Slide 1:1 Six Sigma – A Strategy for Achieving World Class Performance


Purpose of Presentation :2 Purpose of Presentation Share concepts and application of Six Sigma with a case study; Deployment of Six Sigma as a strategy to achieve World Class Performance; Integration of Six Sigma with EFQM framework; Lessons Learnt


World Class Performance :3 World Class Performance Source: The Six Sigma Way by Peter Pande and Others


What is Six Sigma ? :4 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 What is Six Sigma ?


Six Sigma Definitions :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.


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Bank of America – SS Experience :7 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


Bank of America – SS Experience :8 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


Bank of America – SS Experience :9 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


Slide 10:10 High Level Business Metrics Operating Level Metrics Revenue Capital Utilization Return on Assets Profits Quote Time Defect Rate Waste 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


Who is Implementing Six Sigma :11 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.


Six Sigma Results :12 Six Sigma Results 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.


Six Sigma Project Methodology :13 Six Sigma Project Methodology


Six Sigma – Case Study Service Organisation :14 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


Define - Critical to Quality (CTQ) :15 Define - Critical to Quality (CTQ) Focus on customers generating annual revenue of USD 400,000/-. Current process sigma level - 2.43 or 175889 DPMO


Define - Goal Statement :16 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.


Define - Performance Standards :17 Define - Performance Standards


Define - SIPOC Diagram :18 Define - SIPOC Diagram Detailed process maps drawn


Measure and Analyze :19 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


Improve :20 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. Improve


Control :21 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. Control


Key Lessons Learnt :22 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;


Key Lessons Learnt :23 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.


Key Lessons Learnt :24 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


What Makes Six Sigma Different? :25 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). What Makes Six Sigma Different?


Benefits of Six Sigma :26 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


Slide 27:27 Thank you