DEPARTMENT OF BMS

NAME: RITA GAHATYARI

CLASS: (5 th SEM)

ROLL NO: 5639

SUBMITTED TO:

SIGNATURE OF THE COORDINATOR

SIX SIGMA
DEFINITION: “A rigorous and disciplined methodology that utilizes data and statistical
analysis to measure and improve a company’s operational performance, practices
and systems. Six Sigma identifies and prevents defects in manufacturing and service-

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related processes. In many organizations, it simply means a measure of quality that
strives for near perfection.”

What is Six Sigma Quality?

• Originated at Motorola in the early 80’s
• Helped Motorola win the 1988 MBNQA
• Is a methodology for disciplined quality improvement
Juran principles apply
• Doesn’t use “Quality” in the name
• With the inclusion of Six Sigma into a sound business system, the major
ingredients of a Total Quality Management System are usually in place
• Uses a modified Deming Wheel (PDCA) .
• Six Sigma’s goal is the near elimination of defects from any process,
product, or service.
• The numerical goal is 3.467 defects per million opportunities.

Statistical Six Sigma Definition

What does it mean to be "Six Sigma"? Six Sigma at many organizations simply means a
measure of quality that strives for near perfection. But the statistical implications of a Six Sigma
program go well beyond the qualitative eradication of customer-perceptible defects. It's a
methodology that is well rooted in mathematics and statistics.

The objective of Six Sigma Quality is to reduce process output variation so that on a long term
basis, which is the customer's aggregate experience with our process over time, this will result
in no more than 3.4 defect Parts Per Million (PPM) opportunities (or 3.4 Defects Per Million
Opportunities – DPMO). For a process with only one specification limit (Upper or Lower), this
results in six process standard deviations between the mean of the process and the customer's
specification limit (hence, 6 Sigma). For a process with two specification limits (Upper and
Lower), this translates to slightly more than six process standard deviations between the mean
and each specification limit such that the total defect rate corresponds to equivalent of six
process standard deviations.

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Many processes are prone to being influenced by special and/or assignable causes that impact
the overall performance of the process relative to the customer's specification. That is, the
overall performance of our process as the customer views it might be 3.4 DPMO (corresponding
to Long Term performance of 4.5 Sigma). However, our process could indeed be capable of
producing a near perfect output (Short Term capability – also known as process entitlement – of
6 Sigma). The difference between the "best" a process can be, measured by Short Term process
capability, and the customer's aggregate experience (Long Term capability) is known as Shift
depicted as Zshift or  shift. For a "typical" process, the value of shift is 1.5; therefore, when one
hears about "6 Sigma," inherent in that statement is that the short term capability of the process
is 6, the long term capability is 4.5 (3.4 DPMO – what the customer sees) with an assumed shift
of 1.5. Typically, when reference is given using DPMO, it denotes the Long Term capability of
the process, which is the customer's experience. The role of the Six Sigma professional is to
quantify the process performance (Short Term and Long Term capability) and based on the true
process entitlement and process shift, establish the right strategy to reach the established
performance objective

As the process sigma value increases from zero to six, the variation of the process around the
mean value decreases. With a high enough value of process sigma, the process approaches
zero variation and is known as 'zero defects.'

Six Sigma at many organizations simply means a measure of quality that strives for near
perfection. Six Sigma is a disciplined, data-driven approach and methodology for eliminating
defects (driving towards six standard deviations between the mean and the nearest
specification limit) in any process -- from manufacturing to transactional and from product to
service.

The statistical representation of Six Sigma describes quantitatively how a process is

performing. To achieve Six Sigma, a process must not produce more than 3.4 defects per
million opportunities. A Six Sigma defect is defined as anything outside of customer
specifications. A Six Sigma opportunity is then the total quantity of chances for a defect.
Process sigma can easily be calculated using a Six Sigma calculator.

The fundamental objective of the Six Sigma methodology is the implementation of a

measurement-based strategy that focuses on process improvement and variation reduction
through the application of Six Sigma improvement projects. This is accomplished through the
use of two Six Sigma sub-methodologies: DMAIC and DMADV. The Six Sigma DMAIC process
(define, measure, analyze, improve, control) is an improvement system for existing processes
falling below specification and looking for incremental improvement. The Six Sigma DMADV
process (define, measure, analyze, design, verify) is an improvement system used to develop
new processes or products at Six Sigma quality levels. It can also be employed if a current
process requires more than just incremental improvement. Both Six Sigma processes are
executed by Six Sigma Green Belts and Six Sigma Black Belts, and are overseen by Six Sigma
Master Black Belts.

According to the Six Sigma Academy, Black Belts save companies approximately $230,000 per
project and can complete four to 6 projects per year. General Electric, one of the most
successful companies implementing Six Sigma, has estimated benefits on the order of $10
billion during the first five years of implementation. GE first began Six Sigma in 1995 after
Motorola and Allied Signal blazed the Six Sigma trail. Since then, thousands of companies
around the world have discovered the far reaching benefits of Six Sigma.

Six Sigma according to GE

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“A highly disciplined process that helps us focus on developing and delivering near-perfect
products and services. The word Six Sigma is a statistical term that measures how far a given
process deviates from perfection. The central idea behind Six Sigma is that if you can measure
how many “defects” you have in a process, you can systematically figure out how to eliminate
them and get as close to “zero defects” as possible. Six Sigma has changed the DNA at GE –
it is the way we work – in everything we do and in every product we design.”

TOOLS OF SIX SIGMA

The tools are applied within a simple performance improvement model known as DMAIC, or
Define-Measure-Analyze-Improve-Control. DMAIC can be described as follows:

D Define the goals of the improvement activity. At the top level the goals will be the
strategic objectives of the organization, such as a higher ROI or market share. At the
operations level, a goal might be to increase the throughput of a production
department. At the project level goals might be to reduce the defect level and increase
throughput. Apply data mining methods to identify potential improvement
opportunities.
M Measure the existing system. Establish valid and reliable metrics to help monitor
progress towards the goal(s) defined at the previous step. Begin by determining the
current baseline. Use exploratory and descriptive data analysis to help you
understand the data.
A Analyze the system to identify ways to eliminate the gap between the current
performance of the system or process and the desired goal. Apply statistical tools to
guide the analysis.
I Improve the system. Be creative in finding new ways to do things better, cheaper, or
faster. Use project management and other planning and management tools to
implement the new approach. Use statistical methods to validate the improvement.
C Control the new system. Institutionalize the improved system by modifying
compensation and incentive systems, policies, procedures, MRP, budgets, operating
instructions and other management systems. You may wish to utilize systems such
as ISO 9000 to assure that documentation is correct.

SIX SIGMA INFRASTRUCTURE

A very powerful feature of Six Sigma is the creation of an infrastructure to ensure that
performance improvement activities have the necessary resources. In this author's opinion,
failure to provide this infrastructure is the #1 reason why 80% of all TQM implementations failed
in the past. Six Sigma makes improvement and change the full-time job of a small but critical
percentage of the organization's personnel. These full time change agents are the catalyst that
institutionalizes change. Figure 2 illustrates the required human resource commitment required
by Six Sigma.

Figure 2: Six Sigma Infrastructure

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Leadership

Six Sigma involves changing major business value streams that cut across
organizational barriers. It is the means by which the organization's strategic goals are
to be achieved. This effort cannot be led by anyone other than the CEO, who is
responsible for the performance of the organization as a whole. Six Sigma must be
implemented from the top-down.

Champions and Sponsors

Six Sigma champions are high-level individuals who understand Six Sigma and are
committed to its success. In larger organizations Six Sigma will be led by a full time,
high level champion, such as an Executive Vice-President. In all organizations,
champions also include informal leaders who use Six Sigma in their day-to-day work
and communicate the Six Sigma message at every opportunity. Sponsors are owners
of processes and systems who help initiate and coordinate Six Sigma improvement
activities in their areas of responsibilities.

Master Black Belt

This is the highest level of technical and organizational proficiency. Master Black
Belts provide technical leadership of the Six Sigma program. Thus, they must know
everything the Black Belts know, as well as understand the mathematical theory on
which the statistical methods are based. Master Black Belts must be able to assist

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Black Belts in applying the methods correctly in unusual situations. Whenever
possible, statistical training should be conducted only by Master Black Belts.
Otherwise the familiar "propagation of error" phenomenon will occur, i.e., Black Belts
pass on errors to green belts, who pass on greater errors to team members. If it
becomes necessary for Black Belts and Green Belts to provide training, they should
do only so under the guidance of Master Black Belts. For example, Black Belts may
be asked to provide assistance to the Master during class discussions and exercises.
Because of the nature of the Master's duties, communications and teaching skills are
as important as technical competence.

Black Belt

Candidates for Black Belt status are technically oriented individuals held in high
regard by their peers. They should be actively involved in the process of
organizational change and development. Candidates may come from a wide range of
disciplines and need not be formally trained statisticians or engineers. However,
because they are expected to master a wide variety of technical tools in a relatively
short period of time, Black Belt candidates will probably possess a background
including college-level mathematics and the basic tool of quantitative analysis.
Coursework in statistical methods may be considered a strong plus or even a
prerequisite. As part of their training, Black Belts receive 160 hours of classroom
instruction, plus one-on-one project coaching from Master Black Belts or consultants.

Successful candidates will be comfortable with computers. At a minimum, they should

understand one or more operating systems, spreadsheets, database managers,
presentation programs, and word processors. As part of their training they will be
required to become proficient in the use of one or more advanced statistical analysis
software packages. Six Sigma Black Belts work to extract actionable knowledge from
an organization's information warehouse. To ensure access to the needed
information, Six Sigma activities should be closely integrated with the information
systems (IS) of the organization. Obviously, the skills and training of Six Sigma Black
Belts must be enabled by an investment in software and hardware. It makes no
sense to hamstring these experts by saving a few dollars on computers or software.

Green Belt

Green Belts are Six Sigma project leaders capable of forming and facilitating Six
Sigma teams and managing Six Sigma projects from concept to completion. Green
Belt training consists of five days of classroom training and is conducted in
conjunction with Six Sigma projects. Training covers project management, quality
management tools, quality control tools, problem solving, and descriptive data
analysis. Six Sigma champions should attend Green Belt training. Usually, Six Sigma
Black Belts help Green Belts define their projects prior to the training, attend training
with their Green Belts, and assist them with their projects after the training.

Staffing Levels and Expected Returns

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As stated earlier in this article, the number of full time personnel devoted to Six Sigma
is not large. Mature Six Sigma programs, such as those of Motorola, General Electric,
Johnson & Johnson, AlliedSignal, and others average about one-percent of their
workforce as Black Belts. There is usually about one Master Black Belts for every ten
Black Belts, or about 1 Master Black Belt per 1,000 employees. A Black Belt will
typically complete 5 to 7 projects per year. Project teams are led by Green Belts, who,
unlike Black Belts and Master Black Belts, are not employed full time in the Six Sigma
program. Black Belts are highly prized employees and are often recruited for key
management positions elsewhere in the company. After Six Sigma has been in place
for three or more years, the number of former Black Belts tends to be about the same
as the number of active Black Belts.

Estimated savings per project varies from organization to organization. Reported

results average about US$150,000 to US$243,000. Note that these are not the huge
mega-projects pursued by Re-engineering. Yet, by completing 5 to 7 projects per year
per Black Belt, the company will add in excess of US$1 million per year per Black Belt
to its bottom line. For a company with 1,000 employees the numbers would look
something like this:

Master Black Belts: 1

Black Belts: 10

Projects: = 50 to 70 (5 to 7 per Black Belt)

Estimated saving: US$9 million to US$14.6 million (US$14,580 per employee)

Because Six Sigma savings impact only non-value added costs, they flow directly to
your company's bottom line.

Implementation of Six Sigma

After over two decades of experience with quality improvement, there is now a solid
body of scientific research regarding the experience of thousands of companies
implementing major programs such as Six Sigma. Researchers have found that
successful deployment of Six Sigma involves focusing on a small number of high-
leverage items. The steps required to successfully implement Six Sigma are well-
documented.

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 1. Successful performance improvement must begin with senior
leadership. Start by providing senior leadership with training in the
principles and tools they need to prepare their organization for success.
Using their newly acquired knowledge, senior leaders direct the
development of a management infrastructure to support Six Sigma.
Simultaneously, steps are taken to "soft-wire" the organization and to
cultivate an environment for innovation and creativity. This involves
reducing levels of organizational hierarchy, removing procedural barriers
to experimentation and change, and a variety of other changes designed
to make it easier to try new things without fear of reprisal.

2. Systems are developed for establishing close communication with

customers, employees, and suppliers. This includes developing rigorous
methods of obtaining and evaluating customer, employee and supplier
input. Base line studies are conducted to determine the starting point
and to identify cultural, policy, and procedural obstacles to success.

3. Training needs are rigorously assessed. Remedial skills education is

provided to assure that adequate levels of literacy and numeracy are
possessed by all employees. Top-to-bottom training is conducted in
systems improvement tools, techniques, and philosophies.

4. A framework for continuous process improvement is developed,

along with a system of indicators for monitoring progress and success.
Six Sigma metrics focus on the organization's strategic goals, drivers,
and key business processes.

5. Business processes to be improved are chosen by management, and

by people with intimate process knowledge at all levels of the
organization. Six Sigma projects are conducted to improve business
performance linked to measurable financial results. This requires
knowledge of the organization's constraints.

6. Six Sigma projects are conducted by individual employees and teams

led by Green Belts and assisted by Black Belts.

Although the approach is simple, it is by no means easy. But the results justify the
effort expended. Research has shown that firms that successfully implement Six
Sigma perform better in virtually every business category, including return on sales,
return on investment, employment growth, and share price increase.

MUMBAI’S AMAZING DABBAWALLAS

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A Six Sigma means the accuracy rate is 99.999 per cent, which otherwise means that
for an office-goers engaging a dabbawala for a monthly fee of something between Rs
150 to Rs 300, the chances of missing a day's home-made lunch is just one in six
thousand.
More than 175,000 or 200,000 lunches get moved every day by an estimated 4,500 to
5,000 dabbawalas, all with an extremely small nominal fee and with utmost
punctuality. According to a recent survey, there is only one mistake in every 6,000,000
deliveries. The American business magazine Forbes gave a Six Sigma performance
rating for the precision of dabbawalas.

The BBC has produced a documentary on dabbawalas, and Prince Charles, during
his visit to India, visited them (he had to fit in with their schedule, since their timing
was too precise to permit any flexibility). Owing to the tremendous publicity, some of
the dabbawalas were invited to give guest lectures in top business schools of India,
which is very unusual. Most remarkably, the success of the dabbawala trade has
involved no modern high technology. The main reason for their popularity could be the
Indian people's aversion to fast food outlets and their love of home-made food.

Low-tech and lean

Dabbawala in action

Although the service remains essentially low-tech, with the barefoot delivery boys as
the prime movers, the dabbawalas have started to embrace technology, and now
allow booking for delivery through SMS. A web site, mydabbawala.com, has also
been added to allow for on-line booking, in order to keep up with the times. An on-line
poll on the web site ensures that customer feedback is given pride of place. The
success of the system depends on teamwork and time management that would be the
envy of a modern manager. Such is the dedication and commitment of the barely
literate and barefoot delivery boys (there are only a few delivery women) who form

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links in the extensive delivery chain, that there is no system of documentation at all. A
simple colour coding system doubles as an ID system for the destination and
recipient. There are no elaborate layers of management either — just three layers.
Each dabbawala is also required to contribute a minimum capital in kind, in the shape
of two bicycles, a wooden crate for the tiffins, white cotton kurta-pyjamas, and the
white trademark Gandhi topi (cap). The return on capital is ensured by monthly
division of the earnings of each unit.

Six Sigma rating

A few years ago, US business magazine Forbes gave Mumbai’s dabbawallas a Six
Sigma performance rating, or a 99.999999 percentage of correctness — which means
one error in six million transactions.

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