Define Phase Six Sigma Fundamentals Six Sigma Fundamentals

Define Phase Six Sigma Fundamentals

Six Sigma Fundamentals Understanding Six Sigma Fundamentals Process Maps Voice of the Customer Cost of Poor Quality Process Metrics Selecting Projects Elements of Waste Wrap Up & Action Items OSSS LSS Green Belt v 11. 0 XL - Define Phase 2 © Open Source Six Sigma, LLC

What is a Process? Why have a process focus? – So we can understand how and why work gets done – To characterize customer & supplier relationships – To manage for maximum customer satisfaction while utilizing minimum resources – To see the process from start to finish as it is currently being performed – Blame the process, not the people proc • ess (pros′es) n. – A repetitive and systematic series of steps or activities where inputs are modified to achieve a value-added output OSSS LSS Green Belt v 11. 0 XL - Define Phase 3 © Open Source Six Sigma, LLC

Examples of Processes We go through processes everyday. Below are some examples of those processes. Can you think of other processes within your daily environment? • • • • • Injection molding Decanting solutions Filling vial/bottles Crushing ore Refining oil Turning screws Building custom homes Paving roads Changing a tire OSSS LSS Green Belt v 11. 0 XL - Define Phase 4 Recruiting staff Processing invoices Conducting research Opening accounts Reconciling accounts Filling out a timesheet Distributing mail Backing up files Issuing purchase orders © Open Source Six Sigma, LLC

Process Maps • The purpose of Process Maps is to: – Identify the complexity of the process – Communicate the focus of problem solving • Process Maps are living documents and must be changed as the process is changed – They represent what is currently happening, not what you think is happening. – They should be created by the people who are closest to the process Step A Step B Step C Step D Finish In Start sp ec t Process Map OSSS LSS Green Belt v 11. 0 XL - Define Phase 5 © Open Source Six Sigma, LLC

Process Map Symbols Standard symbols for Process Mapping (available in Microsoft Office™, Visio™, i. Grafx™ , Sigma. Flow™ and other products): A PARALLELAGRAM shows that there are data A RECTANGLE indicates an activity. Statements within the rectangle should begin with a verb A DIAMOND signifies a decision point. Only two paths emerge from a decision point: No and Yes An ELLIPSE shows the start and end of the process An ARROW shows the connection and direction of flow A CIRCLE WITH A LETTER OR NUMBER INSIDE symbolizes the continuation of a flowchart to another page OSSS LSS Green Belt v 11. 0 XL - Define Phase 1 6 © Open Source Six Sigma, LLC

High Level Process Map One of the deliverables from the Define Phase is a high level Process Map, which at a minimum must include: – – – Start and stop points All process steps All decision points Directional flow Value categories as defined below • Value Added: – Physically transforms the “thing” going through the process – Must be done right the first time – Meaningful from the customer’s perspective (is the customer willing to pay for it? ) • Value Enabling: – Satisfies requirements of non-paying external stakeholders (government regulations) • Non-Value Added – Everything else OSSS LSS Green Belt v 11. 0 XL - Define Phase 7 © Open Source Six Sigma, LLC

Process Map Example A Process Map for a Call Center B START REVIEW CASE TOOL HISTORY & TAKE NOTES LOGON TO PC & APPLICATIONS SCHEDULED PHONE TIME? E C N Z N CALL or WALK-IN? Z TRANSFER CALL IMMEDIATE RESPONSE AVAILABLE? PROVIDE RESPONSE PHONE& NOTE DATA ENDS Y WALK-IN N CALL PUT ON HOLD, REFER TO REFERENCES PHONE DATA CAPTURE BEGINS ANSWER? DETERMINE WHO IS INQUIRING Y ANSWER? Y N C ENTER APPROPRIATE SSAN (#, 9 s, 0 s) CREATE A CASE INCL CASE TYPE DATE/TIME, & NEEDED BY N Y Y AUTO ROUTE N Y CASE CLOSED OFF HOLD AND ARRANGE CALL BACK PHONE DATA ENDS ADD TO RESEARCH LIST B OSSS LSS Green Belt v 11. 0 XL - Define Phase F UPDATE ENTRIES INCL OPEN DATE/TIME N CASE TOOL RECORD? ACCESS CASE TOOL OLD CASE QUERY INTERNAL HRSC SME(S) DETERMINE NATURE OF CALL & CONFIRM UNDERSTANDING N IF EMP DATA NOT POPULATED, ENTER N ACCESS CASE TOOL D A EXAMINE NEXT NOTE OR RESEARCH ITEM N Y Y SCHEDULED PHONE TIME? Y TRANSFER APPROPRIATE? LOGON TO PHONE TIME LOGOFF PHONE, CHECK MAIL, E-MAIL, VOICE MAIL Y A D Z 8 N TAKE ACTION or DO RESEARCH Y CLOSE CASE W/ DATE/TIME E GO TO F or E DEPENDING ON CASE E NEXT F © Open Source Six Sigma, LLC

Cross Functional Process Map When multiple departments or functional groups are involved in a complex process it is often useful to use cross functional Process Maps. – Draw in either vertical or horizontal Swim Lanes and label the functional groups and draw the Process Map Start Request transfer Attach ACH form to Invoice ACH – Automated Clearing House. Produce an Invoice No Vendor info in FRS? Yes General Accounting OSSS LSS Green Belt v 11. 0 XL - Define Phase Fill out ACH enrollment form Receive payment End Match against bank batch and daily cash batch Input info into web interface Maintain database to balance ACH transfers Accepts transactions, transfer money and provide batch total Bank Financial Accounting Vendor Department Sending Fund Transfers Review and Process transfer in FRS 9 3. 0 Journey Entry 21. 0 Bank Reconciliation © Open Source Six Sigma, LLC

Process Map Exercise objective: Using your favorite Process Mapping tool create a Process Map of your project or functional area. 1. Create a high level Process Map, use enough detail to make it useful. • It is helpful to use rectangular post-it’s for process steps and square ones turned to a diamond for decision points. 2. Color code the value added (green) and non-value added (red) steps. 3. Be prepared to discuss this with your mentor. OSSS LSS Green Belt v 11. 0 XL - Define Phase 10 © Open Source Six Sigma, LLC

Do you know your Customer? Knowing your customer is more than just a handshake. It is necessary to clearly understand their needs. In Six Sigma we call this “understanding the CTQ ’s” or critical to customer characteristics. Critical to Customer Characteristics Voice Of the Customer OSSS LSS Green Belt v 11. 0 XL - Define Phase 11 © Open Source Six Sigma, LLC

Voice of the Customer or VOC seems obvious; after all, we all know what the customer wants. Or do we? ? The customer’s perspective has to be foremost in the mind of the Six Sigma Belt throughout the project cycle. 1. Features • • Does the process provide what the customers expect and need? How do you know? 2. Integrity • • Is the relationship with the customer centered on trust? How do you know? 3. Delivery • • Does the process meet the customer’s time frame? How do you know? 4. Expense • • Does the customer perceive value for cost? How do you know? OSSS LSS Green Belt v 11. 0 XL - Define Phase 12 © Open Source Six Sigma, LLC

What is a Customer? There are different types of customers which dictates how we interact with them in the process. In order to identify customer and supplier requirements we must first define who the customers are: External – Direct: those who receive the output of your services, they generally are the source of your revenue – Indirect: those who do not receive or pay for the output of your services but have a vested interest in what you do (government agencies) Internal - those within your organization who receive the output of your work OSSS LSS Green Belt v 11. 0 XL - Define Phase 13 © Open Source Six Sigma, LLC

Value Chain The relationship from one process to the next in an organization creates a “Value Chain” of suppliers and receivers of process outputs. Each process has a contribution and accountability to the next to satisfy the external customer. External customers needs and requirements are best met when all process owners work cooperatively in the Value Chain. Careful – each move has many impacts! OSSS LSS Green Belt v 11. 0 XL - Define Phase 14 © Open Source Six Sigma, LLC

What is a CTQ? • Critical to Quality (CTQ ’s) are measures that we use to capture VOC properly. (also referred to in some literature as CTC’s – Critical to Customer) • CTQ ’s can be vague and difficult to define. – The customer may identify a requirement that is difficult to measure directly so it will be necessary to break down what is meant by the customer into identifiable and measurable terms Service: • Competence • Reliability • Accuracy • Timeliness • Responsiveness • Access • Courtesy • Communication • Credibility • Security • Understanding Product: • Performance • Features • Conformance • Timeliness • Reliability • Serviceability • Durability • Aesthetics • Reputation • Completeness OSSS LSS Green Belt v 11. 0 XL - Define Phase 15 © Open Source Six Sigma, LLC

Developing CTQ’s Step 1 Step 2 Step 3 OSSS LSS Green Belt v 11. 0 XL - Define Phase Identify Customers • Listing • Segmentation • Prioritization Validate CTQ’s • Translate VOC to CTQ’s • Prioritize the CTQ’s • Set Specified Requirements • Confirm CTQ’s with customer Capture VOC • Review existing performance • Determine gaps in what you need to know • Select tools that provide data on gaps • Collect data on the gaps 16 © Open Source Six Sigma, LLC

Cost of Poor Quality (COPQ) • COPQ stands for Cost of Poor Quality • As a Six Sigma Belt, one of your tasks will be to estimate COPQ for your process • Through your process exploration and project definition work you will develop a refined estimate of the COPQ in your project • This project COPQ represents the financial opportunity of your team’s improvement effort (VOB) • Calculating COPQ is iterative and will change as you learn more about the process No, not that kind of cop queue! OSSS LSS Green Belt v 11. 0 XL - Define Phase 17 © Open Source Six Sigma, LLC

The Essence of COPQ • COPQ helps us understand the financial impact of problems created by defects. • COPQ is a symptom, not a defect – Projects fix defects with the intent of improving symptoms. • The concepts of traditional Quality Cost are the foundation for COPQ. – External, Internal, Prevention, Appraisal • A significant portion of COPQ from any defect comes from effects that are difficult to quantify and must be estimated. OSSS LSS Green Belt v 11. 0 XL - Define Phase 18 © Open Source Six Sigma, LLC

COPQ - Categories Internal COPQ Prevention • • • Quality Control Department • Inspection • Quarantined Inventory • Etc… Detection External COPQ • Warranty • Customer Complaint Related Travel • Customer Charge Back Costs • Etc… OSSS LSS Green Belt v 11. 0 XL - Define Phase Error Proofing Devices Supplier Certification Design for Six Sigma Etc… 19 • • Supplier Audits Sorting Incoming Parts Repaired Material Etc… © Open Source Six Sigma, LLC

COPQ - Iceberg Warranty Inspection Recode Rejects Visible Costs Lost sales Engineering change orders Time value of money (less obvious) More Set-ups OSSS LSS Green Belt v 11. 0 XL - Define Phase Late delivery Expediting costs Excess inventory Working Capital allocations Hidden Costs Rework Long cycle times Excessive Material Orders/Planning Lost Customer Loyalty 20 © Open Source Six Sigma, LLC

COPQ and Lean Waste does not add, subtract or otherwise modify the throughput in a way that is perceived by the customer to add value. • In some cases, waste may be necessary, but should be recognized and explored: – – • • Inspection, Correction, Waiting in suspense Decision diamonds, by definition, are non-value added Often, waste can provide opportunities for additional defects to occur. We will discuss Lean in more detail later in the course. OSSS LSS Green Belt v 11. 0 XL - Define Phase 21 Lean Enterprise Seven Elements of Waste * u Correction u Processing u Conveyance u Motion u Waiting u Overproduction u Inventory *Womack, J. P. , & Jones, D. T. (1996). Lean Thinking. New York, NY: Simon & Schuster © Open Source Six Sigma, LLC

COPQ – Hard and Soft Savings While hard savings are always more desirable because they are easier to quantify, it is also necessary to think about soft savings. COPQ – Hard Savings • • • COPQ – Soft Savings Labor Savings Cycle Time Improvements Scrap Reductions Hidden Factory Costs Inventory Carrying Cost OSSS LSS Green Belt v 11. 0 XL - Define Phase 22 • • • Gaining Lost Sales Missed Opportunities Customer Loyalty Strategic Savings Preventing Regulatory Fines © Open Source Six Sigma, LLC

COPQ Exercise objective: Identify current COPQ opportunities in your direct area. 1. Brainstorm a list of COPQ opportunities. 2. Categorize the top 3 sources of COPQ for the four classifications: • • OSSS LSS Green Belt v 11. 0 XL - Define Phase Internal External Prevention Detection 23 © Open Source Six Sigma, LLC

The Basic Six Sigma Metrics In any process improvement endeavor, the ultimate objective is to make the process: • • • Better: DPU, DPMO, RTY (there are others, but they derive from these basic three) Faster: Cycle Time Cheaper: COPQ If you make the process better by eliminating defects you will make it faster. If you choose to make the process faster, you will have to eliminate defects to be as fast as you can be. If you make the process better or faster, you will necessarily make it cheaper. The metrics for all Six Sigma projects fall into one of these three categories. OSSS LSS Green Belt v 11. 0 XL - Define Phase 24 © Open Source Six Sigma, LLC

Cycle Time Defined Think of Cycle Time in terms of your product or transaction in the eyes of the customer of the process: – It is the time required for the product or transaction to go through the entire process, from beginning to end – It is not simply the “touch time” of the value-added portion of the process What is the cycle time of the process you mapped? Is there any variation in the cycle time? Why? OSSS LSS Green Belt v 11. 0 XL - Define Phase 25 © Open Source Six Sigma, LLC

Defects Per Unit (DPU) Six Sigma methods quantify individual defects and not just defectives – Defects account for all errors on a unit • A unit may have multiple defects • An incorrect invoice may have the wrong amount due and the wrong due date – Defectives simply classifies the unit bad • Doesn’t matter how many defects there are • The invoice is wrong, causes are unknown – A unit: • Is the measure of volume of output from your area. • Is observable and countable. It has a discrete start and stop point. • It is an individual measurement and not an average of measurements. Two Defects OSSS LSS Green Belt v 11. 0 XL - Define Phase 26 One Defective © Open Source Six Sigma, LLC

First Time Yield FTY is the traditional quality metric for yield – Unfortunately, it does not account for any necessary rework FTY = Total Units Passed Total Units Tested Units in = 100 Units Out = 100 Process A (Grips) Process B (Shafts) Defects Repaired 40 Units in = 100 Units Out = 100 Process C (Club Heads) Defects Repaired 30 Defects Repaired 20 Units Passed = 50 Units Tested = 50 Final Product (Set of Irons) FTY = 100 % *None of the data used herein is associated with the products shown herein. Pictures are no more than illustration to make a point to teach the concept. OSSS LSS Green Belt v 11. 0 XL - Define Phase 27 © Open Source Six Sigma, LLC

Rolled Throughput Yield RTY is a more appropriate metric for problem solving – It accounts for losses due to rework steps RTY = X 1 * X 2 * X 3 Units in = 100 Units W/O Rework = 60 RTY = 0. 6 Process A (Grips) Defects Repaired 40 Units in = 100 Units W/O Rework = 70 RTY = 0. 7 Process B (Shafts) Defects Repaired 30 Units in = 100 Units W/O Rework = 80 RTY = 0. 8 Process C (Club Heads) Units Passed = 34 Units Tested = 100 Final Product (Set of Irons) Defects Repaired 20 RTY = 33. 6 % *None of the data used herein is associated with the products shown herein. Pictures are no more than illustration to make a point to teach the concept. OSSS LSS Green Belt v 11. 0 XL - Define Phase 28 © Open Source Six Sigma, LLC

RTY Estimate • In many organizations the long term data required to calculate RTY is not available, we can however estimate RTY using a known DPU as long as certain conditions are met. • The Poisson distribution generally holds true for the random distribution of defects in a unit of product and is the basis for the estimation. – The best estimate of the proportion of units containing no defects, or RTY is: RTY = e-dpu The mathematical constant e is the base of the natural logarithm. e ≈ 2. 718284 59045 23536 02874 7135 OSSS LSS Green Belt v 11. 0 XL - Define Phase 29 © Open Source Six Sigma, LLC

Deriving RTY from DPU The Binomial distribution is the true model for defect data, but the Poisson is the convenient model for defect data. The Poisson does a good job of predicting when the defect rates are low. Binomial n = number of units r = number of predicted defects p = probability of a defect occurrence q=1 -p Poisson For low defect rates (p < 0. 1), the Poisson approximates the Binomial fairly well. OSSS LSS Green Belt v 11. 0 XL - Define Phase 30 © Open Source Six Sigma, LLC

Deriving RTY from DPU - Modeling Unit Opportunity • • Basic Question: What is the likelihood of producing a unit with zero defects? For the unit shown above the following data was gathered: – 60 defects observed – 60 units processed What is the DPU? • What is probability that any given opportunity will be a defect? • What is the probability that any given opportunity will NOT be a defect is: • The probability that all 10 opportunities on single unit will be defect-free is: If we extend the concept to an infinite number of opportunities, all at a DPU of 1. 0, we will approach the value of 0. 368. OSSS LSS Green Belt v 11. 0 XL - Define Phase 31 © Open Source Six Sigma, LLC

RTY Prediction — Poisson Model • Use the binomial to estimate the probability of a discrete event (good/bad) when sampling from a relatively large population, n > 16, & p < 0. 1. • When r=0, we compute the probability of finding zero defects per unit (called “rolled throughput yield”). • The table to the right shows the proportion of product which will have – 0 defects (r=0) – 1 defect (r=1) – 2 defects (r=2), etc… (dpu) r e – dpu Y= r r! p[r] When DPU=1 • When, on average, we have a process, with 1 defect per unit, then we say there is a 36. 79% chance of finding a unit with zero defects. There is only a 1. 53% chance of finding a unit with 4 defects. • When r=1, this equation simplifies to: • To predict the % of units with zero defect (i. e. , RTY): – count the number of defects found – count the number of units produced – compute the dpu and enter it in the dpu equation: OSSS LSS Green Belt v 11. 0 XL - Define Phase 32 0 1 2 3 4 5 6 7 8 0. 3679 0. 1839 0. 0613 0. 0153 0. 0031 0. 0005 0. 0001 0. 0000 © Open Source Six Sigma, LLC

Six Sigma Metrics – Calculating DPU The DPU for a given operation can be calculated by dividing the number of defects found in the operation by the number of units entering the operational step. 100 parts built 2 defects identified and corrected dpu = 0. 02 So RTY for this step would be e-. 02 (. 980199) or 98. 02%. RTY 1=0. 98 dpu =. 02 RTY 2=0. 98 dpu =. 02 RTY 3=0. 98 dpu =. 02 RTY 4=0. 98 dpu =. 02 RTY 5=0. 98 dpu =. 02 RTYTOT=0. 904 dpu. TOT =. 1 If the process had only 5 process steps with the same yield the process. RTY would be: 0. 98 * 0. 98 = 0. 903921 or 90. 39%. Since our metric of primary concern is the COPQ of this process, we can say that in less than 9% of the time we will be spending dollars in excess of the pre-determined standard or value added amount to which this process is entitled. Note: RTY’s must be multiplied across a process, DPU’s are added across a process. OSSS LSS Green Belt v 11. 0 XL - Define Phase 33 © Open Source Six Sigma, LLC

Focusing our Effort – FTY vs. RTY Assume we are creating two products in our organization that use similar processes. Product A FTY = 80% Product B FTY = 80% How do you know what to work on? *None of the data used herein is associated with the products shown herein. Pictures are no more than illustration to make a point to teach the concept. OSSS LSS Green Belt v 11. 0 XL - Define Phase 34 © Open Source Six Sigma, LLC

Focusing our Effort – FTY vs. RTY Let’s look at the DPU of each product assuming equal opportunities and margin… Product A Product B dpu 200 / 100 = 2 dpu 100 / 100 = 1 dpu Now, can you tell which to work on? “the product with the highest DPU? ” …think again! How much more time and/or raw material are required? How much extra floor space do we need? How much extra staff or hours are required to perform the rework? How many extra shipments are we paying for from our suppliers? How much testing have we built in to capture our defects? *None of the data used herein is associated with the products shown herein. Pictures are no more than illustration to make a point to teach the concept. OSSS LSS Green Belt v 11. 0 XL - Define Phase 35 © Open Source Six Sigma, LLC

Summary At this point, you should be able to: • Describe what is meant by “Process Focus” • Generate a Process Map • Describe the importance of VOC, VOB and VOE, and CTQ’s • Explain COPQ • Describe the Basic Six Sigma metrics • Explain the difference between FTY and RTY • Explain how to calculate “Defects per Unit” DPU OSSS LSS Green Belt v 11. 0 XL - Define Phase 36 © Open Source Six Sigma, LLC

The Certified Lean Six Sigma Green Belt Assessment The Certified Lean Six Sigma Green Belt (CLSSGB) tests are useful for assessing Green Belt’s knowledge of Lean Six Sigma. The CLSSGB can be used in preparation for the ASQ or IASSC Certified Six Sigma Green Belt (CSSGB) exam or for any number of other certifications, including private company certifications. The Lean Six Sigma Green Belt Course Manual Open Source Six Sigma Course Manuals are professionally designed and formatted manuals used by Belt’s during training and for reference guides afterwards. The OSSS manuals complement the OSSS Training Materials and consist of slide content, instructional notes data sets and templates. Get the latest products at… www. opensourcesixsigma. com OSSS LSS Green Belt v 11. 0 XL - Define Phase © Open Source Six Sigma, LLC