Six Sigma

INTRODUCTION
What is Six Sigma?

 Introduced to Motorolla by Bill Smith “Father of Six Sigma.

 A philosophy for systematically improving quality, and
therefore efficiency.
 A performance goal, representing 3.4 defects for every
million opportunities i.e A standard of performance equal
to 3.4 defects per million outputs (i.e. near perfection).
 A series of tools and methods used to improve or design
products, processes, and/or services.
 A statistical measure indicating the number of standard
deviations within customer expectations.
 The philosophy and methods used to eliminate defects in
their products and processes.
 It allows managers to readily describe the performance
of a process in terms of variability and to compare
different processes using a common metric.
 This metric is Defects per million opportunities
(DPMO).
 It requires 3 data:
- Unit: The item produced or being serviced.
- Defect: Any item or event that does not meet the
customer’s requirements.
- Opportunity: A chance for a defect to occur.
DPMO: No. of defects X 10,00,000
No. of opportunities for error per unit x No. of units
Example
 The customers of a mortgage bank expect to have their
mortgage applications processed within 10 days of
filing. Suppose all defects are counted, and it is
determined that there are 150 loans in the 1000
applications processed last month that don’t meet this
customer requirement.
 DPMO = 150/ 1000 X 1000,000
 150,000 loans out of every million processed that fail to
meet customer requirement.
 Statistically 15% of the loans are defective and 85% are
correct
Six Sigma is a …
• Degree of variation;
• Level of performance in terms of 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

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 Sigma is a measure
of variation
(the data spread)

μ
What does variation mean?
20

 Variation means that a 15

process does not produce 10

the same result (the “Y”) 5

every time. 0

-5

 Some variation will exist in

-10

all processes.

 Variation directly affects customer experiences.

Measuring Process Performance

The pizza delivery example

 Customers want their pizza
delivered fast!

 Guarantee = “30 minutes or less”

 What if we measured performance and found an

average delivery time of 23.5 minutes?
– On-time performance is great, right?
– Our customers must be happy with us, right?
How often are we delivering on time?
Answer: Look at the variation!

30 min. or less

20 x
 Managing by the average doesn’t tell the whole story. The average
0 10 30 40 50
and the variation together show what’s happening.
Reduce Variation to Improve Performance
How many standard deviations can you “fit” within
customer expectations?
30 min. or less

20 x
 Sigma level measures how often we meet (or fail to meet) the
0 10 30 40 50
requirement(s) of our customer(s).
Managing Up the Sigma Scale

Sigma % Good % Bad DPMO

1 30.9% 69.1% 691,462
2 69.1% 30.9% 308,538
3 93.3% 6.7% 66,807
4 99.38% 0.62% 6,210
5 99.977% 0.023% 233
6 99.9997% 0.00034% 3.4
 - Defect rate Costs of poor Status of the
level (dpm) quality company
6 3.4 < 10% of turnover World class

5 233 10-15% of turnover Current

4 6210 15-20% of turnover Standard

3 66807 20-30% of turnover

2 308537 30-40% of turnover Bankruptcy
Examples of the Sigma Scale
In a world at 3 sigma. . . In a world at 6 sigma. . .

 There are 964 flight  1 flight is cancelled every 3

cancellations per day. weeks.

 The police make 7 false arrests  There are fewer than 4 false
every 4 minutes. arrests per month.

 5,390 newborns are dropped  1 newborn is dropped every 4

each year. years.

 In one hour, 47,283  It would take more than

international long distance calls 2 years to see the same number
are accidentally disconnected. of dropped international calls.
• 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.

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 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.
 Where can Six Sigma be applied?

Service
Design
Management

Purchase

Administration Applications
Production

IT
Quality
Depart
HRM M&S
Six Sigma Companies
Methodology & Tools
DMAIC – The Improvement Methodology

Define Measure Analyze Improve Control

Objective: Objective: Objective: Objective: Objective:
DEFINE the MEASURE ANALYZE the IMPROVE the CONTROL the
opportunity current root causes of process to process
or type of performance problems eliminate root to sustain the
product / & compare causes gains
service
Key Define Key Measure Key Analyze Key Improve Key Control
Tools: Tools: Tools: Tools: Tools:
• Cost of Poor • Six Sigma • Pareto • To-Be • Action
Quality analysis Process Plan(s)
• Voice of the • Cause-effect Map(s)
Stakeholder Diagram • PDCA cycle
• As-Is Process • Mean Median
Map(s) Mode
Problem Identification
“If it ain’t broke, why fix it”
“This is the way we’ve always done it…”
 What is the problem? The “problem” is the Output
 Who are the stake holders / decision makers

S ta k e h o ld e r s Voice of the
Stakeholder

 As-Is Process: How does our existing process work?

 What is the cost of this problem ?
COPQ - The cost involved in fulfilling the gap between the
desired and actual product/service quality. It also includes
the cost of lost opportunity due to the loss of resources
used in rectifying the defect.
Customer Requirements
What motivates the customer?
Voice of the Customer Key Customer Issue Critical to Quality

SECONDARY RESEARCH

Industry
Benchmarking

Customer Customer
Service Correspondence

PRIMARY RESEARCH

Obser-
Focus Groups vations
Define
 Identify customers and their priorities
 Identify a project suitable for 6 sigma efforts
based on business objectives as well as
customer needs and feedback
 Identify CTQ (critical to quality characteristics)
that the customer considers to have the most
impact on quality
B. Measure

Baselines and Capability

What is our current level of performance?
 Current Process actuals to be measured against the
Customer expectation
 Frequency of defects

Six Sigma
 Determine how to measure the process and how it is
performing.
 Identify the key internal processes and measure the defects
currently generated relative to those processes.
C. Analyze
Potential Root Causes & Validated Root Causes

What affects our process?

What are the key root causes?
Why, where & when do defects occur ?
Pareto Chart for Txfr Defects
Ishikawa Diagram
(Fishbone)
100 100

80

Percent
60

Count
50
40

20

0 0

Defect
Count 79 17 4
Percent 79.0 17.0 4.0
Cum % 79.0 96.0 100.0

Address the causes, not the symptoms.

D. Improve
Potential Solutions
How can we address the root causes we identified?
(Brainstorming)
Solution Selection
How do we choose the best solution?
Implement possible solution on small scale, test basis.
Solution Quality
Right Wrong
Solution
Implementation

Implementation
Good

Nice
☺ Try Plan

Nice
X
Bad

Idea
Time Cost

Identify means to remove the causes of defects.

Modify the process to stay within an acceptable range.
E. Control – Sustainable Benefits
How do we “hold the gains” of our new process ?
To ensure that improvements are maintained:

 Some variation is normal and OK

 Pre-plan approach

 Determine how to maintain the improvements.

 Put tools in place that key variables remain within
the maximum acceptance ranges under the modified
process.
DFSS – The Design Methodology

Design for Six Sigma

Define Measure Analyze Develop Verify

Roles & Responsibilities
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!
Champions or ‘Enablers’

 Who champion Six Sigma projects

 Take responsibility for Six Sigma implementation

across the organization in an integrated manner.
 Act as mentors to Black Belts and orchestrate their
work.
 Focus on identifying projects/functions for Six Sigma
 Provide Black Belts.
Role

• Measure and report Business Impact

• Lead projects overall

• Overcome resistance to Change

• Encourage others to Follow

Black Belts
 Six Sigma practitioners who are employed by the company
using the Six Sigma methodology.
 Identified by champions
 Act as in-house coaches on Six Sigma.
 They operate under champions and guide Green Belts.
 Become recognized ‘Black Belts’ after embarking on Six
Sigma training program and completion of at least two
projects which have a significant impact on the ‘bottom-line’.
 Work full time on the implementation of problem solving &
statistical techniques through projects selected on business
needs.
 They primarily focus on Six Sigma project execution.
Green Belts

 Employees who take up Six Sigma implementation along

with their other job responsibilities, operating under the
guidance of Black Belts

 May lead smaller improvement projects within Business

Unit(s)

 Bring knowledge of Six Sigma concepts & tools to their

respective job function(s)

 Undergo 8-11 days of training over 3-6 months

 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
Six Sigma In
Healthcare
 Quality of care has become an increasingly more
important metric. Because the care the industry
produces continues to vary, Six Sigma has grown to
play a larger role.
 The importance of controlling and limiting variance in
healthcare is compounded by the fact that failure to do
so could led to misdiagnosis, malpractice suits and even
death.
 Accountability coupled with the timely recognition and
resolution of errors increases the desire of managers to
implement a Six Sigma program.
How Six Sigma Can Help?
 In Healthcare, the delivery of care is largely a human process,
and the causes of variability are often more subtle and difficult to
quantify.
 Six Sigma could help the healthcare industry deal with its over
utilization and insufficient capacity, by creating measures that
reduce waste, improve outcomes and decrease the cost of poor
quality.
 Healthcare costs can be categorized into three groups: process
costs, costs of quality and costs of poor quality (which make up
67%, 13% and 20% respectively).
 Aggressive Six Sigma programs can help to redesign processes
to limit the costs of poor quality while improving the patient
experience, thus helping to recover some of the costs of poor
quality.
 Six Sigma Application

All or Nothing vs. Contingency

 All or Nothing means that the company either fully
commits to Six Sigma or else it shouldn’t bother
- It offers greater rewards
- But it comes at the cost of greater risk
 Contingency
- Allows a company to tailor its’ own solutions
- If done half-hazard, it can cause more harm than good
 How It Works

Project types

 Patient Satisfaction
 Safety
 Efficiency
 Outcomes
 Many Others
Patient Satisfaction:

 In Healthcare most the time people aren’t really happy

to be in the hospital. It is a rough hoe to row to delight
customers.
 A project example: Room service.
 There is an increasing trend in hospitals to offer room
service, and Six Sigma could be used by a company to
verify the viability and importance of offering it in a
hospital that currently doesn’t.
Safety:

All projects performed to enhance patient safety.

– Provide leadership: Make patient safety a top
priority and make it everyone’s responsibility.
– Avoid reliance on vigilance and memory.
– Promote effective team functioning: People who
must work together should be trained together.
– Anticipate the unexpected: be proactive.
– Create a learning environment: ensure no reprisals
for reporting errors.
 Efficiency:
Doing more with less, eliminating waste, taking out
unnecessary redundancy.
e.g. Improving turnover times in an ED.
 Outcomes:
Projects that improve processes to allow for quicker healing,
or decrease the percent of reoccurrences.
e.g. Testing a protocol to see if it improves clinical outcomes.
 Many Others:
These were just some general ideas for projects but managers
can find projects that incorporate all these project types or are
more unique in nature.
How It Works

Performance Variables

 Patient Satisfaction
 Service Level
 Service Cost
 Clinical Excellence
 Patient Satisfaction:
Can be verified through customer feedback mechanisms. The
analysis of this variable can include survey responses and
focus groups.
(Also managers may consider Physician and employee
satisfaction because they influence patient satisfaction.)
 Service Level:
This variable should be defined with help from the customer;
to see what they consider the varying levels of service to be.
Then a capability analysis can be preformed to see what
changes can be made to the steps of care that are
encompassed in the larger project.
 Service Cost: being able to itemize and understand
the average cost per procedure; and calculating
employee productivity. This is accomplished through
financial analysis.

 Clinical Excellence: is researching outcomes to

ensure the effectiveness of processes and procedures.
Like, measuring how long it takes to administer
critical care in emergencies. Management can get help
identifying working in collaboration with medical
staff.
How It Works

Physician Engagement

 Why it is essential
 Why so hard to get
– Think differently
– Increases burdens
 How to gain
 Why is it essential ?

Only a handful of process changes can be fully

optimized without physician engagement, and
active management of the role of physicians may be
one of the most vital tasks of senior leaders.
 Why so hard to get ?

Physicians are often biased to think using more resources

produce the best outcomes
• Think differently: Doctors often don’t understand
systems thinking, or process improvement. Physician's
are trained to give directions, so it is hard for them to
work in a team with people they view as subordinates.
• Increases burdens: Process changes can add to the
already heavy load of doctors. Many times they have
no vested interests in saving the hospital money. Often
times what can mean better processes for the hospital
can increase complexity for physician’s practice.
 How to gain:

Educate the physicians so they can understand why

changes are being made.
Seek to build trust, to decrease the combative element
between administrators and doctors.
Seek win-win project where both can benefit, and when
not possible provide a quid pro quo allowing for
concessions to be made to the physician for
cooperation or consider other incentives.
How is 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
 Creating a dedicated organization for problem
solving.
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 LEAN v/s SIX SIGMA

 Lean and Six Sigma are both planned change initiatives

with objectives to reduce or eliminate waste.
 Six Sigma may be a program but lean is a philosophy.
 Six Sigma uses a methodology called DMAIC
(determine, measure, analyse, implement, and control)
to identify and eliminate waste. As a philosophy, lean is
all about continuous improvement through the
elimination of waste.
People
 Six Sigma is about exclusion. A Six Sigma team is
identified for a specific area or project.
 Lean is inclusive. Lean teaches us that success is
achieved when the entire value stream improves, not
when one discrete element of it does.

Improvement philosophy
 Six Sigma is aimed at specific targets in the value
stream.
 Lean is all about continuous improvement. The
philosophy says there will always be waste to be
extracted from the value stream.
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

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CONCLUSION
The right support
+
The right projects
+
The right people
+
The right tools
+
The right plan
=
The right results