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INTRODUCTION TO SIX SIGMA

A. OBJECTIVES
B. SIX SIGMA OVERVIEW
C. CUSTOMER FOCUS
D. VARIATION IS THE ENEMY
E. BUSINESS METRICS
F. INTEGRATION OF LEAN
THINKING & SIX SIGMA
G. BASIC SIX SIGMA CONCEPTS
AND TOOLS
H. ISO 9000/SIX SIGMA SYNERGY

1-1

OBJECTIVES
Background and fundamentals of Six Sigma.
Identify customer needs in measurable outcomes.
How our companys value system is an indicator of its
performance improvement.
Need to focus on process input, not process output.
Variation is the main reason for process performance.
How measurement of quality is related to process
improvement.
Basic Six Sigma concepts and tools.

1-2

SIX SIGMA OVERVIEW


To thrive in todays marketplace,
organizations must continually improve
their products and services to meet the
ever-changing needs and expectations
of the customer.
This dynamic business environment
places a premium on innovation and
creativity, making it critical to
continually raise the bar on company
performance.
1-3

SIX SIGMA OVERVIEW

6
Our customers demand quality and QUALITY is our
strongest defense against the competition and the straightest
path to sustained growth and performance.
The evolution to a higher standard of improvement is made
possible by the concepts and practices of Six Sigma.

1-4

WHAT IS SIX SIGMA?


To understand what Six Sigma is, lets begin with a lesson in
elementary physics:
nd
The
2
The 2ndLaw
Lawof
ofThermodynamics
Thermodynamicsstates
statesthat
thatEntropy,
Entropy,or
or
deterioration,
deterioration,is
isconstantly
constantlyincreasing
increasingin
inall
allsystems.
systems.

When applied to Mfg. and Services, this means that right after a
process is stabilized (or optimized), entropy immediately goes to
work to make it unstable the process is subjected to a
ceaseless barrage of variation.

1-5

The TUNE UP Principle

1-6

SIX SIGMA
Six Sigma is a metric, a problem solving methodology
and set of tools.
Six Sigma is a total business philosophy that Epic has
embraced.
We must reflect on how the values/philosophies of Six
Sigma is different from beliefs, values and priorities
emphasized within Epic.
Those things truly valued within Epic are the things that
drive everyones behavior.
It is vital that every Epic employee understand the
values and philosophy of Six Sigma.

1-7

BACKGROUND OF SIX SIGMA


Developed by the Motorola Corporation in the 1980s in
response to increasing competitive pressures from
Japan and chronic deficiencies in product quality.
Resulted in a culture of quality that permeated the
organization and led to a period of unprecedented
growth and sales.
Embraced by the likes of GE, Honeywell, Dupont, IBM,
Texas Instruments and Sony.
Jack Welch, retired CEO of GE has described Six
Sigma as the most important initiative GE has ever
undertaken. GE points to Six Sigma as being a key
factor in its ability to sustain their legendary doubledigit growth rates.

1-8

SIX SIGMA FUNDAMENTALS


Data - driven process re-engineering methodology resulting
in paradigm shifts in the way a company behaves, treats its
customers and produces its products.
Will result in major shifts in our way of thinking and our
way of doing business.
Leads to quantum leaps in process and product quality.
Fundamental objective is customer satisfaction through
Continuous Improvement in quality.
Six Sigma is the GOAL.
Products and Processes - 3.4 defects per 1 million
opportunities or 99.9997%.
Sigma level is indicator of how often defects are likely to
occur.

1-9

SIX SIGMA FUNDAMENTALS


Sigma level is a metric; higher the sigma value, the
better.
Accomplished by repeated application of strategy on a
project after project basis.
Projects are selected based upon key business issues.
Project cost savings drives dollars to bottom line;
typically 6 figures per project.
Black/Green Belt typically complete 3-4 projects annually.
Initiative designed to change culture through
breakthrough improvement to achieve aggressive stretch
goals.

1-10

CONCEPT OF 3 vs 6 SIGMA
We demand High Quality in our daily lives. . .
99% Good (3.8 Sigma)

99.99966% Good (6 Sigma)

20,000 lost letters per hour

Seven articles of mail lost per hour

Unsafe drinking water for almost


15 minutes each day

One unsafe minute every seven


months

5,000 incorrect surgical


operations per week

1.7 incorrect operations per week

Two short or long landings at


most major airports each day
200,000 wrong drug
prescriptions each year
No electricity for seven hours
each month

One short or long landing every five


years at each airport
68 wrong prescriptions per year
One hour without electricity every 34
years

99% Goodness Level is not close to being satisfactory.

1-11

SIX SIGMA AS A VALUE


Average company is in 3 - 4 sigma range.
Shared traits include:
Profitable and growing
Market prices declining
Increasing competition
Internal failure (cost of quality) up 50% of sales dollars
Unaware world class companies have similar
processes greater than 100x more defect free
Believe zero defects are not realistic/achievable
Have 10x number of suppliers required.

1-12

Where does U.S. industry stand?

PPM

1,000,000
100,000
10,000
1,000
100
10
1

Restaurant Bills
Doctor Prescription Writing
IRS - Tax Advice
Payroll Processing
(phone-in)
(140,000 PPM)
Order Write-up
Journal Vouchers
Wire Transfers
Airline Baggage Handling
Purchased Material
Lot Reject Rate

Best-in-Class

Average
Company
1

Domestic Airline Flight


Fatality Rate (0.43 PPM)
5

Sigma Scale of Measure


Sigma level with various services is about 3.
Our goal - to continually improve processes and become
world class.
1-13

SIGMA AS A VALUE
There are differences in philosophy, policies, procedures
and beliefs between companies with 3 to 4 sigma
capabilities.
Biggest difference is MINDSET.
3 to 4 sigma companies are complacent, unaware and
unable to accept ideas that they must make quantum
leaps in process quality to gain/keep competitive edge.
6 sigma company is able to produce products in most
efficient means possible, competitively priced and of
highest quality.
6 sigma company will be at the top of their market and far
ahead of its competition.

1-14

CUSTOMER FOCUS
Business growth depends on how well we meet
customer expectations in terms of quality, price and
delivery.
Ability to satisfy these needs is controlled by process
capability and amount of variation in our processes.
Key six sigma activity - understanding (in quantitative
terms) customer needs and translating needs into
measurable outcomes.
Need to focus on understanding/measuring process
inputs and looking at root causes of variation.
We MUST place value and emphasis on taking
measurements.
If we do not measure or do not know how to measure,
we will not achieve customer satisfaction.

1-15

COMPARING VALUE SYSTEMS


P
Priority

Exploring Our Values

Description of what is valued

Describe and
rank what you
think is really
valued at
Your company

On a piece of paper write down the things you perceive


are the most valued, emphasized and get the most
management attention - the things you think Epic
stands for.
Rank them in terms of what you perceive are the
priorities of the organization.

1-16

COMPARING VALUE SYSTEMS


What We Really Value

What Six Sigma Values

Improving business
performance by improving
Quality and consistently
meeting Customer
Expectations
Measurement
Measuring inputs, not just
outputs
Reducing defects, by
improving process and
product, to help achieve
business objectives

It is important that we compare and contrast the critical


six sigma values with what we, as a group, feel is
emphasized at Epic.
1-17

BEHAVIOR IS A FUNCTION
OF VALUES

Behavior

Values

What we value is a key indicator of how successful


any company will be in improving its performance.
What we value drives our day-to-day behavior since
behavior is a function of values.

1-18

The Focus of Six Sigma

Y=

f (X)

Y
Dependent
Output
Effect
Symptom
Monitor

X1. . . X N
Independent
Input-Process
Cause
Problem
Control

If we are so good at X, why do we constantly test and inspect Y?

Y = F(x) is key six sigma concept.

We need to focus on process inputs (xs).

Six Sigma emphasizes measurement and understanding


of inputs (xs).

Our job is to discover the xs that will really drive the Y


1-19

VARIATION IS THE ENEMY

Variation is the main reason for poor performance and key


focus of six sigma.
Six Sigma methodologies focus on the drastic reduction of
process variation and defects.
Result is ROBUST processes.

1-20

Primary Sources of Variation


Inadequate Design
Margin

Unstable
Parts and
Material

Insufficient
Process
Capability

Region of Six Sigma Synergy


1-21

HOW DO WE MEASURE VARIATION


AND QUALITY?

Measure of variation
and quality
Measure of capability
of our processes

Unless we can measure something, we cannot improve


performance.
Sigma is a unit of measure that gives us a way to measure
variation and the capability of our processes.
The sigma value is used to designate the distribution or spread
about the mean.
Sigma values indicate how often defects are likely to occur.

1-22

BUSINESS METRICS
Unless we are prepared to invest in the measurement
of quality, we can not improve quality.
If we do not measure quality and do not follow-up on
these measures, we send a message that we do not
value quality.

1-23

The Role of Questions


Same
questions
New
questions

Same
measures
New
measures

New measures requires that we ask new questions

If we ask questions about inputs and not outputs, we


will receive focus and measures on outputs.
Focus must be on process and product quality, root
causes and inputs versus outputs.
New measures and new behavior require we ask new
questions.

1-24

COST OF POOR QUALITY (COPQ)


Represents visible and less visible costs of all
defects that exist in our processes
(manufacturing and transactional).
Highest quality producer is lowest cost producer
as it relates to COPQ.
Many feel that cost of reducing defects makes
reaching Six Sigma impractical.
Net cost to reduce defects lowers as you
approach Six Sigma.
As we drastically reduce defects we also
dramatically redirect resources tied up in looking
for and eliminating defects.

1-25

TRADITIONAL COPQ IS ONLY THE


TIP OF THE ICEBERG
Tip of the Iceberg
Maintenance and service
Warranty
Rejects
claims
Rework
Additional
labor hours
Scrap
Opportunity cost if sales
greater than plant
capacity
Improvement program costs
Lost customer loyalty
Process control
Vendor control
Inspection/test (materials,
equipment, labor)

Cost to customer
Expediting
Excess inventory
Quality engineering
and administration
Quality audits
Longer cycle times

Many costs related to COPQ are not readily visible; they are
invisible below the surface.
Example - when process produces defective material, length
of time required to get completed components through the
system increases.
Longer cycle time = additional labor hours and cost of
inspection to monitor these processes.

1-26

FOUR COPQ CATEGORIES

Prevention - those costs associates with personnel engaged in


designing, implementing and maintaining the quality system
(i. e.; Quality Management, Quality Engineering, Six Sigma
Black/Green Belt).
Appraisal - costs related to measuring, evaluating and/or auditing
parts, assemblies, finished goods or processes to assure
conformance to Epic or external specifications (i.e.; Inspectors,
calibration, ISO 9000 expenses).
Internal Failure - costs related to material and products that fail to
meet Epic specification and result in manufacturing losses. These
costs are incurred prior to shipment to the customer (i.e.; scrap,
rework).
External Failure - costs incurred as a result of nonconforming
products shipped to customers (i.e.; labor charges).

1-27

COPQ ECONOMICS (Old Belief)


But Wont It Cost Too Much to Improve Quality?

Internal
and
External
Failure

Appraisal
and
Prevention

Old Belief

Common Concerns:

Quality

>How can you reduce internal and external failure costs


without increasing prevention and appraisal costs?
>At a certain point , would it become uneconomical to
improve quality?

1-28

COPQ ECONOMICS (New Belief)


The Enlightened Perspective

Appraisal
and
Prevention

Internal
and
External
Failure
New Belief

5
6

Quality

Many feel that beyond 3 or 4 sigma, the cost of reducing defects


exceeds benefits of reducing COPQ.
Moving to 5 and 6 sigma quality allows you to dramatically reduce
prevention and appraisal.
We cannot inspect our way to Six Sigma; we must eliminate defects at
the root source.
We must abandon the minor adjustment philosophy and consider
new/aggressive ways of running our business.

1-29

COPQ ECONOMICS (Loss - No Loss)


Impact of Variation on Cost
The Traditional View
Loss

COST

No Loss

Lower
Specification
Limit

Upper
Specification
Limit

Target

The Enlightened View


Loss

COST

Loss

Lower
Specification
Limit

Target

Upper
Specification
Limit

Traditional View - any results within specifications is acceptable


and lessens the need to improve quality.
Enlightened View - anything that deviates from the desired
target has a cost and represents a loss.
1-30

SYNERGY OF LEAN
THINKING & SIX SIGMA
Expand Six Sigma definition to include reduction of
variation in the time it takes to complete a process
(SPAN).
Integrate concepts of Six Sigma with Lean Thinking
to achieve improvements across the organization.
Accomplished by reducing the number of non-value
added steps in a process, reducing wait time
between value added steps, reducing complexity of
value added steps and eliminating all forms of waste
(Muda).
1-31

Time is nearly as important an improvement metric as


is quality and reducing process lead times and variation
in the time it takes to complete a process has just as
much potential for improving a companys performance
as reducing variation in quality

Jack Welch
-former CEO of GE
1-32

SERVICE APPLICATIONS
Cost related to work that adds no value (non-value
added) is higher than in manufacturing in both
percentage and dollars.
Studies indicate work that adds no value typically
accounts for at least 50% of the total service costs.

1-33

WHAT IS LEAN?
Referred to as Lean Manufacturing or Lean Production
Originally developed by Toyota Motor Company
Objective is to eliminate all forms of production process
Muda, such as:
Overproduction
Waiting time for machines or operators
Transportation waste
Excess inventory
Wasted motion
Waste of rework
1-34

LEAN THINKING
When we eliminate waste, the production cycle is
compressed resulting in shortened cycle times,
improved quality and reduced costs.
Toyota realized that product quality is the results of
process quality.

1-35

LEAN CONCEPTS
Most processes are non-lean less than 10% of
process time consists of value added steps (90% is
Muda).
Reduce work-in-process (WIP) speed up any
process by reducing the amount of WIP.
Create a pull system every process should operate
by pull, not pushthe only trigger for releasing
work into the process is an item exiting the process.
80-20 rule 20% of the activates cause 80% of the
delays. We have to eliminate those time traps.
1-36

LEAN MEANS SPEED


As velocity increases, cost & capital expenditures are
reduced.
Lean is focused on creating flow through the entire
value stream.
Six Sigma is focused on identifying and reducing
variation.
The focus of lean is reducing non-value added steps
while Six Sigma improves the quality of the value
added steps.

1-37

It is much harder to achieve high levels of quality with


processes that have a lot of steps and low quality has a
much greater cumulative impact on complex processes.
1-38

RESULTS OF APPLYING SIX SIGMA &


LEAN THINKING SIMULTANEOUSLY
Getting faster will improve quality.
Improving quality will make you faster.
Reducing complexity improves speed and
quality.

1-39

BASIC SIX SIGMA CONCEPTS


AND TOOLS
Histogram and the Normal Distribution
The Histogram

Units of Measure

The Normal Curve

Frequency

25
20
15
10
5
Performance
Limit
Probability
Area of Yield of a Defect

1.238

1.240

1.242

1.244

Raw Data
Units of Measure

Histogram - good way to represent any situation is to transform


the data into a picture.
Histogram represents the distribution of the data.
Most cases, distribution is similar to the normal distribution (bell
shaped curve).
1-40

BASIC SIX SIGMA TOOLS AND


CONCEPTS
Shape, Location and Spread
Variable X Measurements
75
85
60
80
70
80
65
75
70
75

14

Frequency

12
10
8
6

80
70
80
75
75
55
70
85
75
95

75
70
80
75
75
70
80
90
75
90

65
85
80
70
75
70
75
80
80
60

70
70
65
85
85
85
65
65
80
65

Number of Cases = 50
Mean = 75
Median = 75
Standard Deviation = 8.3299
Range = 40
Variance = 69.388
Minimum = 55
Maximum = 95

4
2
0
50

60

70

80

90

Values of X

100

110

( Xi - X )2

^=
s =

i=1

n-1
n

^ Xi
X = =i=1
n

Measure of location refers to the way in which the central tendency of the
data can be calculated/displayed.

Mean is the best way to estimate the central tendency.

Median is the middle point of the data. It divides the distribution into
halves.

Spread (variation) can be estimated by calculating range or standard


deviation.

1-41

BASIC SIX SIGMA TOOLS AND


CONCEPTS

Specification Limits

m
Relatively little data is outside the Spec
Limits so the defect rate is
comparatively low
m

LSL

USL
T

USL

LSL
T

Much of the data is beyond the Spec


Limit so the Defect Rate is very high

Specifications = expression of customer needs and is


goalpost by which defects are determined.
If process output is not within specifications, a defect has
been produced.

1-42

SPECIFICATION LIMITS
Mean
Upper
Limit

Frequency

24h

48h

Much of the data is beyond the


Limit so the defect rate is very high

Time to
deliver
information
package

Manufacturing Environment - specifications usually


established by Engineering.
Transactional Environment - specifications are rarely
established.
> Major change in mindset is required.
> Requires development of process specifications where
none existed before.

1-43

SIX SIGMA TOOLS AND CONCEPTS


Probability and Defects
Proc
Cap ess
abi
Rep lity
ort

300

Number of Parts

250
200
150

LSL

USL

100
50
0
1.233 1.235 1.237 1.239 1.241 1.243 1.245 1.247

Probability of defects and yield have an important relationship.


Consider the following production results:
No. of units > upper specification = 22
No. of units < lower specification = 31
Total units produced = 1000
22 + 31 = 53 defective units

1-44

PROBABILITY AND DEFECTS

Opportunities for a defect = 1000 = no. of times we rolled


the dice.
Roll of dice = 53 defects.
Results:
* Probability of a defect = 53/1000 = .053 (5.3%).
* Process yield = 1 - .053 = .947 (94.7%).
Must also consider units reworked, opportunities missed,
units recycled. These losses are our Hidden Factory.

1-45

SIX SIGMA TOOLS AND CONCEPTS


A Tale of Two Sigmas

(Xi - )
N

i=1

Z = SL -

USL x

Process Standard Deviation ( ) determines the spread around the mean;


larger then , the worse the process is performing.
Standard deviation is NOT the process sigma value.
Process Sigma Value (Z) relates the process variation to the outputs
specification limits, relative to the process mean. It is the number of standard
deviations that can fit between the mean and specification limits.

1-46

SIX SIGMA TOOLS AND CONCEPTS


Shifts and Drifts
Problem with Spread
Short-Term
Performance
(st)

Desired
Current
Situation
Accurate
(but not precise)
LSL

Dynamic Mean

USL

Long-Term
Performance
(lt)
Problem with Centering
Current
Situation
Precise
(but not
accurate)

Desired

LSL

USL

LSL

Nominal

USL

Short-Term
Long-Term

LSL

USL

Variation is inherent in every process and is independent of specifications.


Process center is independent of design target.
Sigma level includes a / 1.5 value to account for typical shifts and drifts
of the mean.
Process spread and the shift and drift results in Process Long Term Variation.
Variation is the effect of trivial many (white noise) and vital few (black noise).
1-47

THE GOAL OF SIX SIGMA


(Distribution Shifted 1.5 )

PPM

2
3
4
5
6

308,537
66,807
6,210
233
3.4

Process
Capability

Defects per Million


Opportunities

With a Six Sigma short term process, the probability to


produce out of specification results, even with a 1.5
sigma shift = 3.4 parts per million.
Process is ROBUST to variation.

1-48

SIX SIGMA TOOLS AND CONCEPTS


Normal table - can be used
to determine probability of
defects.

The Standard Normal Deviate


(Z value - short- and long-term)
Z
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
ST
0.50
0.55
0.60
0.65
0.70
0.75
0.80
0.85
0.90
0.95
1.00
1.05
1.10
1.15
1.20
1.25
1.30
1.35
1.40
1.45
1.50

Area

Area

Area

Area

.500000000
.480061306
.460172290
.440382395
.420740315
.401293634
.382088486
.363169226
.344578129
.326355105
Shift
.308537454
.291159644
.274253121
.257846158
.241963737
.226627465
.211855526
.197662672
.184060243
.171056222
.158655319
.146859086
.135666053
.125071891
.115069593
.105649671
.096800364
.088507862
.080756531
.073529141
.066807100

1.51
1.56
1.61
1.66
1.71
1.76
1.81
1.86
1.91
1.96
2.01
2.06
2.11
2.16
2.21
2.26
2.31
2.36
2.41
2.46
2.51
2.56
2.61
2.66
2.71
2.76
2.81
2.86
2.91
2.96
3.01

.065521615
.059379869
.053698886
.048457216
.043632958
.039203955
.035147973
.031442864
.028066724
.024998022
.022215724
.019699396
.017429293
.015386434
.013552660
.011910681
.010444106
.009137469
.007976235
.006946800
.006036485
.005233515
.004527002
.003906912
.003364033
.002889938
.002476947
.002118083
.001807032
.001538097
.001306156

3.02
3.07
3.12
3.17
3.22
3.27
3.32
3.37
3.42
3.47
3.52
3.57
3.62
3.67
3.72
3.77
3.82
3.87
3.92
3.97
4.02
4.07
4.12
4.17
4.22
4.27
4.32
4.37
4.42
4.47
4.52

.001263795
.001070234
.000904215
.000762175
.000640954
.000537758
.000450127
.000375899
.000313179
.000260317
.000215873
.000178601
.000147419
.000121399
.000099739
.000081753
.000066855
.000054545
.000044399
.000036057
.000029215
.000029215
.000019047
.000015327
.000012305
.000009857
.000007878
.000006282
.000004998
.000003968
.000003143

4.53
4.58
4.63
4.68
4.73
4.78
4.83
4.88
4.93
4.98
5.03
5.08
5.13
5.18
5.23
5.28
5.33
5.38
5.43
5.48
5.53
5.58
5.63
5.68
5.73
5.78
5.83
5.88
5.93
5.98
6.03

.000002999
.000002369
.000001867
.000001469
.000001153
.000000903
.000000705
.000000550
.000000428
.000000332
.000000258
.000000199
.000000154
.000000118
.000000091
.000000070
.000000053
.000000041
.000000031
.000000024
.000000018
.000000018
.000000010
.000000008
.000000006
.000000004
.000000003
.000000003
.000000002
.000000001
.000000001

ZLT Z Z

SL

Table represents how many


sigmas (standard
deviations) the specification
limit is away from the
average.

Once the Z value has been


computed, the probability of
defects can be determined.
SL

Z of 3.01 = .001306 (.13%


probability of defects (short
term).
Z of 1.51 = .065521 (6.5%)
with 1.5 sigma process drift
(long term)
1-49

SIX SIGMA TOOLS AND CONCEPTS


Defects per Unit (DPU)
DPU = D/U
where; DPU = average no. of defects observed
per unit of output
D (Defect) = no. of times output
does not meet specification
U (Unit) = no. of units of output

Defect per Million Opportunities (DPMO)


DPMO = DPU x 106 (1,000,000)
where; DPMO = defects per million
opportunities
DPU = average no. of defects observed per unit of output.

1-50

SIX SIGMA TOOLS AND CONCEPTS


Process Capability

Precise but not


Accurate

Accurate but not


Precise

If the process has a small standard deviation (less variation), but the process
output is far from the target value, the process is Precise but not accurate.
If the process output is centered around a target value, but has a wide spread of
values (large standard deviation), the process is Accurate but not precise.

1-51

SIX SIGMA TOOLS AND CONCEPTS


Process Capability Ratios Cp & Cpk

Cp = 2.0

Lower
Specification

Increase in the number of rejects

Cp < 1

Upper
Specification

Continuous Improvement

Lower
Specification

Upper
Specification

Potential
Capability

Real
Capability

Cp = 2.0

Cpk = 2.0

Cp = 2.0

Cpk = 1

Cp = 2.0

Cpk < 1

Cp = 2.0

Cpk = 0

Cp = 2.0

Cpk < 0

Cp = 2.0

Cpk < -1

Process capability ratios provide an indicator to assess a process relative to


the specification criteria.
> CP is a measure of the potential of a process to produce product within a
specified tolerance. In effect, the CP helps us to answer the question,
Are we able to produce good products?
> CPK addresses the concept of precision and answers the question, Is
your process centered on target? In effect, the process may have little
variation (precise), but be far from the target (not accurate). CPK also
answers the question, Are we making good products?

1-52

PROCESS CAPABILITY RATIOS

6 process = Z ST = 6

CP = 2

ZLT = 4.5 CPK = 1.5

1-53

SIX SIGMA TOOLS AND CONCEPTS

S 90
YFT
.90,or 90%
U 100

YTP e DPU e 1.0 .3679 or 37%

Defect
Type

Number
Observed

A
B
C
D
E

3
1
0
2
4

Total

10

DPU = 1.0

37 Units
D=0

Y.TP
Throughput Yield
(Units With Zero Defects)
100
Units
Submitted

Operation

90 Units
Passed

Verify

Not
OK

53 Units
D=1

Rework
10 Units Repaired

37% 90%
... why not?

Scrap
0 Units Scrapped

Classical Yield (YFT - First time yield) - divide units passed by units
submitted.
Rolled throughput Yield (YTP) - gives visibility to process steps with
high defect rates or other hidden losses (Hidden factory).

1-54

SIX SIGMA TOOLS AND CONCEPTS


Pareto & The Leverage Principle
100

Pareto
Analysis of Process Inputs

84

80

DPU/DPMO

Percentage

90
70
60
50
40
30
20

10
3

10
0

Vital few inputs (Xs) are responsible for majority of problems with the
outputs (Ys).
Pareto chart prioritizes which variables need to be studied to improve
the process.

1-55

ISO 9000 - SIX SIGMA SYNERGY


The ISO 9000 standards establish the baseline measurements for a
quality management system and emphasize that the only way to
maintain quality is by continuous improvement of the quality system.
As a result, the standards are recognized as a good foundation upon
which a more sophisticated quality improvement process, such as Six
Sigma, can be built.
Also, the standards and consistency fundamental to ISO 9000 are the
main building blocks for Six Sigma implementation.
Six Sigma has a great potential to build on the success of ISO 9000.
In addition, like ISO 9000, Six Sigma is a management process. In
effect, Six Sigma is a new way to manage the business.
Although Six Sigma has a strong technical component, it is not
primarily a technical program.

1-56

ISO 9000 - SIX SIGMA SYNERGY


CONT.
Six Sigma has been the first initiative which has pulled together
employees as a result of a common goal; not only within disciplines, but
across disciplines.
Effective implementation of ISO 9000 has set the stage for Six Sigma.
This has been evidenced by some of the following changes.
Teamwork and participation of all employees.
Discipline and structure as a result of following established systems
and procedures.
Focus on continual improvement by development of a corrective
action, internal audit and management review process.
Cultural change as a result of the entire registration process.
Pride among employees as a result of participation in this major
accomplishment.

1-57

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