ
5σ 6σ
6σ
11 93.32
93.32 99.379
99.379 99.9767
99.9767 99.99966
99.99966
10
10 50.09
50.09 93.96
93.96 99.77
99.77 99.9966
99.9966
100
100 0.1
0.1 53.64
53.64 97.70
97.70 99.966
99.966
500
500 00 4.44
4.44 89.02
89.02 99.83
99.83
1000
1000 00 0.2
0.2 79.24
79.24 99.66
99.66
2000
2000 00 00 62.75
62.75 99.32
99.32
2955
2955 00 00 50.27
50.27 99.0
99.0

172
 Financial Aspects

Benefits of 6σ approach w.r.t. financials

σ-level Defect rate Costs of poor quality Status of the

(ppm) company
6 3.4 < 10% of turnover World class
5 233 10-15% of turnover
4 6210 15-20% of turnover Current standard
3 66807 20-30% of turnover
2 308537 30-40% of turnover Bankruptcy

173
SIX SIGMA AND OTHER
QUALITY PROGRAMMES

174
Comparing three recent
developments in “Quality
Management”
 ISO 9000 (-2000)
 EFQM Model

 Quality Improvement and Six

Sigma Programs

175
ISO 9000

 Proponents claim that ISO 9000 is a general

system for Quality Management
 In fact the application seems to involve
 an excessive emphasis on Quality Assurance, and
 standardization of already existing systems with
little attention to Quality Improvement
 It would have been better if improvement
efforts had preceded standardization

176
 Critique of ISO 9000
 Bureaucratic, large scale
 Focus on satisfying auditors, not customers
 Certification is the goal; the job is done when certified
 Little emphasis on improvement
 The return on investment is not transparent
 Main driver is:
 We need ISO 9000 to become a certified supplier,
 Not “we need to be the best and most cost effective supplier
to win our customer’s business”
 Corrupting influence on the quality profession

177
EFQM Model

 A tool for assessment: Can measure where we

are and how well we are doing
 Assessment is a small piece of the bigger
scheme of Quality Management:
 Planning
 Control
 Improvement
 EFQM provides a tool for assessment, but no
tools, training, concepts and managerial
approaches for improvement and planning

178
 The “Success” of Change
Programs?
“Performance improvement efforts …
have as much impact on
operational and financial results as a
ceremonial rain dance has on the weather”

Schaffer and Thomson,

Harvard Business Review (1992)

179
Change Management:
Two Alternative Approaches

Activity Centered
Programs
Change
Management
Result Oriented
Programs

Reference: Schaffer and Thomson, HBR, Jan-Feb. 1992

180
Activity Centered Programs
 Activity Centered Programs: The pursuit of
activities that sound good, but contribute little
to the bottom line
 Assumption: If we carry out enough of the
“right” activities, performance improvements
will follow
 This many people have been trained
 This many companies have been certified
 Bias Towards Orthodoxy: Weak or no
empirical evidence to assess the relationship
between efforts and results

181
An Alternative:
Result-Driven Improvement
Programs
 Result-Driven Programs: Focus on
achieving specific, measurable, operational
improvements within a few months
 Examples of specific measurable goals:
 Increase yield
 Reduce delivery time
 Increase inventory turns
 Improved customer satisfaction
 Reduce product development time

182
Result Oriented Programs

 Project based
 Experimental
 Guided by empirical evidence
 Measurable results
 Easier to assess cause and effect
 Cascading strategy

183
Why Transformation
Efforts Fail!
 John Kotter, Professor, Harvard Business
School
 Leading scholar on Change Management
 Lists 8 common errors in managing change,
two of which are:
• Not establishing a sense of urgency
• Not systematically planning for and
creating short term wins

184
Six Sigma Demystified*

Six Sigma is TQM in disguise, but this time

the focus is:

 Alignment of customers, strategy, process and

people
 Significant measurable business results
 Large scale deployment of advanced quality
and statistical tools
 Data based, quantitative

*Adapted from Zinkgraf (1999), Sigma Breakthrough

Technologies Inc., Austin, TX.

185
Keys to Success*

 Set clear expectations for results

 Measure the progress (metrics)
 Manage for results

*Adapted from Zinkgraf (1999), Sigma Breakthrough

Technologies Inc., Austin, TX.

186
SIX SIGMA TRAINING
PACKAGE

187
Aim of training package

To successfully integrate Six Sigma

methodology into Sauer Danfoss’ culture
and attain significant improvements in
quality, service and operational
performance

188
DMAIC

 Define
 Measure
 Analyze
 Improve
 Control

189
Six-Sigma - A “Roadmap” for improvement

Define Select a project

Measure Prepare for assimilating information

Analyze Characterise the current situation

Improve Optimize the process

Control Assure the improvements

DMAIC
190
Example of a Classic Training strategy

Define
Throughput
Throughputtime
timeproject
project
Measure
44months
months(full
(fulltime)
time)

Analyze

Training
Training(1
(1week)
week)
Improve
Work
Workononproject
project
(3
(3weeks)
weeks)
Control Review
Review

191
5 weeks of training
Define
Define

Measure
Measure

Analyze
Analyze

Improve
Improve

Control
Control

192
 Roadmap
Example Next Project Define
Customers, Value, Problem Statement Validate
Scope, Timeline, Team Project $
Celebrate Primary/Secondary & OpEx Metrics
Project $ Current Value Stream Map
Measure
Voice Of Customer (QFD)
Control Assess specification / Demand
Document process (WIs, Std Work) Measurement Capability (Gage R&R)
Mistake proof, TT sheet, CI List Correct the measurement system
Analyze change in metrics Process map, Spaghetti, Time obs.
Value Stream Review Measure OVs & IVs / Queues
Prepare final report

Validate
Project $
Validate
Project $

Improve Analyze (and fix the obvious)

Optimize KPOVs & test the KPIVs Root Cause (Pareto, C&E, brainstorm)
Redesign process, set pacemaker Find all KPOVs & KPIVs
Validate
5S, Cell design, MRS FMEA, DOE, critical Xs, VA/NVA
Project $
Visual controls Graphical Analysis, ANOVA
Value Stream Plan Future Value Stream Map

193
 Plan Execute
• Strategic Link to Business Plan defined in Project Selection Process
• Defined Business Impact with Op Ex Champion support
Identify • Structured Brainstorming at all organizational levels
Problem • Cause and Effect Diagrams identifying critical factors
• Primary and Secondary Metrics defined and charted
• Multi-Level Pareto Charts to confirm project focus

• Develop a focused Problem Statement and Objective

• Develop a Process Map and/or FMEA
Operational Excellence

Practical • Develop a Current State Map

Problem • Identify the response variable(s) and how to measure them
• Analyze measurement system capability
• Assess the specification (Is one in place? Is it the right one?)

• Characterize the response, look at the raw data

• Abnormal? Other Clues? Mean or Variance problem?
• Time Observation • Spaghetti Diagram • Takt Time
Problem
• Future State Maps • Percent Loading
Definition • Standard Work Combination
• Use Graphical Analysis, Multi-Vari, ANOVA and basic
statistical tools to identify the likely families of variability
Methodology

• Identify the likely X’s

• 5S • Set Up Time Reduction (SMED)
• Material Replenishment Systems
Problem • Level Loading / Line Leveling
Solution • Cell Design • Visual Controls
• Use Design of Experiments to find the critical few X’s
• Move the distribution; Shrink the spread; Confirm the results

• Mistake Proof the process (Poka-

Yoke) Problem
 What do you want to know?
Problem • Tolerance the process Solving
 How do you want to see what it is that you need
• Measure the final capability to know?
Control
• Place appropriate process controls on  What type of tool will generate what it is that you
need to see?
the critical X’s  What type of data is required of the selected tool?
Execute Plan
• Document the effort and results 194
 Where can you get the required type of data?
• Standard Work • TPM
Based in part on Six Sigma Methodology developed by GE Medical Systems and Six Sigma Academy, Inc. Co. Op. Ex. Methodology Originated by MBBs; D. Braasch, J. Davis, R. Duggins, J. O’Callaghan, R.
Crane
 Draft training schedule

J an 2003 Feb 2003 M ar 2003 A pr 2003 M ay 2003 Jun 2003 Jul 2003
N o. B la c k B e lt w o r k p a c k a g e ta s k s S ta r t E nd D u ra tio n
1 /5 1 /1 2 1 /1 9 1 /2 6 2 /2 2 /9 2 /1 6 2 /2 3 3 /2 3 /9 3 /1 6 3 /2 3 3 /3 0 4 /6 4 /1 3 4 /2 0 4 /2 7 5 /4 5 /1 1 5 /1 8 5 /2 5 6 /1 6 /8 6 /1 5 6 /2 2 6 /2 9 7 /6 7 /1 3 7 /2 0 7 /2 7

1 C h a m p io n s D a y 0 3 /0 2 /0 3 0 3 /0 2 /0 3 1d

2 In tia l 3 - d a y B la c k b e lt s e s s io n s 0 4 /0 2 /0 3 0 6 /0 2 /0 3 3d

3 A d m in is tr a tio n D a y 0 7 /0 2 /0 3 0 7 /0 2 /0 3 1d

4 P ro je c t s u p p o r t ( W o r k s h o p 1 ) 1 1 /0 2 /0 3 1 1 /0 2 /0 3 1d

B la c k B e lt tr a in in g ( M e a s u r e m e n t
5 1 7 /0 2 /0 3 2 1 /0 2 /0 3 1w
ph as e)

6 P ro je c t s u p p o r t ( W o r k s h o p 2 ) 2 5 /0 3 /0 3 2 5 /0 3 /0 3 1d

7 B la c k B e lt tr a in in g ( A n a ly s is p h a s e ) 1 4 /0 4 /0 3 1 8 /0 4 /0 3 1w

8 P ro je c t s u p p o r t ( W o r k s h o p 3 ) 0 6 /0 5 /0 3 0 6 /0 5 /0 3 1d

9 B la c k B e lt tr a in in g ( Im p r o ve m e n t p h a s e2)6 /0 5 /0 3 3 0 /0 5 /0 3 1w

1 0 P ro je c t s u p p o r t ( W o r k s h o p 4 ) 1 7 /0 6 /0 3 1 7 /0 6 /0 3 1d

1 1 B la c k B e lt tr a in in g ( C o n tr o l p h a s e ) 0 7 /0 7 /0 3 1 1 /0 7 /0 3 1w

1 2 P ro je c t s u p p o r t ( F o llo w u p ) 2 9 /0 7 /0 3 3 0 /0 7 /0 3 2d

195
Training programme delivery

 Lectures supported by appropriate technology

 Video case studies
 Games and simulations
 Experiments and workshops
 Exercises
 Defined projects
 Delegate presentations
 Homework!

196
Deployment (Define) phase
 Topics covered include

 Team Roles
 Presentation skills
 Project management skills
 Group techniques
 Quality
 Pitfalls to Quality Improvement projects
 Project strategies
 Minitab introduction

197
Measurement phase
 Topics covered include:

 Quality Tools
 Risk Assessment
 Measurements
 Capability & Performance
 Measurement Systems Analysis
 Quality Function Deployment
 FMEA

198
Example - QFD
 A method for meeting customer requirements
 Uses tools and techniques to set product strategies
 Displays requirements in matrix diagrams, including
‘House of Quality’
 Produces design initiatives to satisfy customer and
beat competitors

199
House Of Quality 5. Tradeoff
matrix

Importance 3. Product
characteristics

1. Customer 4. Relationship 2. Competitive

requirements matrix assessment

6. Technical assessment and

target values

200
QFD can reduce

 Lead-times - the time to market and time to

stable production

 Start-up costs

 Engineering changes

201
Analysis phase

 Topics include:

 Hypothesis testing
 Comparing samples
 Confidence Intervals
 Multi-Vari analysis
 ANOVA (Analysis of Variance)
 Regression

202
Improvement phase

 Topics include:

 History of Design of Experiments (DoE)

 DoE Pre-planning and Factors
 DoE Practical workshop
 DoE Analysis
 Response Surface Methodology (Optimisation)
 Lean Manufacturing

203
Example - Design of
Experiments

What can it do for you?

Minimum cost Maximum output

204
What does it involve?

 Brainstorming sessions to identify

important factors
 Conducting a few experimental trials
 Recognising significant factors which
influence a process
 Setting these factors to get maximum
output

205
Control phase

 Topics include:

 Control charts
 SPC case studies
 EWMA
 Poka-Yoke
 5S
 Reliability testing
 Business impact assessment
206
Example - SPC (Statistical Process
Control)

- reduces variability and keeps the process

Disturbed process

stable Natural process

Temporary
upsets
Natural boundary

Natural boundary
207
Results of SPC

 An improvement in the process

 Reduction in variation
 Better control over process
 Provides practical experience of collecting
useful information for analysis
 Hopefully some enthusiasm for
measurement!

208
Project support
 Initial ‘Black Belt’ projects will be considered in Week
1 by Executive management committee, ‘Champions’
and ‘Black Belt’ candidates

 Projects will be advanced significantly during the

training programme via:
 continuous application of newly acquired statistical
techniques
 workshops and on-going support from ISRU and CAMT
 delivery of regular project updates by ‘Black Belt’ candidates

209
 Project execution

Black
BlackBelt
Belt

Review
Review Training
Training

ISRU, ISRU
ISRU
ISRU,
Champion
Champion Application
Application

ISRU,
ISRU,
Champion
Champion
210
 Conducting projects

Traditional Six Sigma

-Project leader is obliged to -Black Belt is obliged to

make an effort. achieve financial results.
-Set of tools . -Well-structured method.
-Focus on technical knowledge. -Focus on experimentation.
-Project leader is left to his own -Black Belt is coached by
devices. champion.
-Results are fuzzy. -Results are quantified.
-Safe targets. -Stretched targets.
-Projects conducted “on the -Projects are top priority.
side”.

211
The right support
+
The right projects
+
The right people
+
The right tools
+
The right plan
=
The right results
212
Champions Role
• Communicate vision and progress

• Facilitate selecting projects and

people

• Track the progress of Black Belts

• Breakdown barriers for Black Belts

• Create supporting systems

213
Champions Role

• Measure and report Business

Impact

• Lead projects overall

• Overcome resistance to Change

• Encourage others to Follow

214
 Project selection

Define
Select:
- the project
- the process
- the Black Belt
- the potential savings
- time schedule
- team

215
 Project selection

Projects may be selected according to:

1. A complete list of requirements of customers.

2. A complete list of costs of poor quality.

3. A complete list of existing problems or targets.

4. Any sensible meaningful criteria

5. Usually improves bottom line - but exceptions

216
Key Quality Characteristics
“CTQs”

How will you measure them?

How often?
Who will measure?
Is the outcome critical or
important to results?

217
Outcome Examples

Reduce defective parts per

million
Increased capacity or yield
Improved quality
Reduced re-work or scrap
Faster throughput
218
Key Questions

Is this a new product - process?

Yes - then potential six-sigma
Do you know how best to run a
process?
No - then potential six-sigma

219
Key Criteria

Is the potential gain enough - e.g.

- saving > $50,000 per annum?
Can you do this within 3-4
months?
Will results be usable?
Is this the most important issue at
the moment?

220
Why is ISRU an effective Six
Sigma practitioner?

221
Six Sigma instructors (ISRU)
 Aim: Successfully integrate the Six Sigma
methodology into a company’s existing culture and
working practices
 Key traits
 Knowledge of statistical techniques
 Ability to manage projects and reach closure
 High level of analytical skills
 Ability to train, facilitate and lead teams to success,
‘soft skills’

222
ISRU program content
 Week 1 - Six Sigma introductory week (Deployment
phase)
 Weeks 2-5 - Main Black Belt training programme
 Week 2 - Measurement phase
 Week 3 - Analysis phase
 Week 4 - Improve phase
 Week 5 - Control phase
 Project support for Six Sigma Black Belt candidates
 Access to ISRU’s distance learning facility

223
 Reasons
 Because we are experts in the application of
industrial statistics and managing the
accompanying change
 We want to assist companies in improving
performance thus helping companies to
greater success
 We will act as mentors to staff embarking on
Six Sigma programmes

224
INDUSTRIAL STATISTICS
RESEARCH UNIT
At
School of Mechanical and Systems Engineering
University of Newcastle upon Tyne, England

225
Mission statement

"To promote the effective and

widespread use of statistical
methods throughout European
industry."

226
 The work we do can be
broken down into 3 main
categories:
 Consultancy
 Training
 Major Research Projects

All with the common goal of promoting quality

improvement by implementing statistical
techniques
227
Consultancy

We have long term one to one consultancies

with large and small companies, e.g.

 Transco
 Prescription Pricing Agency
 Silverlink

228
Training

In-House courses
 SPC
 QFD
 Design of Experiments
 Measurement Systems Analysis
On-Site courses
 As above, tailored courses to suit the company
 Six Sigma programmes

229
European projects

 The Unit has provided the statistical input into

many major European projects
Examples include -
 Use of sensory panels to assess butter quality

 Using water pressures to detect leaks

 Assessing steel rail reliability

 Testing fire-fighter’s boots for safety

230
European projects
 Eurostat - investigating the multi-dimensional aspects of
innovation using the Community Innovation Survey (CIS) II
- 17 major European countries involved -determining the
factors that influence innovation
 Certified Reference materials for assessing water quality -

validating EC Laboratories
 New project - ‘Effect on food of the taints

and odours in packaging materials’

231
Typical local projects
 Assessment of environmental risks in
chemical and process industries
 Introduction of statistical process control
(SPC) into a micro-electronics company
 Helping to develop a new catheter for
open-heart surgery via designed
experiments (DoE)
 ‘Restaurant of the Year’ & ‘Pub of the Year’
competitions!

232
Benefits

 Better monitoring of processes

 Better involvement of people

 Staff morale is raised

 Throughput is increased

 Profits go up

233
Examples of past successes

 Down time cut by 40% - Villa soft drinks

 Waste reduced by 50% - Many projects
 Stock holding levels halved - Many projects
 Material use optimised saving £150k pa -
Boots
 Expensive equipment shown to be
unnecessary - Wavin

234
Examples of past successes

 Faster Payment of Bills (cut by 30 days)

 Scrap rates cut by 80%
 New orders won (e.g £100,000 for an SME)
 Cutting stages from a process
 Reduction in materials use (Paper - Ink)

235
Distance Learning

 or Flexible training
 or Open Learning

 your time
 your place
 your study pattern
 your pace
236
Distance Learning
 http://www.ncl.ac.uk/blackboard
 Clear descriptions
 Step by step guidelines
 Case studies
 Web links, references
 Self assessment exercises in ‘Microsoft Excel’ and
‘Minitab’
 Help line and discussion forum
 Essentially a further learning resource for Six Sigma
tools and methodology

237
CASE STUDY

238
Case study: project selection
Savings:
-Savings on rework and scrap
Coffee -Water costs less than coffee
beans
Potential savings:
Roast
Roast 500 000 Euros

Cool
Cool

Grind
Grind
Moisture
Moisture
content
content
Pack
Pack

Sealed
coffee

239
Case study: project selection
Savings:
-Savings on rework and scrap
Coffee -Water costs less than coffee
beans
Potential savings:
Roast
Roast 500 000 Euros

Cool
Cool

Grind
Grind
Moisture
Moisture
content
content
Pack
Pack

Sealed
coffee

240
 Case study: Measure

1. Select the Critical to Quality (CTQ)

characteristic
2. Define performance standards
3. Validate measurement system

241
 Case study: Measure

1. CTQ

Moisture contents of
roasted coffee

2. Standards

- Unit: one batch

- Defect: Moisture% > 12.6%

242
Case study: Measure

3. Measurement reliability

Gauge
GaugeR&R
R&Rstudy
study

Measurement system too

unreliable!

So fix it!!

243
 Case study: Analyse

Analyse
4. Establish product capability
5. Define performance objectives
6. Identify influence factors

244
Improvement opportunities

USL
USL

USL
USL

245
 Diagnosis of problem

CTQ
CTQ

CTQ
CTQ

246
Discovery of causes

6. Identify factors
Man Machine Material
-Brainstorming
-Exploratory data analysis
Roasting
machines
Batch
size

Moisture%
Amount of Reliability Weather
added water of Quadra Beam conditions

Method Measure- Mother

ment Nature

247
Discovery of causes

Control chart for moisture%

248
 A case study
Potential influence factors

- Roasting machines (Nuisance variable)

- Weather conditions (Nuisance variable)
- Stagnations in the transport system (Disturbance)
- Batch size (Nuisance variable)
- Amount of added water (Control variable)

249
 Case study: Improve

Improve
7. Screen potential causes
8. Discover variable relationships
9. Establish operating tolerances

250
 Case study: Improve

7. Screen potential causes

- Relation between humidity and moisture% not

established
- Effect of stagnations confirmed
- Machine differences confirmed

8. Discover variable relationships

Design of Experiments (DoE)

251
 A case study: Experiment

Experiment:
Y: moisture%
X1: Water (liters)
X2: Batch size (kg)

252
 A case study

9. Establish operating tolerances

Feedback adjustments for influence of weather

conditions

253
A case study: feedback adjustments

Moisture% without adjustments

254
A case study: feedback adjustments

Moisture% with adjustments

255
 Case study: Control

Control
10. Validate measurement system (X’s)
11. Determine process capability
12. Implement process controls

256
 Results

Before

σ long-term = 0.532

Objective

σ long-term < 0.280

Result

σ long-term < 0.100

257
 Benefits

Benefits of this project

σ long-term < 0.100
Ppk = 1.5
This enables us to increase the mean to 12.1%

Per 0.1% coffee: 100 000 Euros saving

Benefits of this project:

1 100 000 Euros per year

Approved by controller 258

 Case study: control
12. Implement process controls

- SPC control loop

- Mistake proofing
- Control plan
- Audit schedule

Project closure

- Documentation of the results and data.

- Results are reported to involved persons.
- The follow-up is determined

259
Six Sigma approach to this project

- Step-by-step approach.
- Constant testing and double checking.
- No problem fixing, but: explanation → control.
- Interaction of technical knowledge and experimentation
methodology.
- Good research enables intelligent decision making.
- Knowing the financial impact made it easy to find priority for this
project.

260
Re-cap I!
 Structured approach – roadmap
 Systematic project-based improvement
 Plan for “quick wins”
 Find good initial projects - fast wins
 Publicise success
 Often and continually - blow that trumpet
 Use modern tools and methods
 Empirical evidence based improvement

261
Re-cap II!
 DMAIC is a basic ‘training’ structure
 Establish your resource structure
- Make sure you know where external help is
 Key ingredient is the support for projects
- It’s the project that ‘wins’ not the training itself
 Fit the training programme around the company
needs
- not the company around the training
 Embed the skills
- Everyone owns the successes

262
Who is the customer

 The person outside your company who

buys your product
 The person inside your company who uses
your product next
 Both

263
Voice of the Customer

 KOPV – is the voice of the customer

 If it is important to the customer it is a KOPV
 Appearance
 On time delivery
 Meet its requirements
 support

264
The Purpose of Business

 Take a product
 Perform your procedures on it
 Increase the value of the product
 Have a customer (internal or external) who is
willing to buy that increase value

265
Where did Six Sigma Begin
 Motorola made Quasar TVs in Chicago
 Lost money on every set that left the plant
 Problems with quality of sets
 Problems with worker motivation
 Sold Manufacturing plant to a Japanese firm
 Got workers involved in manufacturing process
 Reduce defect to 1/20 of former level
 Same plant, same workers
 Made big profits
 Motorola was embarrassed
 CEO swore never to let this happen again
 Started people on the path that became Six Sigma

266
GE gets into Six Sigma
 Under Jake Walsh GE starts to use Six Sigma
methods
 One of the biggest money savers was in reports.
 People went around and talked to managers about the
mountain of reports they got every month
 Found that only a few of the reports were actually used
 Eliminated unused reports
 Estimated savings about $1 billion per year

267
TQM
 Who remembers TQM
 It tended to be a top down system
 Upper management demanded better quality
from the people who worked for them
 Who remembers “Quality is our business”
 TQM tended to be short term attention
 As soon as quality problem solved move onto
next project
 Lack of follow up

268
Six Sigma is Long Term
 Get top management involved from the
beginning
 Clearly define the problem
 Measure performance
 Measure results of improvements
 Report on $$ saved by improvements
 Set up system to monitor results after project
is concluded

269
The Cost of Poor Quality
 Many companies operate at 3-4 σ levels
 25%-40% of revenue used for fixing defects
 Rework parts
 Sorting out defective parts
 Scrape
 Extra employees
 Most of these companies don’t realize what poor
quality is costing them
 Companies working at 6 σ level typically spend
5%

270
Probability and Central
Tendancy
 Typical show single
probability curve
 The central tendency
can shift from the
ideal position
 This increases the
area in the tail
regions which is a
measure of defects

271
Six Sigma Defects per Million

 Allow the central

tendency move by 1.5
standard deviations
either side of theoretical
perfection
 Page II-3

272
Defects per Million
Opportunities

 DPP – Defects per part

 DPP = defects / parts
 O – Number of opportunities for a defect per
part
 DPMO = DPP / O * 1,000,000

273
Six Sigma – 3.4 DPMO

 Achieving Six Sigma level is having 3.4

DPMO
 Measure defects at start of process
 Convert to σ level
 Measure defects after improvement
 Convert to σ level

274
Six Sigma is more than DPMO

 DPMO in manufacturing
 DFSS – Design for Six Sigma
 New process designed to meet Six Sigma from
the beginning
 Lean Manufacturing
 In general almost anything that
significantly improves profits

275
Punch Press Problem

 Bid on project based on 100 parts per minute

 Best they can achieve is 80 parts per minute
 They were going to loose a lot of money on the 3
year contract

276
 Hand placed

 The pieces over lap each other

 Must be precisely placed for
machine pickup at customer
 NO DEFECTS allowed in trays
277
80 Pieces Per Minute
 Punch press no defective parts
 Operators must untangle parts on round table
 Operators barely keep up with flow of parts
 Unstack tray for parts

278
 Process
Flowchart
P re lim ina ry F lo w cha rt - S ix S ig m a P ro je c t W a uco nd a To o l & E ng .
S a turd a y , Ja nua ry 7 ,2 0 0 6

10 20 30 40 50 60 70
P lac e 19 1) Tape box
L e a d F ra m e P ac k
Rec eive D eliver to Unpac k tray s per 2)P art on S k id
P a cka g in g S tage Tray s parts in
Tray s P res s Tray s box (54 3) A dd Control
F lo w Tray s
parts /tray tape

10 20 30 40 50

R etrieve D eliver 1) F eed c oil

S ta m p in g F eed c oil S tam p
c oil from tw o c oils 2) S tam p 3)
F lo w to pres s P arts
s toc k Coil to pres s Q A C hec k

10 20 30 40

1) Tape B ox
T e rm in a l Rec eive Deliver to B ulk
2) Color
P a cka g in g box es P res s P ac k
c ode Tape

Q uantity
b y P res s S end to
c ount S hipping

279
Things Under Consideration

 Process Issues
 Improving manual packing methods
 Un-stacking of delivered trays
 Running machine at 180 SPM
 maintain current quality
 Using 2 inch or 3 inch stroke press
 Staging and storage of trays
 Analyzing cost of materials

280
Change Packing
 Receive 1,000 trays to a box
 Hard to unpack from shipping box
 Trays cling together
 Must be separated without distorting box
 Come from Phoenix
 Send 16 trays out in special boxes
 Arrange for local manufacture of trays
 Receive in the same boxes used to ship product

281
Change Personnel Layout

 Tests showed that packers on linear

conveyor packed faster
 Parts did not stack on each other
Original personnel layout Improved personnel layout
2

3
2 3
1

4
1 4

282
Original Costs

80 Strokes/Minute Cost/K % TC
Material Cost $105.89
Scrap Reclaim -$57.94
Total Mat'l Cost $47.95 42.2%
Processing Cost $25.56 22.5%
Packaging Material $9.22 8.1%
Packaging Labor $23.11 20.4%
Set-up Cost $0.32 0.3%
Changeover Cost $0.32 0.3%
Die Maintenance Cost $7.05 6.2%

Total Cost $113.5280 100.0%

283
 Improved Costs

180 Strokes/Minute Cost/K % TC

Material Cost $105.89
Scrap Reclaim -$57.94
Total Mat'l Cost $47.95 48.3%
Processing Cost $11.36 11.4%
Packaging Material $9.22 9.3%
Packaging Labor $23.11 23.3%
Set-up Cost $0.32 0.3%
Changeover Cost $0.32 0.3%
Die Maintenance Cost $7.05 7.1%

Total Cost $99.3280 100.0%

284
Improved Profits

Total Cost w/ Recommended Changes $81.2680

Total Cost Now $113.5200
Savings per Thousand -$32.2520
Year 1 Savings (1.8M) -$60,311
Year 2 Savings (4.3M) -$154,165
Year 3 Savings (9.3M) -$300,589
Total Three Year Savings -$515,064

285
Some Keywords

 DMAIC
 Voice of the Customer
 KIPV
 KOPV
 DPMO

286
High Definition Television

287
HD TV on a computer
 ATI makes a HD tuner for PCI slot – HDTV
Wonder
 Works only with broadcast HD signal
 Minimum standards do not come close to
describing computer requirements
 Do not get without having AGP 8x or PCI
express slot
 Designed to be part of multi-media computer
 Has remote control, USB plug in receiver
288
Extreme Tech Comment
•The card itself features a Philips HDTV tuner box but ATI’s NXT2004
receiver chip does much of the heavy lifting.
•The NXT2004 VSB (vestigial sideband modulation)/QAM (quadrature
amplitude modulation) Receiver is designed for off-air and cable digital
television receivers, set-top boxes, PCDTV, and datacast applications
where cost, low power and industry-leading performance are a must.
•The NXT2004 Multimode VSB/QAM demodulator can work in either the
ATSC compliant 8 VSB mode for terrestrial broadcasting, or DICSIS-
compliant 64 QAM or 256 QAM modes for Digital TV-Cable Connect and
Digital TV Cable Interactive reception.
•However, in the HDTV Wonder product, the NXT2004 is set up only as a
70-channel off-the-air HDTV receiver

289
ATI HDTV Card

290
HDTV is not CPU hog

 2.8 G-Hz celeron

 768 Meg Ram
 7200 RPM HD
 No AGP
 No PCI express
 720P – black image
 1080i – black image
 Demand Direct X 9
 Plus more
291
ATI RADEON 9250 PCI

292
Things I have Learned
 If you go for HDTV Wonder you are still in the pioneer
era (arrows in the back)
 The card assumes you are creating a media
computer (rich set of software features)
 Remote control plus USB RF receiver
 Needs tweaking to start HD TV
 S video and component Video, left, right input
 Not every feature works as well as you would like
 TV directory
 Create DVD disk
 Keep it all ATI (HDTV and video card)
 Complaints about GE-Force video cards

293
And now to Robts

 There are children ready

robot projects
 No not the False Maria
 Based on BASIC Stamp
module

294
2 Robots
295
 BASIC Stamp
Serial Signal
Conditioning
Conditions voltage
signals between PC serial
connection (+/- 12V) and
BASIC Stamp (5V) for
5V Regulator
Programming.
Regulates voltage
to 5V with a supply of
EEPROM 5.5VDC to 15VDC
Stores the tokenized
PBASIC program. Resonator
Sets the speed at which
instructions are processed.

Interpreter Chip
Reads the BASIC
program from the
EEPROM and executes
the instructions.
296
 BASIC Stamp
Pin 1: SOUT
Transmits serial data during Pin 24: VIN
programming and using the Un-regulated
DEBUG instruction input voltage
Pin 23: VSS
(5.5-15V)
Pin 2: SIN Ground (0V)
Receives serial data during
programming
Pin 3: ATN
Uses the serial DTR line to
gain the Stamps attention Pin 21: VDD
for programming. P0 P15 Regulated
Pin 4: VSS P1 P14 5V.

Communications P2 P13
Ground (0V). P3 P12
P4 P11
Pins 5-20: P5 P10
Input/Output (I/O) P6 P9
pins P0 through P7 P8
P15 297
BOE BOT Box

298
Board of Education Robot – BOE
Bot

299
BOE BOT Circuit Board

300
 BOT
motherboard
The Board of Education makes it easy to
connect devices, power up and program.
5V
Battery regulator
Wall DC
Servo
Supply Connections
Power
Power On Header
Light
I/O Header
Breadboard
Serial
Programming Reset Switch
Port

Off/Module Power/Servo Power 301

Off/Module Power/Servo Power
 Programmin
 A program is
g
written
in the BASIC Stamp
Editor.
 The program is
tokenized,
or converted into
symbolic format. Tokenizer

 The tokenized program is

transmitted through the
serial cable and stored in
EEPROM memory.

 The Interpreter Chip

reads the program from
EEPROM and executes the
instructions.
302
Instructions

303
 Instruction
The FREQOUT command sends high/low signals to
the specified pin at the frequency and for the
duration defined.

FREQOUT Pin, Duration, Freq1, {Freq2}

To play a note at 2000Hz which lasts 1.5 seconds:

304
 Instructions

Outer Inner
Loop Loop

The inner loop is performed fully every

repetition of the outer loop.

305
 Instructions
When index = 0

306
 Instructions
When index = 1

307
 Instructions
Variable expression
to be checked

Conditions to check
expression against

If condition is true,
Code will be ran. If not,
it will be skipped

Each CASE
will be checked

Defines the end of the

SELECT…CASE block

308
Shows how resources are
used
 View
memory
 View
registers

309
BOE BOT Program
'Robotics with the Boe-Bot - BoeBotForwardTenSeconds.BS2
'Make the Boe Bot roll forward for 10 seconds

'{$STAMP BS2}
'{$PBASIC 2.5}

counter VAR Word

FREQOUT 4, 2000, 3000 'create sound

FOR counter = 1 TO 407 'forward 10 seconds

PULSOUT 13,850 'left wheel forward
PULSOUT 12,650 'right wheel forward
PAUSE 20
NEXT

END

310
SUMO BOT Box

311
SUMO BOT

312
Sumo Bot

313
SUMO BOT Circuit Board

314
SUMO Bot 2 CPU

 Motion uses PIC16C505

processor for wheels
 Simplifies motion commands
315
SUMO BOT Programming

 Simpler commands because of built in

functions
 Must include predefined constants

PAUSE 100
RobotData = RobotForward
GOSUB RobotSend

316
SUMO BOT Remote Control

317
Remote Control Details

318
Pretend it is like Sojourner

319
Where to go from here

320
Which Bot do you want
 BOE BOT
 More hardware assembly
 Must adjust software to hardware performance
 Comes with lots of extra parts
 More learning opportunities
 SUMO BOT
 Quick assembly
 Starts running immediately
 4 built in behaviors
 Remote control
 Kids like simpler requirements better

321
 SIX SIGMA EXAMPLE
Pizza Chain Missing Its Promise
If a pizza chain promises delivery in 30 minutes or the pizza is free, what is
the pizza delivery problem shown below?

Customer’s Pizza
D = 40 minutes

0 minutes 30 minutes 60 minutes

Delivery time

322
Six Sigma Example
After collecting additional data on the problem, the following histogram was
created. Now how would you solve the pizza delivery problem,
specifically:
1) What should the curve look like for these pizza outlets to be making
money?
2) Which variables do we need data on to understand the problem—ranked
in order of importance?

Exe 323
Six Sigma Example

Solutio
P
Solutio
324 Av
Customer-Based Metrics and Whitespace

 Lead Time L/T

 The time it takes one unit of production to move through a process or
value stream - start to finish
 Cycle Time C/T
 The time it takes to complete a sub-process or process within the value
stream - start to finish
 Value Creating Time VCT
 The time within a cycle where work is being done to create value to the
customer

L/T > C/T > VCT

325
Whitespace

 White Space is the time between process steps

 White Space represents the greatest opportunity for

improvement

 Reducing White Space is “neutral” to all parties

 Lead time improvement is best achieved through

managing white space

326
 Time = 0
Scott submits Travel
Expense form

Department Personnel
Process Form
Whitespace Example

Department Personnel
Inspect/Approve Form

Central Personnel
Process Form

Central Personnel
Inspect/Approve Form

Accounting Cuts
Check

Check Delivered or
Mailed to Scott

Scott Deposits Check

327
Time = 6 weeks
 Converse’s Observations on Successful Process Improvement
Initiatives
1. It’s a process problem not a people problem

2. Focus on the customer not the process

3. From problem to solution is more than 2 steps

4. Broken processes can’t be seen sitting at your office desk;

alk the process

1. Process problems speak out in the data;

nfortunately that
data isn’t usually
collected

1. Effective results require more than a solution;

t requires user
acceptance

1. Automation and technology are good but see #5

2. A focused, measurable problem goal is the light during a dark journey

328
 Content Covered in APR Process Improvement Training
Change Management Module
Stakeholder Analysis
Innovation and Value
Process Improvement Methodologies
Leadership Techniques
Group Dynamics
Force Field Analysis
Change Resistance Factors
Equity Analysis
Reward and Recognition Systems
Stress and Yerkes-Dodson Law
Learning Curves
Emotional Loss Models
Change Management Models
Campaign Strategy for Change
SC=CC+V+U+S+RR>BB
Define and Measure Module
Six Sigma Overview
Fathers of Quality Movement
Process vs People
COQ – Cost of Poor Quality
Sigma quality levels
TQM vs Six Sigma
Process Selection Matrix
Team Charters
Stretch Goals
VOC Analysis
Kano Model
CTQ Analysis
Affinity Diagrams
Flowcharting
Process Mapping
SIPOC Diagram
Value Analysis
Define and Measure Module (continued) Process Analysis Module (continued)
Performance Metrics Wait Time and Length Calculations
QFD Process Capability
Functional Activity Flowchart Customer Specification Limits
Ishikawa Diagrams Normal Distributions
Check Sheets Empirical Rule
Pareto Diagrams Shifting vs. Narrowing Process Curves
Multi-voting Lean Wastes
Fast cycle time analysis Standard Work
Traveler
Discrete and Continuous Measures Analyze, Improve, Control and Workout
Data Stratification Module
Gage R&R Root Cause Analysis
Variation Causal Analysis
Standard Deviation Five Why Technique
Central Tendency Measures OFAT Experimentation
Histograms DOE
Statistical Sampling Process Variation Analysis
Scatter Plots
Service, Time, and Queue Based Process Analysis Regression Analysis
Module Creativity Models
Service vs. Manufacturing Brainstorming Techniques
Variability Accommodation Design and Creativity Techniques
Planned Capacity Utilization Idea Generation
Throughput/Lead Time Analysis FMEA
L/T vs. C/T vs. VCT metrics Implementation Options
Batching Systems Run Charts
Push vs. Pull Demand Systems Common Cause vs Special Cause
Queuing Paths Control Limits vs Spec Limits
Customer Focused Time Based Metrics Control Charts
Six Sigma vs Lean Tools Standard Operating Procedures
Product Family Categorization Sustaining Gains
QxA=E Formula for Change Focused Workout Technique
Value Stream Mapping Nominal Group Technique
Service, Information, and Resource Channels Consensus Building
Queuing Theory Models
Server Capacity Utilization
329
 APR Six Sigma Projects
 Transferring Funds from Foundation to Department Accounts
 Checking vs Savings Account

 Cycle Time Reduction

 Accuracy, Float, Transparency

 Grant Award-Sub Award Process

 Access to IT Resources
 New Employee

 Transferring Employee

 Exiting Employee

330
Six Sigma Quality
Engineering

TEAM PROJECT
A PAPER HELICOPTER
EXPERIMENT

331
 Helicopter Paper Experiment

 Requirements –
1. 5x5 (5 space per inch) Quad Pad per team
2. 1 preferably 2 scissors per team
3. 1 stopwatch per team
 Purpose -
 To create, conduct, analyze, and draw conclusions in a 27-4 fractional
factorial DOE.
 Problem
 Currently, the factors that keep a Helicopter aloft as long as possible are
not well understood
 Objective
 To identify the factors and their respective effects that impact the length of
time the Helicopter stays aloft
 Metric
 Seconds aloft
 Start time – When the bottom of the helicopter is dropped from the top of the Flip
Chart
 Stop time – When the bottom of the helicopter touches the ground

332
Helicopter Paper Experiment
 Procedure
1. Create the Baseline Helicopter

Using the Quad paper supplied, create a baseline Helicopter as

shown below in the picture to the left. Shown below right is an
example schematic to create the baseline Helicopter. Use the grids
on the Quad paper as a means to quantify the length of the cuts and
folds. Your team can make any size Baseline Helicopter you
desire

• Cuts are made

on the solid
lines
• Folds are
made on the
dotted lines

333
 Helicopter Paper Experiment
 Procedure (cont’d)
2. Baseline Capability –
Using the top of the flip chart as a constant measure of height, drop the
baseline helicopter 50 times and determine the capability of this design.
Use 1.75 sec as a lower specification limit. The time will be measured from
using the Metric definition.
3. DoE -
Work with your team to determine 7 factors that you want to test in a 27-4
fractional factorial. Name your 7 Factors and quantify them based on the
number of grids. The grid size will be the smallest change you can make to
this process. The factors and levels you select can be anything you want
them to be, greater or smaller than your current baseline, or all of them
greater than, or smaller than the baseline.
4. Run three replicates of this DOE. (Technically, you would have to make a
new helicopter for each replicate, for this DOE make an helicopter for each
run of the single replicate and drop them in random order).
5. Analyze the results of the DOE and determine an optimal set of conditions
that provides improved capability.Using the optimal set of conditions, create
an helicopter, drop 50 times and measure the improved capability

334
 Helicopter Paper
Experiment
Report
Metrics: Primary & Secondary. Out

SIPOC: Identify Supplier Inputs Process Output Customer.

Process Map: Develop a process map of your Helicopter Paper Experiment and
identify the X’s, Y’s, and all possible noise variables (understanding and attempting
to control noise variables will be critical in this exercise).

Gage R&R: Repeatability & Reproducibility.

Capability Study: Cp & Cpk.

C&E Diagram: Fishbone Diagram

C&E Matrix: FMEA

335
 Helicopter Paper
Experiment
Report
DOE: Design Of Experiment:Out
 Output variable(s)
 Input variables
 Study design
 Procedures
 Results and Data analysis
 Conclusions

Capability Study of improved process: Cp & Cpk.

Control Phase: X-bar and R Control Chart.

Final Report: Project Conclusions.

336
Objectives
• Articulate the case for organizational
transformation in healthcare
• Acquire high-level understanding of Six Sigma
and related change management methods
• Learn from case study examples
• Know the keys to a successful deployment

337 2
338
The Need for Change in
Healthcare

339
A Perfect Storm
• Patient safety and quality
concerns
• Demographic changes
• Rapidly changing technologies
and treatment
• Digital transition
• Workforce issues
• Financial constraints
• Rising consumerism
• Un and Under-insured
• Leadership challenges

340
 Time cover story - May 1, 2006

Q: What Scares
Doctors?
A: Being the Patient
“To a large extent, health care systems were not designed
with any scientific approaches in mind. Too often there are
long waits, high levels of waste, frustration for patients
and clinicians alike, and unsafe care. A bold effort to
design health care scheduling systems, process flows,
safety procedures, and even physical space will pay off in
better, less expensive, safer experiences for patients and
staff alike.” – Don Berwick, IHI
341
The high cost of poor
quality:
• Along with human suffering, treating medical errors
New
such aspayment rulescome
hospital-acquired infections fromwith a high
financial cost.
CMS
• Roughly 1 in 10 Americans will acquire an infection as
a result of their hospital stay, and this stay will be
lengthened in order to provide appropriate treatment.
• Hospitals will no longer be reimbursed by CMS for
certain errors and the additional resources they
require.
 Change is imperative!

Centers for Medicare and Medicaid Services (CMS), HHS CMS-1533-FC, Medicare
Program; Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal
Year 2008 Rates.

342
Technology alone isn’t the answer…
Simply overlaying 21st century
technologies on top of 20th
century workflow will not yield
the necessary cost, quality and
efficiency benefits.

Hospitals must also redesign

processes and address the
human side of change.

343
Overcoming the barriers
1. Culture
• Overcome resistance
• Shape common goals
1. Alignment and accountability
• Ensure clear linkage between
improvement initiatives, performance and
strategic goals
• Develop consistent management
structure
1. Control
• Put mechanisms in place to monitor and
maintain results long-term
344
Getting there from here
• Transformation in healthcare won’t happen without
transparency.

• Transparency can’t happen without culture change.

• Culture change won’t happen without a bold vision, a common toolset
and unwavering commitment.

345
Six Sigma Background
and Basics

346
Where did Six Sigma
Come From?at Motorola in
• Initially developed
the 1980s to improve processes,
meet customer expectations and
maintain market leadership
• During the first five years, even suppliers were
required to participate in the process
• Six Sigma was adopted by Allied Signal and GE
and further developed into a true management
system
• Success led to global deployment across a variety
of companies and industries – including healthcare!

347
What does Six Sigma
mean?
The term “Sigma” is a measurement of


how far a given process deviates from

perfection – a measure of the number of ΖΖ BB DPMO
DPMO
“defects”. Six Sigma correlates to just 3.4 2 308,537
defects per million opportunities.
3 66,807
A quality improvement methodology that 4 6,210
applies statistics to measure and reduce 5 233
variation in processes. 6 3.4
A management system that is
comprehensive and flexible for achieving,
sustaining, and maximizing success.

348
Key Concepts
Critical to Quality (CTQ): Attributes most important to
the customer
Defect: Failing to deliver what the customer wants
Process Capability: What your process can deliver
Stable Operations: Ensuring consistent, predictable
processes to improve what the customer perceives

349
An Enabler for Cultural Change
 How does the customer view my process? Patient’s View
 What does the customer look at to measure of “Registration”
performance?

Registration

Time to Time to Lobby Walk to Procedure

drive to Park Car Time Procedure Time
facility Area

Hospital’s View
of “Registration”
Six Sigma illustrated
Target Customer
Specificatio
n BEFORE

3s
6.6% Defects
3s
w i d e v a r i a n c e

Target Customer
Specificatio
n
AFTER

6s
No Defects
6s
slim variance
Patients don’t feel the averages, they feel the
variability
351
How good are we today?

Statistically... Sigma
Level DPMO
Six Sigma refers to a 2 308,537
Goal
process that produces ~93.3%
3 66,807
only 3.4 Defects Per “Good”
4 6,210
Million Opportunities 5 233
99.99966%
6 3.4
“Good”

352
How good do we need to be?
The Classical View of Quality The Six Sigma View of Quality
“99% Good” (Z = 3.8σ ) “99.99966% Good” (Z = 6σ )

20,000 lost articles of mail per hour Seven lost articles of mail per hour

Unsafe drinking water almost One minute of unsafe drinking water

15 minutes each day every seven months

5,000 incorrect surgical operations 1.7 incorrect surgical operations

per week per week

2 short or long landings at most One short or long landing at most

major airports daily major airports every five years

200,000 wrong drug prescriptions 68 wrong drug prescriptions

each year each year

No electricity for almost One hour without electricity every

7 hours each month 34 years

353
 The DMAIC
Methodology
... define the problem, clarify
Define and relate it to the customer..,
CTQs

Practical ...measure your target metric

and know your measure is good...
Problem

Statistical …look for root causes and

Problem generate a prioritized listing of them.

Statistical ... determine and confirm the

Solution optimal solution ...

Practical …be sure the problem doesn’t

come back… sustain it
Solution

354
Sample fishbone diagram – poor x-ray quality
1. Form cross-functional team
2. Construct cause-and-effect
diagram, listing potential
causes on each branch
3. Prioritize causes on each
branch – select important
causes and ignore trivial ones
4. Conduct detailed analysis and
develop an action plan
5. Follow up until action is
completed and results are
verified
6. If results are unsatisfactory,
use statistical tools (such as
Regression Analysis) to further
analyze the problem

355
Key roles and
responsibilities
Champions/Sponsors: Trained business leaders who lead the
deployment of Six Sigma in a significant business area

Master Black Belts: Fully-trained quality leaders responsible for

Six Sigma strategy, training, mentoring, deployment and results
Black Belts: Fully-trained Six Sigma experts who lead
improvement teams, work projects across the business
and mentor Green Belts
Green Belts: Fully-trained individuals who apply
Six Sigma skills to projects in their job areas
Team Members: Individuals who
receive specific Six Sigma training
and who support projects in their
areas

356
Translating Goals into Results
The Big Ys

Clinical excellence
Patient safety
Financial results ALL DRIVEN BY

Patient satisfaction
PROCESSES
Physician/staff
satisfaction
Community service

357
Linking Projects to Healthcare “Y”s
World Class Excellent Top Financial
CTQ’s Team
Clinical Quality Growth
Service Performance

Quality Patient Flow Wait

Measures Reimbursement Productivity Times/Delays

Core Measures
Performance Accuracy of Nursing Discharge
(CHF) Documentation Lab TAT
Patient Info Process

Communication Medical Pain ICU

of Quality-Public Necessity Management Throughput Radiology TAT
Validation

Certifications/ On Base Appropriate

Accreditations Implementation Placement PACU/ED
POS Admit to Bed
Collections

ICU Clinical Cath Lab

Effectiveness Scheduling
Patient System
Classification
Process
Reconciliation Reduce FPC
of Patient No Shows
Medicine

358
 Perioperative Service Needs
Performance Critical Project
Metrics Factors Solutions
Core Business
• Preop delays • Lean Preop Process
Metrics • Surgeon NA • Staffing/anesthesia time
First Case Start
• Anesthesia NA • Preference Cards
Time • Equipment/ • Equipment
Supplies NA replenishment

•Work-Out: Work
Room • Staff roles Process, Roles,
• Quality Turnover Time • Setup/Cleanup Responsibilities,
process Communication
• Capacity • Communication •Kaizan Event: TAT
• Net Revenue
• Block Time • Level Loading Blocks/
Room Allocation/Util Cases across days/time
• Case Time Alloc by clinical service
Utilization
• Add-on Mgmt • Match sched to staffing
• Scheduling Guidelines • New guidelines: Add-ons

• Anesthesia Time • Process for identifying,

Patient Safety
• Right Side reporting, taking
• Instrument Counts corrective action

359
The Ultimate Goal

Outcome Becoming a Better Healthcare Provider

Performance Excellence
Patient Patient Physician – Community Financial
Safety Satisfaction Staff Relationship Viability
Satisfaction

Business Hospital Clinical

Processes Management Care
Processes Processes

Tools Projects and Work-Outs

It’s really not about projects – they are a means to an end!

In simple terms…

• Listen to the customer

• Define their expectations
• Measure how many times we get it wrong
• Fix it
• Prove the fix is real and meaningful
• Make it stick !!!!!

361
Related Methodologies and
Change Management
Techniques

362
 Large scale
improvements
require precise
coordination and a
common 62% of initiatives fail due to lack
“cadence” of leadership commitment

to advance
smoothly

363
Change Acceleration Process
(CAP) Leading Change
Creating a Shared Need
Shaping a Vision

Mobilizing Commitment
Current Transition Improved
State State State
Making Change Last

Monitoring Progress

Changing Systems & Structures

364
 Stakeholder Analysis
Change Acceleration Process
Stakeholder Analysis
Names Strongly Moderately Neutral Moderately Strongly
Against Against Supportive Supportive

Dr. XYZ  x
Influence
loop 
Dr. R

Steps: 1. Brainstorm key stakeholders by name

Plot where individuals currently are with regard to desired chan ge ( √ = current).
2. Plot where individuals need at the minimum level to be (X = desi red) in order to
successfully accomplish desired change -identify gaps between current and desired.
3. Indicate how individuals are linked to each other, draw lines to indicate an influence link
using an arrow (  ) to indicate who influences whom.
r 3/96 4. Plan action steps for closing gaps with influence strategy.
UCSS 36

365
Exercise: Stakeholder
Analysis
Take home assignment for your current project:


1. Brainstorm key stakeholders by name

2. Plot where individuals currently are with regard to desired
change ( = current).
3. Plot where individuals need to be at the minimum level (X =
desired) in order to successfully accomplish desired
change-identify gaps between current and desired.
4. Indicate how individuals are linked to each other, draw lines
to indicate an influence link, using an arrow to indicate who
influences whom.
5. Plan action steps for closing gaps with influence strategy.

366
 Change Acceleration Process
Stakeholder Analysis
Names Strongly Moderately Neutral Moderately Strongly
Against Against Supportive Supportive

Steps: 1. Brainstorm key stakeholders by name

Plot where individuals currently are with regard to desired chan ge ( √ = current).
2. Plot where individuals need at the minimum level to be (X = desi red) in order to
successfully accomplish desired change -identify gaps between current and desired.
3. Indicate how individuals are linked to each other, draw lines to indicate an influence link
using an arrow (  ) to indicate who influences whom.
r 3/96 4. Plan action steps for closing gaps with influence strategy.
UCSS 36

367
Work-Out
Typical Session
Ground Rules, Brainstorm
Kick-Off Introductions, Issues/Barriers
Roles, etc
Define the Problem

Mission

Categorize Define “Headers” Prioritize

Categories Brainstorm
Issues/Barriers for Categories
Potential Solutions

s
2 10 9 4 6

te
vo

Assess Develop Share Report-Out

Potential Solutions Action Plans Action Plans Action Plans

What: Who: When: Resources

Pay-off

368
What is Lean?
 The relentless pursuit of the perfect process through waste
elimination…

We Spend 75-95% of Our Time Doing

Things That Increase Our Costs and
Create No Value for the Customer!

In healthcare, Lean is about shortening the time between the patient entering and
leaving a care facility by eliminating all non-value added time, motion, and steps.
 Lean Thinking Process
The 5 steps to Lean Thinking …
2
Define value from the customer’s Map the Map all of the steps…value added
perspective and express value in
1 Value Stream & non-value added…that bring a
terms of a specific product product of service to the customer
Specify Value

The complete elimination of 3

waste so all activities create Establish
value for the customer 5
Work to Flow
Perfection
The continuous movement of
products, services and information
from end to end through the process
4
Implement
Nothing is done by the upstream process until Pull
the downstream customer signals the need

What are your customers willing to pay for?

370
Project funnel and tool selection
Best practice, patient satisfaction
Voice of results, benchmarks, suggestions,
Customer complaints

Inefficient processes, waits, rework,

Opportunities errors, substandard performance

Scoping How do you know you have a problem?

Low
Hanging Is data available?
Fruit
Projects What is expected performance or CTQ’s?

What is payback/benefits of project?

Priority
Setting Do you have the appropriate sponsor?
Mgmt
Engineering Work-Out
Study
Six
Lean Sigma
Tool
Selection DMAIC CQI
CAP
Team

371
Synergistic Tools and Processes
 Change Acceleration Process (CAP) –
a process that proactively plans for
change acceptance for successful
implementation
 Work-Out - a process that promotes
rapid problem solving via involvement
and accountability
 Lean - an improvement methodology
focused on eliminating waste through
detailed analysis of workflow in relation
to time
 Six Sigma – an improvement
methodology
driven by the statistical analysis of data
to identify causes of unwanted variation 372
Healthcare Case Study
Examples

373
Healthcare Project Examples
•Improving process/safety for medication administration
•Reduction in Blood Stream Infections in ICU
•Reducing ventilator acquired pneumonia
•Emergency Department Patient Wait Time
•Improved Patient Throughput in Radiology
•Reduction in Lost Films
•MR Exam Scheduling Improvement
•Staff Recruitment and Retention
•Operating Room Case Cart Accuracy
•Physician (Professional Fee) Billing Accuracy
•Appointment Backlog for Hospital-Based Orthopedic Clinic
•Quality of Care and Satisfaction of Families in Newborn ICU
374
Pioneers in Six Sigma for
HealthcareIn March 1998, John C. Desmarais,
Commonwealth Health Corporation's
President and Chief Executive Officer,
introduced CHC to Six Sigma, a quality
initiative program developed by Motorola
and perfected by General Electric.
• By the end of 2001, over 2000 employees had attended at
least one full day of Six Sigma awareness training,
• Initial projects generated annualized savings of $276,188 in
billing, decreased annual radiology expenses by $595,296,
and reduced errors in the MR ordering process by 90%.
• Within 18 months, CHC had increased efficiency, improved
the patient experience, eliminated over $800,000 in costs
and reenergized the culture.
375
Commonwealth Health Corporation web site – www.chc.net
Case Study: Improving ED Throughput
Project
ProjectTitle:
Title:ED
EDThroughput
Throughput Project
ProjectScope:
Scope:
InInScope
Scope- -Treat
TreattotoStreet
Streetpts,
pts,Staffing
Staffingpatterns
patterns(ED
(EDMDs
MDs
&&RNs), Equip’t, FTEs, Registration, Lab, X-R.
RNs), Equip’t, FTEs, Registration, Lab, X-R.
Out
OutofofScope
Scope- -ED
EDAdmits,
Admits,ED
EDHold
HoldHours,
Hours,Bed
BedControl,
Control,
Housekeeping, Transport to Floor, MR, US, CT, Pharm.
Housekeeping, Transport to Floor, MR, US, CT, Pharm.

Customer(s):
Customer(s):
Patients,
Patients,Physicians
Physicians
Potential
PotentialBenefits:
Benefits:
• • Decrease LWBS
Decrease LWBS
• • Increase patient satisfaction (Press Ganey #s)
Increase patient satisfaction (Press Ganey #s)
• • Reduce ED LOS (Soft Dollars)
Project
ProjectDescription
Description::
Reduce ED LOS (Soft Dollars)
PS
PS- -Moving
Moving“Treat-to-Street”
“Treat-to-Street”patients
patientsthrough
throughthe
theED
ED
takes too long. PD - One-third of our patients wait
takes too long. PD - One-third of our patients wait
longer
longerthan
than60
60minutes
minutestotobe
beseen
seenby
byaaphysician.
physician.
Alignment
Alignmentwith
withStrategic
StrategicPlan:
Plan:
• • Customer Service
Customer Service
• • Growth
Growth
• • Efficiency
Efficiency

376
 Measure

What
Whatis
isthe
theRight
RightYY(CTQ)
(CTQ)to
toMeasure?
Measure? How
Howwill
willititbe
bemeasured?
measured?
Y = Door to Doc Time. From the time a patient enters through the door until the physician
Y = Door to Doc Time. From the time a patient enters through the door until the physician
enters
entersthe
theexam
examroom
roomto
toassess
assessthe
thepatient,
patient,measured
measuredininminutes.
minutes.

What
Whatis
isour
ourgoal?
goal?
We
Wewill
willimprove
improvethe
theaverage
averageED
EDThroughput
ThroughputTime
Timefor forTreat
Treatand
andStreet
StreetPatients
Patientsby
by40%.
40%.
This will reduce the weighted average Door-to-Doc time from 65 minutes to 40 minutes.
This will reduce the weighted average Door-to-Doc time from 65 minutes to 40 minutes.
We will improve our throughput yield of patients seeing a physician within 60 minutes
We will improve our throughput yield of patients seeing a physician within 60 minutes
(USL)
(USL)from
from67%
67%current
currentto
to80%.
80%. This
Thisreduction
reductionininour
ourdefect
defectrate
rateof
of13%
13%represents
representsover
over
7,500 customers.
7,500 customers.

What
Whatare
arethe
thespecification
specificationlimits?
limits?(LSL,
(LSL,USL)
USL) What
Whatis
isthe
theTarget?
Target?
Based
Basedupon
uponour
ourVOC
VOCdata,
data,we
wehave
haveset
setaaUSL
USLof
of60
60minutes
minutesand
andaaTarget
TargetMean
Meanof
of40
40
minutes.
minutes.

377
 Analyze

Value
ValueStream
StreamMap
MapOpportunities
Opportunitiesfor
forPerformance
PerformanceImprovements:
Improvements:
Door-to-Doc Subcycle Triage
Fax
EKG, Draw
Blood, UA,
X-Ray – written
Front Order X-Ray, In ED report/
administer Pain ED
Desk / QR med
2- RNs Portable
1 Tech
Team Area

Lab
ED Call critical
Waiting values
Patient Room Treatment
Flow
People Tube/bloo
Flow (RN, d
E-Info
MD, etc.)
Flow MD
Other
Flow
Phone
(blood, Arr QR QR Triage Triage Bed Bed MD
Call
etc.)
Patient Wait 6.3 min 11.6 min 23.5 min 22.9 min
Time
Current Average Cycle Times

378
 Analyze
Statistical
StatisticalAnalysis
Analysis

Door-to-Doc Causes (Xs)

Hypothetical
Measurements Materials People Driver (X)

Statistically

G
en

A
Proven (X)

cu
M

de
M
W

Triage Sheets
in

ge

it
Sh

on
Da

ee

y
Patient Attributes
ut

if

th
es

ys

ks
ts

Time

Re
g
Re
Q

ist
uic
Chart

ra
A

k
P

r
Registration
ss

hy
Pa

si

H
tie

c ia

ci

yp
an
n

te

er
t

C
Satisfaction

ion

ha
ria
ED

rg
(F

ge
Bed Available

e
T

in
Nurses
ra

In

an
vi
LWBS
ck

c
si Nurses

e)
in

on
Physicians
g

Software

Ex
Re

pe
Census

rie
ve

Sp
n
nu

ee
RO

Sk

ce
os
e

il

d
Financial Metrics Supplies Associate Attributes
I
t

Door-to-Doc

Triage Level

Co
pie
Fa
X-

Office Equipt

r
La

Ra
b

y
X
Ra
La
Pa

Ancillary Svcs Pyxis

b

y
tte

Le
ve
rn
s

ls

Staffing
Da

EKG
y
Sh

of

Transportation
ift

W
D

ee
ay

Computers (screens)
im

k
Q

e
H
M

ua

fW
ol

of
on

rt

id
er

ee

D
th

ay

ay
ly

k
ly

Seasonality Advanced Triage Dynamap

Environment Methods Machines

379
 Analyze

What
WhatX’s
X’s(inputs)
(inputs)are
arecausing
causingmost
mostof
ofour
ourvariation?
variation?
Results
Resultsfor:
for: Historical
HistoricalDOE
DOEDoor
DoortotoDoctor
DoctorTime
Time
Factorial
Factorial Fit: D2D versus Express Care, X-Ray,Bed
Fit: D2D versus Express Care, X-Ray, BedOpen`
Open`

Estimated Effects and Coefficients for D2D (coded units)

Term Effect Coef SE Coef T P
Constant 87.34 2.547 34.30 0.000
Express Care 35.56 17.78 2.547 6.98 0.000
X-Ray 36.06 18.03 2.547 7.08 0.000
Bed Open -37.81 -18.91 2.547 -7.42 0.000
Express Care*X-Ray 33.69 16.84 2.547 6.61 0.000
Express Care*Bed Open 32.56 16.28 2.547 6.39 0.000
X-Ray*Bed Open 14.06 7.03 2.547 2.76 0.025
Express Care*X-Ray*Bed Open 5.19 2.59 2.547 1.02 0.338
S = 10.1865 R-Sq = 96.87% R-Sq(adj) = 94.12%

Analysis of Variance for D2D (coded units)

Source DF Seq SS Adj SS Adj MS F P
Main Effects 3 15979.9 15979.9 5326.6 51.33 0.000
2-Way Interactions 3 9571.7 9571.7 3190.6 30.75 0.000
3-Way Interactions 1 107.6 107.6 107.6 1.04 0.338
Residual Error 8 830.1 830.1 103.8
Pure Error 8 830.1 830.1 103.8
Total 15 26489.4

380
 
What
Whatdo
dowe
wewant
wantto
toknow?
know?
Improve 
Screen
ScreenPotential
PotentialCauses?
Causes?

Discover
DiscoverVariable
VariableRelationships?
Relationships?

Establish
EstablishOperating
OperatingTolerances?
Tolerances?

What
WhatX’s
X’s(inputs)
(inputs)have
havewe
wechosen
chosento
toimprove?
improve?
1.1. Bed
BedAvailability
Availability
––The
TheMeasure
MeasurePhase
Phasedata
datademonstrated
demonstratedthat
thatDoor-to-Doctor
Door-to-Doctortime
timeincreased
increasedby
bytwo
twoto
to
three times when there is no bed open for the patient.
three times when there is no bed open for the patient.
1.1. Ancillary
AncillaryServices
Services
––The
Thedata
datafurther
furthershowed
showedthatthatthe
thetime
timeitittakes
takesto
toperform
performan
anX-Ray
X-Rayor
orLab
Labtesting
testingisis
statistically
statisticallysignificant
significantininrelation
relationto
toDoor-to-Doctor
Door-to-Doctortime.
time.
3.3. Express
ExpressCare
Care
––Lower
Loweracuity
acuitypatients
patients(i.e.
(i.e.Level
Level33/ /Express
ExpressCare)
Care)wait
waitlonger
longerto
tosee
seeaaphysician
physicianthan
than
do higher acuity patients (i.e. Level 1).
do higher acuity patients (i.e. Level 1).

381
 Improve

Value
ValueStream
StreamMap
MapKey
KeyPoints
Points/ /Opportunities
Opportunitiesfor
forImprovement:
Improvement:
Bedside Registration
Triage
EKG, Draw
Registration Non-value
Non-valueadded
Blood, UA,
Front Order X-Ray, added
Desk / QR
administer Pain
med
If rooms ful step removed
step removed
may reg pt
2- RNs
while
1 Tech
waiting.

ED
Waiting
Patient Room
Flow
People
Flow (RN,
Impacts:
MD, etc.)
1 – Inc. Patient Satisfaction
E-Info 2 – Red. time by 8.7 minutes
Flow
Patient Wait
3 – Red. variability in process
Time

382
 Improve

What
Whatisisthe
themean
meanand
andmedian
medianof
ofour
ourprocess?
process? What
Whatisisthe
thestandard
standard
deviation?
deviation?
Measure
MeasurePhase
Phase Control
ControlPhase
Phase +∆
+∆ %%
Mean score 64.3
Mean score 64.3minutes
minutes 39.8
39.8minutes
minutes 38.1%
38.1%
Median 38.5 minutes 34.0 minutes 11.7%
Median 38.5 minutes 34.0 minutes 11.7%
Standard
StandardDeviation
Deviation 44.7
44.7minutes
minutes 27.7
27.7minutes
minutes 38.0%
38.0%
HI/LO 241
HI/LO 241 / 11 minutes
/ 11 minutes 129
129 / 4minutes
/ 4 minutes 46.5%
46.5%(HI;
(HI;outliers)
outliers)
Range 230 minutes 125 minutes 45.7%
Range 230 minutes 125 minutes 45.7%

What
Whatis
isour
ourprocess
processcapability
capability(Z
(Zscore,
score,DPMO,
DPMO,Yield
Yield%)?
%)?
ZZShort-Term
Short-TermScore
Score== 1.91σ
1.91σ 2.35σ
2.35σ 0.44σ
0.44σ
DPMO = 333,333 175,000 <109,523>
DPMO = 333,333 175,000 <109,523>
Yield
Yield%%== 66.7%
66.7% 82.5%
82.5% 15.8%
15.8%

383
 Control

What
Whatare
areour
ourfinancial
financialresults?
results? How
Howwere
werethey
theycalculated?
calculated?
Our
OurFinancial
FinancialImpact
Impactisis$1,120,650
$1,120,650and
andreflects
reflectsthe
theimprovement
improvementininLWBS
LWBSvisits
visitsand
andthe
the
corresponding admissions as well as a conservative (5%) recognition as a result
corresponding admissions as well as a conservative (5%) recognition as a result of of
throughput
throughputimprovement.
improvement.

What
Whatisisthe
theplan
planfor
formonitoring/
monitoring/auditing
auditingthe
theprocess?
process? What
Whatis
isthe
theControl
Control
Plan?
Plan?

T a rg e t M e a su re m e n t U p p e r/ L o w e r C o n tro l R e sp o n si b i lity
M e tric V a lu e s M e a su re m e n t D e fin itio n M e th o d S p e c L im i ts M e th o d F re q u e n c (W y h o w i ll m e a su re ) A le rt F la g s
Tim e b e g in s w h e n a p a t ie n t
c ro s s e s t h e re a c h e s Q u ic k Tw o o u t o f t h re e w e e k s w
R e g is tra tio n . Th is tim e is 8 0 % o f p a tie n t s a re n o t s
< 6 0 m in u t ecso; m p le te d w h e n a p h y s ic ia n D a s h b o a rd ; b y a p h y s ic ia n w ith in 6 0
D o o r t o D o c to r Tim
Y ieeld = 8 0 %g re e t s t h e p a tie n t a t th e b eMd saidn ue a. l - C D R WU eSbL = 6 0 m in u tXb
e s a r-R C h aW rt e e k ly M . K e lly -N ic h o ls m in u te s .
P a t ie n t le a ve s th e E D a fte r a t
le a s t c o m p le tin g t h e Q u ic k R e g
p ro c e s s b u t b e fo re p h y s ic iaAnu to m a te d - U S L = 1 .0 % o f D a s h b o a rd ; Tw o o u t o f t h re e w e e k s w
LW B S % < 1.0% p e rfo rm s e x a m in a tio n . E D Tra c k in g E D vis its Xb a r-R C h aW rt e e k ly M . K e lly -N ic h o ls L W B S % e x c e e d s 1 . 0 %

384
Case Study: Linen Utilization
Project
ProjectTitle:
Title:Linen
LinenUtilization
Utilization

Project
ProjectDescription:
Description: ToToIdentify
Identify
opportunities
opportunitieswithin
withinthe
theorganization
organization
which
whichallows
allowsfor
forbetter
betterlinen
linenutilization
utilization
without
withoutcompromising
compromisingquality
qualityororpatient
patient
care.
care.

Problem
ProblemStatement:
Statement: Currently,
Currently,our
ourlinen
linenusage
usage
isishigher
higher than what is expected for a facilityof
than what is expected for a facility of
our
oursize
sizeand
andacuity
acuitylevel.
level. We
Weneed
needto tolook
lookfor
for
ways to better utilize our daily linen supply
ways to better utilize our daily linen supply and and
lower
lowerour
ouroverall
overallpounds
poundsperperpatient
patientday
dayasaswell
well
as our cost per patient day.
as our cost per patient day.

Project
ProjectScope:
Scope: The
Theuse
useof
oflinen
linenfor
forinpatients.
inpatients.

385
What
Whatis
isthe
theRight
RightYY(CTQ)
(CTQ)to
toMeasure?
Measure? How
Howwill
willititbe
bemeasured?
measured?
YY==Pounds
PoundsPer
PerPatient
PatientDay
Dayof
ofLinen
LinenUsed
Used
Pounds
PoundsPer
PerPatient
PatientDay
Dayof
ofLinen
LinenUsed
UsedbybyService
ServiceLine
Line

What
Whatare
arethe
thedata
datasources?
sources? How
Howwill
willthe
thedata
databe
becollected?
collected?
Data
DataSources
Sourcesinclude
includethe
theLinen
LinenDistribution
DistributionProgram
Programcurrently
currentlyin
inplace,
place,as
as
well
wellas
asnational
nationalbenchmark
benchmarkdata.
data.

What
Whatisisour
ourgoal?
goal?
To
Toreduce
reducethe
theoverall
overalllinen
linenutilization
utilizationto
tobetween
between14
14and
and16
16pounds
poundsper
per
patient
patientday.
day.

386
High Level Process Map

Step 1 Step 2 Step 3 Step 4

Inventory of linen Linen order for the Linen is received Exchange carts
is taken in Linen next day is placed the following from previous day
room. with Tartan. morning. are filled.

Step 7 Step 6 Step 5

Secondary Linen carts are Linen re-stock
deliveries are made exchanged for amounts are
to units as required those already on recorded in Textile
at 12 hour mark. Nursing Units. tracking program.

387
What
Whatisisaadefect,
defect,unit,
unit,opportunity?
opportunity?
Defects=
Defects=Missed
MissedDelivery
Deliveryand
andStock
StockOuts,
Outs, and
andany
anyreading
reading<14
<14or
or>18
>18lbs
lbs
per
perpatient
patientday
day
Units
Units==Pounds
Poundsper perPatient
PatientDay
Day
Opportunity
Opportunity==monthly
monthlydatadataper
perunit
unit

What
Whatare
arethe
thespecification
specificationlimits?
limits?(LSL,
(LSL,USL)
USL)
LSL=
LSL=14
14Pounds
Poundsper
perPatient
PatientDay
DayAverage
Average
USL=
USL=18
18Pounds
Poundsper
perPatient
PatientDay
DayAverage
Average

What
WhatX’s
X’s(inputs)
(inputs)are
arecausing
causingmost
mostof
ofour
ourvariation?
variation?
Usage
Usagevariations,
variations,training,
training,old
oldbehaviors.
behaviors.

388
Graphical Analysis
21
Linen Usage by Unit
August 2003

8
.0

.8
19

18
19

1
.4
7

17
.0
17
2

17
.3
16

8
.3
15

.4
15

14
2
.6

5
4

.3
.3

.3
13
.2

.2

.2

13

13

13
13

13

13
Pounds

13
7

7
.7

.7

7
.5
10

10

.3
3

11

10
.1

10
92
10
66

9.
9.
02

74
9.
63
9.

8.
9
8.

04
8.

5
8 S L&D 7 North 7 South 6 North 6 South 5 North 5 South 4 North 4 South CCU CSU ICU GSH
Rehab SNF Resp. Onc CVDOU DOU AVG
Unit

Avg. lbs/PD National Avg.

389
 Linen Pounds
Per patient Day

22

20

Ancillary Areas,
$138,000.00
18
Pounds per Patient Day

Scrubs, $125,000.00

16 Patient Linen, $771,000.00

20.75 20.9
20.37 20.17
19.76 19.79 19.89
19.42 19.47
18.7
14
17.17 17.1 17.3 17.3
17.01
16.44
16.1 16.1

Patient Linen Scrubs Ancillary Areas

12

10
2

03
2

3
2
02

3
2

2
2

03

03
02

03
2

3
-0
l-0

l-0
-0
-0

-0

-0

-0
-0

-0

-0
-0

-0
n-

b-

n-
-

p-

p-
ov
ug

ug
ec
ct
n
ay

ay
pr

pr
ar

ar
Ju

Ju
Ja

Fe
Ju

Ju
Se

Se
O
A

A
M

M
A

A
Month

390
 Control Chart- Pounds Per Patient Day
1 2
23
22
Indiv idual Value 21
20
19
18 UCL=18.28
17 Mean=16.81
16
LCL=15.35
15

Subgroup 0 10 20

1 2
3
Mov ing Range

2
UCL=1.802

1
R=0.5514
0 LCL=0

Achieved
Achievedgoal
goalof
of14
14Pounds
PoundsperperPatient
PatientDay.
Day. Education
Educationand
andfocus
focuson
onScrubs,
Scrubs,
and ancillary usage will contribute to maintaining this goal.
and ancillary usage will contribute to maintaining this goal.

391
What
Whatare
areour
ourfinancial
financialresults?
results?How
Howwere
werethey
theycalculated?
calculated?

Our
OurPer
PerPatient
PatientDay
Daycosts
costsfor
forlinen
linenhave
havedecreased
decreasedby
by20%
20%over
over2002.
2002. From
From
an
anaverage
averageof
of20lbs
20lbsto
toan
anaverage
averageof of16lbs.
16lbs.

What
Whatis
isthe
theWWW
WWW(Who-What-When)
(Who-What-When)plan planfor
forturning
turningthe
theproject
projectover
overto
tothe
the
process
processowner?
owner?What
Whatisisthe
theplan
planfor
formonitoring/auditing
monitoring/auditingthetheprocess?
process?

The
Theprocess
processisisaapermanent
permanentone
oneand
andwill
willbe
betracked
trackedthrough
throughreports
reportsgiven
givento
to
the
theunits,
units,Executive
ExecutiveSponsor,
Sponsor,and
andthe
theLinen
LinenUtilization
UtilizationCommittee.
Committee.

The
TheLinen
LinenUtilization
UtilizationCommittee
Committeewill
willoversee
overseethe
theprocess
processand
andprogress.
progress.

392
 Case Study: Supply Chain
Improvement
 Customer Need… Process Improvement to Reduce Cos
 Four hospital system enjoying 50% market
share
 Materials management improvements
needed to leverage economies of scale,
utilize best practices, and prevent
inefficiencies:
 Pricing structure for orthopedic implants
Barry D. Brown Health Education
highly variable
Center at Virtua West Jersey Hospital
 Inconsistent orthopedic implant utilization
Voorhees
 Deficiencies in OR charge master capture

 Gap in OR supplies between what patient

pays vs. what hospital is charged

 OR “on hand” inventory management

needed

393
Reduce Costs
Solutions…
• Orthopedic Implant Pricing Cap… Determined
actual versus lowest and average prices to
establish a fair cap price.
• Orthopedic Implant Demand Matching…
Examined 132 medical records and compared
implants used against widely accepted
industry criteria for implant selection by
orthopedist
• Charge Master Review… Reviewed OR charge
master systems and identified opportunities
for improvement and standardization
• Price Point Reduction… Identified price
reduction opportunities
• OR Inventory Reduction… HISI contracted to
conduct physical inventories in four ORs and
two surgical centers
394
Improve Quality
Sustainable Results With Bottom Line Impac
Results
• Project results along with data shifted purchases to a primary
orthopedic implant vendor, savings of $159,000 were attained.
• Annual savings of $239,400 through demand matching template
at all hospital sites that do hip and knee replacement surgery.
• Patient billing data review in FY2000 indicated potential loss of
greater than $200,000 annually due to missing charges, much of
which was rectified with the corrections in the current charge
masters.
• Project savings attained totaled $63,845 plus shared savings
with orthopedic cap project.
• Conservative inventory reduction by facility: Facility A $187k,
Facility B $92k, Facility C $47k, and Facility D $18k. Represents
an 8% reduction of the $4.1MM of baseline inventory on hand.

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The Big “Why”

Achieving 35% higher Shorter ED wait

Better patient safety
“take home baby” times allow 28 more
with 91% improvement
rate with increase in in post-surgery patients per day to
successful antibiotic use, be seen, with
implantation at delivering annual potential financial
hospital in Northeast savings over $1 million impact over $13
at hospital in Southeast million annually at
hospital in Southern
California
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Culture Change
Think about it….
Are the mission, vision and values of your health system merely bullet points on a
web site, or are they clearly understood and activated across the organization?
Are people empowered to drive change and accountable for results?

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Keys to implementing Six Sigma in healthcare
• Gain leadership support and don’t skimp on planning!
• Identify opportunities and define the value proposition
• Ensure strategic alignment with organizational objectives and
incentives
• Develop a business case, identify team leaders and build a plan for
deployment
• Establish measurements and evaluate performance
• Manage change through ongoing communication efforts
• Monitor results and sustain improvement through review and
recognition
…and network with others who have
embarked on similar initiatives!
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