TOPIC : LEAN AND SIX SIGMA BACKGROUND

A N D F U N D A M E N TA L S
SUBJECT CODE : MBA18GE36
SUBJECT NAME : LEAN AND SIX SIGMA MANAGEMENT
DELIVERED BY : DR.R.SUGANTHINI REKHA
 HISTORICAL OVERVIEW

The history of quality starts when a statistical control chart was

invented by Dr. Walter Shewhart in the 1930s.

This chart along with other quality controls was adopted by the USA
in World War 2 for production of military supplies in bulk quantities
with high quality.

The UK also used the same for their military equipment.

 HISTORICAL OVERVIEW

Quality began to be systematically studied in the 1930s, mainly in the U.S.A., in the
context of industrial manufacturing, with the cost of rework and scrap drawing a
bit of attention.

In fact, some of the core concepts of quality control can be traced back as far as medieval
Europe, where 13th-century craftsmen’s guilds developed stringent product quality standards,
with compliant goods being marked with a special symbol by inspection committees.
HISTORICAL OVERVIEW
 HISTORICAL OVERVIEW

QUALITY IN THE MEDIEVAL GUILDS OF EUROPE

The quality movement can trace its roots back to medieval Europe, where craftsmen began
organizing into unions called guilds in the late 13th century.

These guilds were responsible for developing strict rules for product and service quality.

Inspection committees enforced the rules by marking flawless goods with a special mark or
symbol.
 HISTORICAL OVERVIEW

❖ QUALITY IN THE INDUSTRIAL REVOLUTION

Until the early 19th century, manufacturing in the industrialized world tended to
follow this craftsmanship model. The factory system, with its emphasis on product inspection,
started in Great Britain in the mid-1750s and grew into the Industrial Revolution in the early
1800s.
 HISTORICAL OVERVIEW

❖ QUALITY IN THE EARLY 20TH CENTURY

The beginning of the 20th century marked the inclusion of "processes" in quality
practices. A "process" is defined as a group of activities that takes an input, adds value to it,
and provides an output.

Walter Shewhart began to focus on controlling processes in the mid-1920s, making quality
relevant not only for the finished product but for the processes that created it.
HISTORICAL OVERVIEW

QUALITY IN THE EARLY 20TH CENTURY

Shewhart recognized that industrial processes yield data. Shewhart determined this data could
be analysed using statistical techniques to see whether a process is stable and in control, or if
it is being affected by special causes that should be fixed. In doing so, Shewhart laid the
foundation for control charts, a modern-day quality tool.
 HISTORICAL OVERVIEW

QUALITY IN THE EARLY 20TH CENTURY

W. Edwards Deming a statistician with the U.S. Department of Agriculture and Census
Bureau, became a proponent of Shewhart’s SQC methods and later became a leader of the
quality movement in both Japan and the United States.
 HISTORICAL OVERVIEW

THE HISTORY OF TOTAL QUALITY IN AMERICA

❖ The birth of total quality in the United States was in direct response to a quality revolution
in Japan following World War II, as major Japanese manufacturers converted from producing
military goods for internal use to producing civilian goods for trade.

❖ At first, Japan had a widely held reputation for shoddy exports, and their goods were
shunned by international markets. This led Japanese organizations to explore new ways of
thinking about quality.
 DEFINITION OF QUALITY

❖ International Organization for Standardization, abbreviated as ISO, is an international

body for formulating standards. It has given ISO 9000 series for Quality Management. ISO
has defined quality as:

“Degree to which a set of inherent characteristics fulfils requirements”

DEFINITION OF QUALITY

Some Common Definitions of Quality

❖ Definition 1. Quality is fitness for use

❖ Definition 2. Quality is conformance to requirements

❖ Definition 3. Good quality means a predictable degree of uniformity and

dependability with a quality standard suited to the customer

❖ Definition 4. Quality is a degree of excellence

❖ Definition 5. Quality is customer satisfaction and loyalty by delighting customers

 DEFINITION OF QUALITY

❖ 1. Quality is fitness for use- Juran

❖ 2. Quality is conformance to requirements- Crosby

❖ 3. Good quality means a predictable degree of uniformity and dependability with a quality
standard suited to the customer- Deming

❖ 4. Quality is a degree of excellence– Merriam-Webster

❖ 5. “Degree to which a set of inherent characteristics fulfils requirements”- ISO 9001

 SIX SIGMA

❖ Six Sigma is a process that makes use of statistics and data analysis to analyse and reduce
errors or defects. In this process, the purpose is to improve cycle times while reducing
manufacturing defects to no more than 3.4 defects per million units or events.

❖ Six Sigma is a data-driven methodology, which purely works on the statistical data retrieved
from a research source.

❖ Six Sigma helps enterprises to cumulatively increase profits in the long run.
SIX SIGMA
 SIX SIGMA

❖ Six Sigma is a method that offers organizations tools to improve their capabilities in
managing their businesses.

❖ This increase in performance and decreasing process variation, it is possible to reduce

defect rates, improve employee morale, and improve the quality of products or services,
which all contribute to a higher level of profitability.
 SIX SIGMA

❖ Six Sigma is a set of management tools and techniques designed to improve the capability
of the business process by reducing the likelihood of error.

❖ Six sigma is a data-driven approach that uses a statistical methodology for eliminating
defects, defect reduction and profits improvement.
 SIX SIGMA

❖ DIFFERING OPINIONS ON THE DEFINITION OF SIX SIGMA

A. The use of teams that are assigned well-defined projects that have a direct impact on the
organization's bottom line.

B. Training in "statistical thinking" at all levels and providing key people with extensive
training in advanced statistics and project management. These key people are designated
"Black Belts."
 SIX SIGMA

❖ Emphasis on the DMAIC approach to problem solving: define, measure, analyze, improve,
and control.

❖ A management environment that supports these initiatives as a business strategy.

 SIX SIGMA

* Keeping in tune with emerging markets and processes, the American

company MOTOROLA developed a new concept of quality management process
in 1986.
* Over the years, it has been refined and polished into a sound theory of principles
and methods, aimed at business transformation through a clearly defined process. This
finished product is Six Sigma.
 TQM & SIX SIGMA

Total Quality Management (TQM) is a management style that involves:

Commitment from everyone in the organization. Dedication to a high level of quality in every
process.
The Total Quality Management technique lays down a set of rules that are aimed to
strategically improve the overall processes of a business. This, in turn, aids in building a high-
quality product that customers accept and appreciate.
 TQM & SIX SIGMA

➢ Six Sigma has two methods to achieve success with the system. DMAIC (Define, Measure,
Analyze, Improve and Control) is a method used to improve existing processes
➢ Sometimes R (Recognize) is added before Define to recognize the correct problem before
continuing the process. DMADV (Define, Measure, Analyze, Design, and Verify), also called the
Design For Six Sigma (DFSS) method, is a method used to create new products or processes.
➢ There are a lot of similarities between Six Sigma and Total Quality Management: They’re both
methods used to monitor quality of output. Both aim to decrease the number of defects and
errors.
 TQM & SIX SIGMA

❖ Although Six Sigma and TQM can be used independently, they are compatible. In many
businesses, the two can be used side by side.

❖ Because they each have a different focus, using them together can increase output
improvement. At the same time, though, it’s important to delineate how each will be used.
 TQM & SIX SIGMA

❖ Both Six Sigma and TQM have many similarities and are compatible in varied business
environments, including manufacturing and service industries.
❖ While TQM has helped many companies in improving the quality of manufactured goods or
services rendered, Six Sigma has the potential of delivering even sharper results.
❖ These methods were eventually developed solely for quality control by W. Edwards Deming in
the 1950s that came to be known as TQM.
❖ Six Sigma came into the picture at a time when TQM was already popular among the companies
as a tool for their quality management needs.
 TQM & SIX SIGMA

❖ For example: International Quality standards such as ISO 9000. Business Excellence
models. Quality awards; for example, the Malcolm Baldrige award and Deming Prize.

❖ All of these are based on the principles of TQM. There are a lot of similarities between
Six Sigma and Total Quality Management:
 L E A N M A N U FAC T U R I N G A N D S I X S I G M A

❖ Lean is a practice that improves processes and reduces waste by harnessing the drive of the
total organization.
❖ Lean Manufacturing is mainly focused on the elimination of waste in the manufacturing
process.
❖ The goal of lean manufacturing is perfection.
❖ Six Sigma is a set of techniques and tools for process improvement that seeks to improve
quality and remove the causes of defects in manufacturing and business processes.
L E A N M A N U FAC T U R I N G A N D S I X S I G M A
 L E A N M A N U FAC T U R I N G A N D S I X S I G M A

❖ Based on the Toyota Production System (TPS), Process Improvement teaches clients to
apply lean principles to identify and eliminate wasteful activities while maintaining or
improving processes. ” Lean thinking” improvement work involves:
• A review of how the current state of a process works
• Identifying wasteful activities in the process
• Establishing projects to eliminate said waste
• Utilizing a Lean Sensei and cross-functional teams to pilot and test potential solutions
• Conducting Kaizen Rapid Improvement Events (RIE’s) to pilot and test improvement strategies
at the point of work, resulting in a culture shift toward continuous improvement
 L E A N M A N U FAC T U R I N G A N D S I X S I G M A

❖ Both Six Sigma and Lean Manufacturing work toward improving the production process and
saving time and cost, however, they have different methods for reaching those goals.

❖ Deciding which program to go with depends on what areas your company needs to improve on.

❖ If one is looking to decrease the number of defects and improve on variability in your product,
then Six Sigma would be the program to choose.

❖ However, if one is looking to cut down on waste and improve the efficiency of your production
process, then Lean Manufacturing is the system best for the company.
 L E A N M A N U FAC T U R I N G A N D S I X S I G M A

➢ Most manufacturers have heard of Lean Manufacturing and Six Sigma systems.

Some believe that the two systems are much the same thing.

➢ However, although both systems are influenced by the Japanese, they are based on different
methods of obtaining a streamlined, efficient flow of work through the manufacturing process.

➢ Lean Manufacturing is based on the areas of waste and efficiency, while Six Sigma is more
concerned with the areas of defects and variability.

➢ Both involve changing the way in which a company’s manufacturing processes are completed.
 SUMMARY

❖ Today we had seen the following topics

* Historical Overview

* Definition of Quality

* Six Sigma

* TQM & Six sigma

* Lean Manufacturing and Six Sigma

Six Sigma and Process Tolerance
 Six Sigma (6σ) is a set of techniques and tools for process improvement. It was
introduced by American engineer Bill Smith while working at Motorola in 1986
 Six Sigma strategies seek to improve manufacturing quality by identifying and
removing the causes of defects and minimizing variability in manufacturing
and business process.
 This is done by using empirical and statistical quality management methods and
by hiring people who serve as Six Sigma experts.
 Each Six Sigma project follows a defined methodology and has specific value
targets, such as reducing pollution or increasing customer satisfaction.
Six Sigma and Process Tolerance
 The term Six Sigma originates from statistical modelling of
manufacturing process.
 The maturity of a manufacturing process can be described by
a sigma rating indicating its yield or the percentage of defect-free
products it creates—specifically, to within how many standard deviations
of a normal distribution the fraction of defect-free outcomes corresponds.
 Six Sigma is a process that makes use of statistics and data analysis to
analyse and reduce errors or defects.
 In this process, the purpose is to improve cycle times while reducing
manufacturing defects to no more than 3.4 defects per million units or
events.
Six Sigma and Process Tolerance
 Process tolerance is a value that sets the standard by which the capability of your
process is determined. It is defined as a multiple of a process standard deviation
(sigma).

 Six Sigma tolerance specification represents the acceptable range of

performance values that a customer will accept.

 Process tolerance refers to the exact limits that each of your processes has on
both ends the lower and the higher.
Six Sigma and Process Tolerance
Six Sigma and Process Tolerance
Six Sigma and Process Tolerance
Process tolerance refers to the exact limits that each of your processes has on both ends the lower and the higher.
Six Sigma and cultural changes
Six Sigma and cultural changes
Six Sigma and cultural changes
Six Sigma and cultural changes
Process for Successful Six Sigma Cultural Changes

➢ Weekly Functional Manager Team Meetings

➢ Weekly Green Belt Mentoring by Black Belts
➢ Monthly Champion Review of Projects
➢ Disciplined Project Opening, Tool Rigor and Closure

DISCIPLINE, REPETITION AND FULL LEADERSHIP INVOVLEMENT

Six Sigma Capability
Six Sigma Capability
 Process Capability and Six Sigma Another measure of process quality is
process capability, or C p, which is the specification width (distance
between the specification limits) divided by 6 times the standard
deviation. Cp = (Upper SL – Lower SL) / 6σ The recommended minimum
or acceptable value of C p is 1.33.
Six Sigma Capability
Six Sigma Process Capability & Performance Limits.
➢ According to Six Sigma philosophy, Cp or Pp (process Capability )and Cpk
or Ppk (Process Performance)should be greater than 1.50.
➢ From a technical standpoint, Six Sigma deems a process being acceptable
only after achieving a maximum defect rate of 3.4 parts per million
opportunities.
Six Sigma need assessments
 Successful corporate initiatives such as Lean Six Sigma require proper
planning, prioritization, resource allocation, budgeting, training, and
proper review and reward mechanics. These initiatives also must consider
the stability, accuracy and maturity of the core processes, measurement
systems and the people they will affect.
Six Sigma need assessments
 In most organizations there is a wide range of both experience and
infrastructure to deal with such issues.
 This variation can be attributed to a variety of causes including –
organizational structure (e.g., centralized versus decentralized),
organization size, geographical diversity, previous initiative rollout
experience, management style/culture, management infrastructure (e.g.,
tools to enable clear and concise commnication, measurement and
reward/recognition) and contention for the best resources.
 Within this dynamic environment of moving parts lies the groundwork for
a highly successful initiative or – at the other end of the spectrum – a train
wreck.
Six Sigma need assessments
 Understanding these processes and systems enables an organization to
logically build out an implementation plan while mitigating potential
risks of failure.

 This is the concept behind a readiness assessment used to drive successful

initiative planning and rollout.
Six Sigma need assessments
 Several factors must be considered when deciding when, how and just
how much assessment to do.
 Mature organizations may already have in place a variety of
comprehensive and regularly scheduled assessments, from which much of
the necessary information may already be available.
 These may include assessments and audits such as the ISO Series
(ISO9000), CMM/CMMi®, national or state quality awards, or a company’s
own existing assessment program. While each of these assessments may
have been created for a purpose other than determining readiness for a
Six Sigma initiative, many of their attributes are useful in determining
readiness or maturity.
Six Sigma need assessments
 Assessment Goals
➢ Validate critical business measures and selection high leverage projects
(from existing clusters).
➢ Identify leverage points and areas of opportunity in upcoming projects
and existing processes.
➢ Identify potential obstacles and mitigation strategies.
➢ Recommend a set of next steps and tune Six Sigma deployment plan
accordingly.
➢ Minimize risk and improve cycle time of deployment.
Six Sigma need assessments
 Existing strategy documentation, goals and objectives,
policies, procedures, process documentation, data, organizational charts
and other pertinent plans and information will provide a basis for
evaluating both the scope of the prospective assessment and serve to help
in the planning and preparation for the assessment.
Six Sigma need assessments
 Communicate to Avoid Organizational Resistance
➢ Any assessment can be a source of trepidation for an organization.
➢ Without communicating the purpose of the assessment, the schedule, the
roles and responsibilities of individuals during the assessment, the
confidentiality of statements and documentation, and what will be done
with the results, organizational resistance can create an environment
where gleaning accurate information will be nearly impossible.
➢ Generally speaking, any assessment should be communicated to the
organization well in advance of when people will be required to respond.
Six Sigma need assessments
• Communicate to Avoid Organizational Resistance

➢ Communications also may be repeated a few times to reinforce its importance.

➢ It is usually best if senior management details the assessment purpose, scope,
context, size, location(s), dates and intended follow-up.
➢ This communication also should state a firm commitment to the process, a
solicitation for full forthright cooperation and an assurance of confidentiality.
➢ This type of communication when reinforced in regularly scheduled meetings
and informal communications will help to reduce organizational resistance and
assure a free flow of accurate information.
Six Sigma need assessments
 Planning Essential for Assessment Success
➢ Planning for an assessment will be gated by the scope and context of the
initiative and the organization. Most readiness assessments involve either
interviewing or surveying of a cross-functional and/or cross-
organizational group of people.
➢ One way to envision the survey/interview population is by imagining a
diagonal slice of the organization.
➢ Given this view, the company needs to be sure it elicits information from
all constituencies in a way that provides a balanced view of what is going
on (from strategic/organizational elements to tactical/operational
elements).
Six Sigma need assessments
 One of the primary inputs to the assessment process is what people in the organization actually do in the
performance of their daily work. Deciding how, how many and who that information is elicited from is a
critical decision in the process. When considering the survey or interview populations, several choices
should be considered:
 Sample size (how many and from where) – This is often determined by the size of the organization and
whether or not web-based technology is used. If assessing an organization of 500-5,000 associates and
utilizing an interview-based model, sample sizes should be 3 to 5 percent of the population.
 When using web-based technology, a sample size of 100 percent is not out of the question. Web-based
assessments while missing on actual observation and dialog, add the capability to collect, process and store
a large amount of data quickly, which enhances the ability to reuse and drill down in the detailed data.
 Demographics (various locations, cultures and or geographies) – Demographics are important to
learn about in an assessment. Often locally tuned processes and practices are getting results and thus may
be ripe for adoption by the organization at large. Sometimes certain geographies are required to comply
with local laws or requirements. A supply chain view also is worth considering. It can be highly desirable to
include several customers, clients or even suppliers in theassessment. This is a great way to see how
external sources view the strengths and weaknesses of a process.
Six Sigma need assessments
 Demographics (various locations, cultures and or geographies) –
Demographics are important to learn about in an assessment.
➢ Often locally tuned processes and practices are getting results and thus
may be ripe for adoption by the organization at large.
➢ Sometimes certain geographies are required to comply with local laws or
requirements.
➢ A supply chain view also is worth considering. It can be highly desirable to
include several customers, clients or even suppliers in the assessment.
➢ This is a great way to see how external sources view the strengths and
weaknesses of a process.
Six Sigma need assessments
 Availability of information (from other sources including other
audits and assessments) – If a recent and rich source of information
exists (previous audit or assessment) it only stands to reason that this
information is useful.
➢ Even if it appears to be in conflict with other things discovered.
➢ This often happens when things are being done in a vacuum or pocket of
excellence. All are useful things to learn.
Six Sigma need assessments
 Use of technology (specifically, web-based survey and assessment tools) –
Web-based tools for assessments are gaining popularity and accuracy.
➢ It is important to differentiate between “survey only” and assessment tools.
➢ Assessment tools usually have some type of intelligence built in to generate
comparative and gap analysis automatically.
➢ They typically can trap user comments and opinions, which can then be stored
for quick retrieval and summarization.
➢ There are many advantages to web-based systems but no web-based system can
observe actual behavior.
➢ Usually some combination of web technology and observation-based validation
provides the most accurate result.
Six Sigma need assessments
 Timing (of the initiative and other things going on in the
organization) – All efforts should be made to plan an assessment in
concert with the initiative scheduling process.
➢ Sometimes when senior management announces a timeline for an
initiative it does not consider the assessment.
➢ The assessment becomes an afterthought and then must be rushed.
➢ While not the optimum way to execute, good planning and frequent
communication can help overcome this shortfall.
Six Sigma need assessments
 Organizational culture (receptiveness or resistance to
assessment) – If this is the first time an organization has undergone a
formal assessment, it is normal to see significant organizational
resistance.
➢ The best way to overcome this is by meticulous planning and frequent
communication.
➢ Organizations used to such events will be able to move faster with less
communication.
Six Sigma need assessments
 Availability of people (resource bandwidth given the type of work
being performed) – Careful consideration should be given to make
people available to participate without any negative consequences.
➢ Typically a survey or interview will require an hour or so of preparation
and an hour in an actual interview or survey.
➢ Management must create a safe ground for employees to participate.
Implications of quality levels
 Quality is still needed in every manufacturing environment and “Quality
at source” is fundamental to a flowing production system.
 Quality at source builds the quality requirements into each step of the
process and has controls so known problems are highlighted and not
passed on.
 As a Lean improvement system is reducing the wastes in the production
system, wasted materials and time due to poor quality needs attention.
Implications of quality levels
 Quality management is embedded within core lean manufacturing
principles, however improving quality assurance even further for small
and large manufacturers alike, can be achieved by adopting Six Sigma
techniques and strategies.
Implications of quality levels
 The implications of quality in terms of business have been produced over
time.
 Different understandings quoted are below:
 As indicated by American Society for Quality: "A subjective term for
which every individual has his or her own definition.
 In technical usage, quality can have two meanings: the characteristics of a
product or service that bear on its ability to satisfy stated or implied
needs; And a product or service free of deficiencies.”
Implications of quality levels
 As indicated by Peter Drucker: “Quality in a product or service is not what
the supplier puts in. It is what the customer gets out and is willing to pay
for.”

 As per ISO 9000: “Degree to which a set of inherent characteristics fulfills

requirements.” The standard defines requirement as need or expectation.
Implications of quality levels
 When lean manufacturing is used properly in an organization, the overall
end result is increased profits.
 The theory behind this is that unnecessary costs and processes are
removed and quality of products is increased.
 When the product quality increases, the products offer more value to the
customers, causing them to purchase more products.
Implications of quality levels
 According to Harry and Schroeder, Six Sigma quality fundamentally
means a breakthrough strategy that can be interpreted as “a disciplined
method of using extremely rigorous data gathering and statistical analysis
to identify the sources of errors and ways of eliminating them.”
 Lean Production focuses on improving process performance. Process
performance can be measured in terms of quality of the output, cost
creating the output, and delivery on time.
Implications of quality levels
 Both Lean and Six Sigma use a proactive, data-driven approach towards
improvement and waste elimination.
 Likewise, quality management systems rely on evidence-based decision
making to solve problems and drive improvement.
 This creates concrete and measurable evidence of improvements and
demonstrates value of Lean and Six Sigma activities.
Implications of quality levels
 Likewise, quality management systems rely on evidence-based decision
making to solve problems and drive improvement.
 This creates concrete and measurable
evidence of improvements and demonstrates value of Lean and Six
Sigma activities.
 By eliminating waste with Lean, risks and opportunities become more
visible.
Summary
 Today we reviewed the following topics

➢ Six Sigma and Process Tolerance

➢ Six Sigma and cultural changes
➢ Six Sigma Capability
➢ Six Sigma need assessments
➢ Implications of quality levels
TOPIC : LEAN AND SIX SIGMA BACKGROUND AND FUNDAMENTALS
SUBJECT CODE : MBA18GE36
SUBJECT NAME : LEANAND SIX SIGMAMANAGEMENT
PRESENTED / FACULTYIN CHARGE : Dr. R.SUGANTHINI REKHA
Cost of Poor Quality (COPQ)
COST OF QUALITY

• Cost of Quality is a methodology used to define and measure where and what
amount of an organization’s resources are being used for prevention activities
and maintaining product quality as opposed to the costs resulting
from internal and external failures.
Cost of Poor Quality (COPQ)

▪ The Cost of Quality can be represented by the sum of two factors. The Cost of
Good Quality and the Cost of Poor Quality equals the Cost of Quality, as
represented in the basic equation below:

CoQ = CoGQ + CoPQ

▪ The Cost of Quality equation looks simple but in reality it is more complex.
Cost of Poor Quality (COPQ)

• The Cost of Quality includes all costs associated with the quality of a product
from preventive costs intended to reduce or eliminate failures, cost of process
controls to maintain quality levels and the costs related to failures both internal
and external.
Cost of Poor Quality (COPQ)
Need for Implementation of Cost of Quality

• Effective use and implementation of Cost of Quality methodology enables an

organization to accurately measure the amount of resources being used for
Cost of Good Quality and Cost of Poor Quality.

• With this valuable information the organization can determine where to

allocate resources to improve product quality and the bottom line
Cost of Poor Quality (COPQ)
Four Types of Cost of Quality

1. Appraisal Costs
2. Prevention Costs
3. Internal Failure Costs
4. External Failure Costs
Cost of Poor Quality (COPQ)

• Appraisal Costs and Prevention Costs deals with Cost of Good Quality ( CoGQ)

• Internal Failure Costs & External Failure Costs deals with Cost of Poor Quality (COPQ)
Cost of Poor Quality (COPQ)
Prevention Costs
• Costs incurred from activities intended to keep failures to a minimum.
• These can include, but are not limited to, the following:
• Establishing Product Specifications
• Quality Planning
• New Product Development and Testing
• Development of a Quality Management System (QMS)
• Proper Employee Training
Cost of Poor Quality (COPQ)
Appraisal Costs
• Costs which are incurred to maintain acceptable product quality levels.
Appraisal costs can include, but are not limited to, the following:
• Incoming Material Inspections
• Process Controls
• Check Fixtures
• Quality Audits
• Supplier Assessments
Cost of Poor Quality (COPQ)
Internal Failures
• Costs which are associated with defects found before the product or service
reaches the customer.
• Internal Failures may include, but they are not limited to, the following
examples:
• Excessive Scrap
• Product Re-work
• Waste due to poorly designed processes
• Machine breakdown due to improper maintenance
• Costs associated with failure analysis
Cost of Poor Quality (COPQ)
• External Failures
• Costs which are associated with defects found after the customer receives the
product or service.
• External Failures may include, but are not limited to, the following examples:
• Service and Repair Costs
• Warranty Claims
• Product or Material Returns
• Incorrect Sales Orders
• Customer Complaints
• Shipping Damage due to Inadequate Packaging
Cost of Poor Quality (COPQ)

• The Cost of Good Quality is the sum of Prevention Cost and Appraisal Cost (CoGQ = PC +
AC)

• The Cost of Poor Quality is the sum of Internal and External Failure Costs (CoPQ = IFC +
EFC)

• By combining the equations, Cost of Quality can be more accurately defined, as shown in
the equation below:

COQ = (PC + AC) + (IFC + EFC)

Cost of Doing Nothing

•Cost of Doing Nothing is A Quality

Concern
•Quality problems that may arise from
lack of quality process or "doing
nothing"
Cost of Doing Nothing

• Organizations that do nothing or simply maintain the status quo in terms of

quality management increase the risk of an incident that can a tarnish their
brand reputation, lose consumer trust or hurt their bottom line.

• Organizations that are proactive on quality are more likely to have stronger
brand loyalty, grow faster and are more profitable.
Cost of Doing Nothing

• Cost of Doing nothing is a prevalent option to solving problems. It usually

holds the least short-term risk, both personally and corporately.

• It doesn’t require a committee’s unanimous decision. Many times it doesn’t

even have a business case attached. Instead, just pointing out that “things are
going well” is justification enough.
Cost of Doing Nothing

• Excellence or continuous improvement can be hard to achieve (or sustain) for

companies, even more so when you consider the demands of modern society.

• Conversely, doing nothing creates a culture of mediocrity that struggles to

react when something goes wrong.
Cost of Doing Nothing

• The cost of doing nothing is, as we have said, often an incalculable amount.

• Doing nothing is not a business strategy, mainly because another company in

the same space is likely doing something – innovating, changing, disrupting,
expanding, enhancing the customer experience.

• Companies that do nothing are missing the opportunities to grow, to improve

operations, to be more effective and efficient, and to gain more market share.
Cost of Doing Nothing

• If the cost of doing nothing is having an adverse effect on a company and,

importantly, its product quality

• Then how can this scenario be prevented.

• The simple answer to how to prevent is quality management software.

Cost of Doing Nothing

“ The Cost of doing wrong is less than the

Cost of doing nothing “
•Seth Godin
Topic : The Scope of tools and techniques
Subject Code : MBA18GE36
Subject Name: Lean and Six SigmA Management
Delivered by : Dr.R.Suganthini Rekha
▪ Quality control is an essential component in the
production process that ensures efficiency and
functionality.
▪ Using quality tools, companies identify
production problems and quality control
professionals implement solutions.
▪ One can be benefited from learning about
various management tools for quality control to
ensure that the final product fulfils the quality
requirements and conforms to industry
standards.
▪ Quality control (QC) is a procedure or set of
procedures intended to ensure that a
manufactured product or performed service
adheres to a defined set of quality criteria or
meets the requirements of the client or
customer. QC is similar to, but not identical with,
quality assurance (QA).
▪ Quality control is a process by which entities
review the quality of all factors involved in
production. ISO 9000 defines quality control as
"A part of quality management focused on
fulfilling quality requirements".
▪ Before reviewing some quality tools, it is
imperative to understand their definition and
importance.
▪ There are many complex processes during
manufacturing.
▪ Some of these processes may malfunction and
result in significant delays and overhead costs.
▪ Using these tools, a manufacturing company or
organisation can examine its production
process, identify key problem areas, control
quality fluctuations and provide solutions to
avoid future defects.
▪ The seven basic quality tools proposed by Kaoru
Ishikawa in 1982 include techniques that
facilitate data collection, data analysis and data
visualisation, which ensure product quality and
reduce maintenance costs.
▪ Professionals have also developed newer
techniques on top of basic tools. The ten tools
for quality control are:
▪ Cause and Effect Diagram
▪ Check Sheet
▪ Control Chart
▪ Histogram
▪ Pareto Chart
▪ Scatter Diagram
▪ Stratification
▪ Affinity Diagram
▪ SIPOC Diagram
▪ Failure Mode and Effects Analysis
▪ Cause and effect diagrams, also known as
fishbone diagrams, give a visual representation
of the elements contributing to a certain
outcome. You can use it to examine the
relationship between variables in a process,
which can help you identify which variables in a
production process can lead to quality
problems.
▪ This diagram typically includes six types of
causes for variations in quality, which are
machine, material, method, measurement,
environment and people. Some key concepts
include:
▪ Cause-effect diagrams do not identify a root
cause but show graphical representations of the
many factors that may explain an observed
result.
▪ Interrelationships between the different factors
are clearly demonstrated.
▪ Some causal factors appear more than once in
the diagram.
▪ The relationships between factors are
qualitative and hypothesised.
▪ The team can focus on the specific problem at
hand in a systematic and structured way.
▪ Check sheets are standard, structured forms for
collecting and analysing data.
▪ They indicate potential problems a process
might encounter.
▪ Employees add tally marks next to the
associated field on the sheet for each problem
that occurs.
▪ These marks provide employees with a way to
keep track of trends.
▪ One can use check sheets when collecting data
from the production process or when collecting
data about problems, defects, defect locations,
defect causes or similar issues.
Topic : The Scope of tools and techniques
Subject Code : MBA18GE36
Subject Name : Lean and Six SigmAManagement
Delivered by : Dr.R.Suganthini Rekha
10 Quality Tools to Use
Quality Tools

• The seven basic quality tools proposed by Kaoru Ishikawa in 1982 include techniques that facilitate data
collection, data analysis and data visualisation, which ensure product quality and reduce maintenance
costs.
• Professionals have also developed newer techniques on top of basic tools. The ten tools for quality
control are:
• Cause and Effect Diagram
• Check Sheet
• Control Chart
• Histogram
• Pareto Chart
• Scatter Diagram
• Stratification
• Affinity Diagram
• SIPOC Diagram
• Failure Mode and Effects Analysis
10 Quality Tools to Use
Quality Tools

• Control Chart
❖ The control chart is a graph used to study how a process changes over time.
❖ Data are plotted in time order.
❖ A control chart always has a central line for the average, an upper line for the upper
control limit, and a lower line for the lower control limit.
❖ These lines are determined from historical data.
 Control Charts

The 3 elements of a control chart

• All control charts have three basic components: a centreline, usually the mathematical
average of all the samples plotted. upper and lower statistical control limits that define
the constraints of common cause variations. performance data plotted over time
The basic principle of control chart
Control charts are constructed by plotting samples of your process output collected
over time. There are several types of control charts, and the one that you choose depends on
the type of output that your process produces and the sampling plan that you use to collect it.
Tracking variables.
10 Quality Tools to Use
Quality Tools
• Histogram
• A histogram is a bar graph-like representation of data that buckets a range of
classes into columns along the horizontal x-axis.
• The vertical y-axis represents the number count or percentage of occurrences in the
data for each column.
• Columns can be used to visualize patterns of data distributions.
• In statistics, a histogram is a graphical representation of the distribution of data.
• The histogram is represented by a set of rectangles, adjacent to each other, where
each bar represent a kind of data.
10 Quality Tools to Use
Quality Tools
• Histogram
10 Quality Tools to Use
Pareto Chart

• A Pareto chart is a type of chart that contains both bars and a line graph, where
individual values are represented in descending order by bars, and the cumulative
total is represented by the line.
• Pareto charts show the ordered frequency counts of data.
• These charts are often used to identify areas to focus on first in process
improvement. Pareto charts show the ordered frequency counts of values for the
different levels of a categorical or nominal variable. The charts are based on the
“80/20” rule.
10 Quality Tools to Use
Pareto Chart “80/20 Rule”

• 80/20 Rule – The Pareto Principle. The 80/20 Rule (also known as the Pareto
principle or the law of the vital few & trivial many) states that, for many events,
roughly 80% of the effects come from 20% of the causes.
• Pareto Analysis is a technique used for decision making based on the Pareto
Principle.
• Pareto Principle is based on 80/20 rule which says “80% of impacts are due to 20% of
causes”.
• It emphasizes that a major number of issues are created by a relatively smaller
number of underlying causes.
10 Quality Tools to Use
Quality Tools
• Scatter Diagram
• The scatter diagram graphs pairs of numerical data, with one variable on each axis,
to look for a relationship between them.
• If the variables are correlated, the points will fall along a line or curve.
• The better the correlation, the tighter the points will hug the line.
The 3 types of scatter diagrams
• Types of Scatter Plot
• Scatter Plot for Positive Correlation.
• Scatter Plot for Negative Correlation.
• Scatter Plot for Null Correlation.
10 Quality Tools to Use
Quality Tools
• Scatter Diagram
10 Quality Tools to Use
Quality Tools
• Stratification
• Stratification is to classify or group data with matching characteristics in groups or
strata. It serves to facilitate the work before using other tools such as histograms or
scatter diagrams.
Stratification factors in six sigma
The four factors are Who,
What,
Where and
When
10 Quality Tools to Use
Quality Tools
• Stratification
10 Quality Tools to Use
Quality Tools
• Affinity
• An Affinity Diagram is an analytical tool used to organize many ideas into subgroups
with common themes or common relationships.
• The method is reported to have been developed by Jiro Kawakita and so is
sometimes referred to as the K-J method.
• An affinity diagram organizes this list based upon common themes or relationships.
10 Quality Tools to Use
Quality Tools
• Affinity Diagram
Tools for definition
• Flow diagram
• Flow diagram is a collective term for a diagram representing a flow or set of
dynamic relationships in a system.
• The term flow diagram is also used as a synonym for flowchart, and sometimes as a
counterpart of the flowchart.
The 3 types of Process Flow Diagram
• In 1987, Andrew Veronis published a book called Microprocessors: Design and
Application that described the following three types of flowcharts: System
flowchart.
• General flowchart.
• Detailed flowchart.
Tools for definition
• Flow diagram
Tools for definition
• CTQ Tree
A Critical to Quality (CTQ) Tree is a diagram-based tool you can use to clarify
customer needs and understand more about the specific, measurable performance
CTQ trees are the key measurable characteristics of a product or process whose
performance standards or specification limits must be met in order to satisfy the
customer.
Tools for definition
CTQ Tree
The purpose of a CTQ tree
• A Critical to Quality (CTQ) Tree Helps Businesses Define and Meet Customer Needs.
A Critical to Quality Tree (also known as a CTQ Tree) is a Six Sigma tool used to
identify the needs of the customer and translate that information into measurable
product and process requirements.
Tools for definition
CTQ Tree

• CTQs are the key measurable characteristics of a product or process whose

performance standards or specification limits must be met in order to satisfy the
customer.
Tools for definition
• CTQ Tree Examples
Some examples of CTQ requirements are: Mobile phone screen does not
break when dropped from a height of three feet onto concrete. Engine part size
variance of less than 0.5%.
Project Charter
• A project charter is a formal short document that states a project exists and
provides project managers with written authority to begin work.
• A project charter document describes a project to create a shared understanding of
its goals, objectives and resource requirements before the project is scoped out in
detail.
Project Charter
• A project charter should always include an overview, an outline of scope, an
approximate schedule, a budget estimate, anticipated risks, and key stakeholders.
Project Charter
Project Charter Importance
The project charter is a document that officially starts a project or a phase. It
formally authorizes the existence of the project and provides a reference source for the
future. The charter gives a direction and a sense of purpose to the management from
start to end
Topic : The Scope of tools and techniques
Subject Code : MBA18GE36
Subject Name: Lean and Six SigmA Management
Delivered by : Dr.R.Suganthini Rekha
 IPO Diagram
• An IPO (Input-Process-Output) Diagram is a very high-level
diagram used for systems analysis that visually describes
business processes with the description of each component in
word.
• It shows a process key inputs and resulting outputs after a set
of operations.
 IPO diagram
The components of an IPO diagram

• This is a table with three columns, which represent three

components: input, output and processing.
IPO Diagram
 SIPOC diagram
• A SIPOC (suppliers, inputs, process, outputs, customers)
diagram is a visual tool for documenting a business process
from beginning to end prior to implementation.
• A SIPOC diagram is a visual process mapping. It's a process
map that shows how the project goals will be accomplished.
It's a way to make sure that the team and leadership all are on
the same page about the business process and customer
requirements
 SIPOC Diagram
• A SIPOC diagram is a tool used by a team to identify all
relevant elements of a process improvement project before
work begins.
• It helps define a complex project that may not be well scoped,
and is typically employed at the Measure phase of the
Six Sigma DMAIC (Define, Measure, Analyze, Improve,
Control) methodology.
• It is similar and related to process mapping and
‘in/out of scope’ tools, but provides additional detail.
 SIPOC Diagram
▪ SIPOC Model Example

To prepare a SIPOC table, process teams must be capable of

mapping the entire operation.
▪ They must be able to identify different elements of the process,
including who the suppliers are, the inputs required for process
execution, the final output, and the customer
SIPOC Diagram
SIPOC Diagram
 Flow process charts
• The flow process chart is a graphical and symbolic
representation of the activities performed on the work piece
during the operation in industrial engineering.
• A Flow Chart (also known as a Process Flow Diagram or Process
Map) is a diagram of the steps in a process and their sequence.
• Two types of flow charts are utilized in quality improvement. A
high-level flowchart, outlining 6-10 major steps, gives a high-
level view of a process.
 Different types
Three types of flow process charts include:
• 1) man-type charts depicting the person actions,
• 2) material-type charts displaying the actions with product or
material object,
• 3) equipment-type charts visualizing the usage of tools and
equipment.
 Eight basic symbols of flowchart
• The most fundamental shapes in the diagramming collections,
these basic flowchart symbols are used in creating your flowcharts,
just stay consistent.
– Circle.
– Rectangle.
– Triangle.
– Trapezoid.
– Diamond.
– Semicircle.
– Hexagon.
– Parallelogram.
Flow process charts
 Process capability Measurement

• Process capability is defined as a statistical measure of the

inherent process variability of a given characteristic.
• One can use a process-capability study to assess the ability of
a process to meet specifications.
 Process capability Measurement
• Cp and Cpk, commonly referred to as process capability
indices, are used to define the ability of a process to produce a
product that meets requirements.
• A proper centered process will have Cp = Cpk. An estimate
for Cpk = Cp(1-k). Since the max value for k is 1.0, so the value
for Cpk will always be less or equal to Cp.
• Input is required from the customer regarding the lower
specification limit (LSL) and the upper specification limit (USL).
 Process capability Measurement
• Two commonly used measures of process capability are Cp, when
the process is centered on the nominal value, and Cpk when the
process is not centered on the nominal value.
Acceptable CP and Cpk
• In general, the higher the Cpk, the better.
• A Cpk value less than 1.0 is considered poor and the process is not
capable.
• A value between 1.0 and 1.33 is considered barely capable, and a
value greater than 1.33 is considered capable.
 Process capability Measurement
• Two parts of process capability are: 1) measure the variability
of the output of a process, and
2) compare that variability with a proposed specification or product
tolerance.
 Process capability Measurement
• The two main types of data for capability analysis
are continuous data and attribute data. Minitab offers normal
and nonnormal analyses for continuous data and binomial and
Poisson analyses for attribute data.
 Tools for Analysis
Analyze Six Sigma
• Here is a step-by-step breakdown of Six Sigma DMAIC:
• Define: Identify the project goals and all customer deliverables.
• Measure: Understand current performance.
• Analyze: Determine root causes of any defects.
• Improve: Establish ways to eliminate defects and correct the
process.
• Control: Manage future process performance.
 Tools for Analysis
1. Pareto Chart
• When it is about the Six Sigma quality tools, the Pareto chart tops
the list.
• This chart comes from the idea known as Pareto Principle.
• According to the Pareto Principle, nearly 80 percent of the outcome
results from 20 percent of the cause.
• The Pareto chart is a special kind of bar chart that enable you to
easily identify a few critical causes, thereby allowing you to focus
on the vital issues.
 Tools for Analysis
2. Gage R&R
• Gage R&R is one of the significant Sigma Six tools for process
improvement.
• To solve a problem, accurate measurements are at the core.
• The Gage R&R allows you to determine whether the
continuous measurements like pressure, weight, and diameter
are reproducible and repeatable.
• It helps in checking the accuracy of the measurements.
 Tools for Analysis
3. Histogram
• A histogram is one of the 6Sigma tools used for the process
improvement of businesses.
• A histogram refers to a snapshot of continuous, numeric data.
• It allows one to identify the spread as well as the center of
data in much less time. It enables you to locate where
maximum data fall and provide you with insights into the
maximum and minimum value.
 Tools for Analysis
4. Process Capability
• Every process has a specific upper and lower bound. The process
capability analysis helps in quantifying how well a process can meet
the set specifications. It can also provide you with an idea about
the ways to improve the poor processes.
5. Attribute Agreement Analysis
• Attribute agreement analysis is also one of the important Six Sigma
analysis tools. It is an ideal tool for categorical assessments, like Fail
or Pass. It allows you to determine whether the people rating the
different categories agree with other appraisers, with themselves,
as well as with known standards.
 Tools for Analysis
6. ANOVA
• ANOVA is one of the popular Six Sigma tools that is widely used
by organizations around the globe.
• It is a collection of statistical models that are used for the
analysis of differences among mean.
• In simple words, this statistical tool enables you to compare
two or more two means easily.
 Tools for Analysis
7. Regression
• Regression is a Six Sigma statistical tool that is helpful in the
determination of the existence of a relationship between one or
more input variables and the output variable.
• For instance, using the tool, you can determine whether there is a
relationship between the sales revenue and the marketing
expenditure of a company.
• If there exists any relationship, you can make use of the regression
equation for describing the relationship and predicting the values
of future output for the provided input values.
 Tools for Analysis
8. t-Tests
• A t-test is another statistical tool that is used for comparing the
average of one sample to the average of another sample.
• It can also be used for comparing the average of one sample to
a given target.
 Tools for Analysis
9. Control Charts
• The control chart is an important Six Sigma tool for risk
analysis.
• To ensure the quality of services and products, it is vital to
have a stable process.
• A control chart helps in distinguishing a special-cause variation
from the natural and acceptable variation.
• It allows the identification of unusual variations, thereby
allowing you to take the necessary actions.
 Tools for Analysis
10. DOE
• Design of Experiments (DOE) offers a data collection strategy
that allows making adjustments to the inputs to determine the
existence of relationships between the outputs and inputs.
After collecting essential data and identifying the vital inputs,
this tool can be used to determine the optimal settings.
TOPIC :SIX SIGMA METHODOLOGIES
SUBJECT CODE : MBA18GE36
SUBJECT NAME : LEAN AND SIX SIGMA
MANAGEMENT
DELIVERED BY : DR.R.SUGANTHINI REKHA
 DESIGN FOR SIX SIGMA (DFSS)

Design for Six Sigma (DFSS) is a methodology of improvement that helps businesses create new
products or services at a high level of quality.
The technique aims to meet the needs of customers and utilize the company's capability as much as
possible during the original development of a process.
 DESIGN FOR SIX SIGMA (DFSS)

History of Design for Six Sigma

The evolution of DFSS methodology began in the 1980’s, when Motorola hired Mr. Bill Smith and Dr.
Mikel J. Harry to improve its quality control.
Building upon improvement theories that were developed by quality professionals such as W. Edward
Deming, Smith and Harry introduced the methodology of Six Sigma.
This statistics-based approach aims to reduce the number of defects to less than 3.4 per million,
controlling quality and achieving near perfection.
 DESIGN FOR SIX SIGMA (DFSS)

Design (detailed) the process to meet the customer needs. Verify the design performance and ability to
meet customer needs.
A slight modification on the DMADV methodology is DMADOV
DMADOV is Define, Measure, Analyze, Design, Optimize and Verify.
 DESIGN FOR SIX SIGMA (DFSS)

Five Phases of DFSS project

DMADV, define – measure – analyze – design – verify, is sometimes synonymously referred to as DFSS,
although alternatives such as IDOV (Identify, Design, Optimize, Verify) are also used.
 DESIGN FOR SIX SIGMA (DFSS)

Design for Six Sigma (DFSS) is a different approach to new product or process development in that
there are multiple methodologies that can be utilized.
 DESIGN FOR SIX SIGMA (DFSS)

Tools used for DFSS

DMAIC Roadmap -Tools for Six Sigma.
DMADV (Define, Measure, Analyze, Design and Validate)
Gage R&R (MSA) - Analyze measurement systems.
Kaizen - Continuous Improvement.
TQM - Total Quality Management.
 DESIGN FOR SIX SIGMA (DFSS)

Implementing DFSS

Identify scope of the program (process versus service/product design). Assess potential impact of DFSS
on the organization (type of involvement necessary). Decide on the implementation approach (scaled or
full; marketing to be part of the initial program or phased in later).
 DESIGN FOR SIX SIGMA (DFSS)

How to Implement DFSS

Design for Six Sigma is incorporated into operations by individuals who have
been certified through a specific Six Sigma training program and regarded as
experts on the matter.
These individuals may be internal employees or hired externally.
Six Sigma programs award certifications for different levels of training, which
are identified by colored belts: White, Yellow, Green, Black, and Master Black
Belt.
It takes years to achieve a Master Black Belt. Design for Six Sigma is typically
executed by employees who have obtained a Green Belt or Black Belt, and
overseen by someone who has a Master Black Belt.
 DESIGN FOR SIX SIGMA (DFSS)

What is DFSS and DMAIC?

The basic difference lies in the fact that DMAIC is a methodology that focuses on bringing about
improvements to the existing products and services of the organization.
While on the other hand, DFSS aims at designing a new defect-free product or service to meet CTQ
factors that will lead to customer satisfaction.
 DESIGN FOR SIX SIGMA (DFSS)

Design for Six Sigma Training

DFSS certification focuses on specifically teaching the DMADV approach rather than the traditional
framework of DMAIC, which improves existing processes.
If a new product needs to be designed for quality and the situation requires more than just a simple
improvement, this is when individuals with DFSS certification come into play.
 DESIGN FOR SIX SIGMA (DFSS)

Design for Six Sigma Training

These individuals understand when you would implement a DFSS methodology versus a
DMAIC approach.
They also have a comprehensive understanding of how to use various Design for Six
Sigma tools.
On top of defining, measuring, and analysing, they help guide a company through the
Design and Verify stages to introduce high quality products.
Overall, an individual with Design for Six Sigma training can ensure that this beneficial
methodology ultimately becomes part of the company’s culture.
 DESIGN FOR SIX SIGMA (DFSS)

Benefits of DFSS
Using DFSS provides a template or structure in the creation stage.
One can include risk factors or issues and avoid them.
Improves quality, reliability and reduce cost.
Addresses key issues immediately.
The financial benefits are long-term.
DESIGN FOR SIX SIGMA METHOD
DESIGN FOR SIX SIGMA METHOD
DESIGN FOR SIX SIGMA METHOD
 DESIGN FOR SIX SIGMA METHOD

Both DFSS and Design for Six Sigma

Method are comparatively Similar in
process.
 DESIGN FOR SIX SIGMA METHOD

What is Design for Six Sigma DFSS and how is it different to Six Sigma?
Traditional Six Sigma utilizes DMAIC or Define, Measure, Analyze, Improve and Control.
This methodology is most effective when used to improve a current process or make incremental
changes to a product design.
In contrast, Design for Six Sigma is used primarily for the complete re-design of a product or process.
 DESIGN FOR SIX SIGMA METHOD

Six Sigma stands for 6 standard deviations (6σ) between average and acceptable limits.
LSL and USL stand for “Lower Specification Limit” and “Upper Specification Limit” respectively.
Specification Limits are derived from the customer requirements, and they specify the minimum and
maximum acceptable limits of a process.
 DESIGN FOR SIX SIGMA METHOD

Why is it called 6 Sigma?

It's called Six Sigma because the term sigma refers to one standard deviation in a data set.
The idea is that six such deviations should occur before the process results in a defect.
When a process achieves Six Sigma, it reaches a point where only 3.4 errors per one million process
events result in a defect.
DESIGN FOR SIX SIGMA METHOD

Seven roles of Six Sigma

Champion.
Master Black Belt.
Black Belt.
Green Belt.
Yellow Belt.
White Belt.
The Power of Six Sigma
Topic : SIX Sigma Methodologies

Subject Code : MBA18GE36

Subject Name : Lean and Six SigmA Management

Delivered by : Dr.R.Suganthini Rekha

 Failure Mode Effect Analysis (FMEA)
• Also called: potential failure modes and effects analysis; failure
modes, effects and criticality analysis (FMECA)
• Begun in the 1940s by the U.S. military, failure modes and effects
analysis (FMEA) is a step-by-step approach for identifying all
possible failures in a design, a manufacturing or assembly process,
or a product or service. It is a common process analysis tool.
• "Failure modes" means the ways, or modes, in which something
might fail. Failures are any errors or defects, especially ones that
affect the customer, and can be potential or actual.
• "Effects analysis" refers to studying the consequences of those
failures.
 Failure Mode Effect Analysis (FMEA)
• Failures are prioritized according to how serious their
consequences are, how frequently they occur, and how easily
they can be detected.
• The purpose of the FMEA is to take actions to eliminate or
reduce failures, starting with the highest-priority ones.
• Failure modes and effects analysis also documents current
knowledge and actions about the risks of failures, for use in
continuous improvement.
 Failure Mode Effect Analysis (FMEA)
• FMEA is used during design to prevent failures.
• Later it’s used for control, before and during on-going
operation of the process. Ideally, FMEA begins during the
earliest conceptual stages of design and continues throughout
the life of the product or service.
Failure Mode Effect Analysis (FMEA)
What is meant by failure?
Failure Mode Effect Analysis (FMEA)
 Failure Mode Effect Analysis (FMEA)
Types of FMEA

➢System FMEA
➢Design FMEA
➢Process FMEA
➢Functional FMEA
 Failure Mode Effect Analysis (FMEA)
WHEN TO USE FMEA
• When a process, product, or service is being designed or
redesigned, after quality function deployment (QFD)
• When an existing process, product, or service is being applied in a
new way
• Before developing control plans for a new or modified process
• When improvement goals are planned for an existing process,
product, or service
• When analyzing failures of an existing process, product, or service
• Periodically throughout the life of the process, product, or service
 Failure Mode Effect Analysis (FMEA)
FMEA PROCEDURE

• Assemble a cross-functional teamf people with diverse knowledge about the process, product or
service, and customer needs.

• Functions often included are: design, manufacturing, quality, testing, reliability, maintenance,
purchasing (and suppliers), sales, marketing (and customers), and customer service.

• Identify the scope of the FMEA. Is it for concept, system, design, process, or service?

• What are the boundaries?

• How detailed should we be?

 Failure Mode Effect Analysis (FMEA)
FMEA PROCEDURE
• Use flowcharts to identify the scope and to make sure every team member
understands it in detail.
• Fill in the identifying information at the top of your FMEA form. The remaining
steps ask for information that will go into the columns of the form.
• Identify the functions of your scope. Ask, "What is the purpose of this system,
design, process, or service? What do our customers expect it to do?" Name it
with a verb followed by a noun. Usually one will break the scope into separate
subsystems, items, parts, assemblies, or process steps and identify the function
of each.
• For each function, identify all the ways failure could happen. These are potential
failure modes. If necessary, go back and rewrite the function with more detail to
be sure the failure modes show a loss of that function.
 Failure Mode Effect Analysis (FMEA)
FMEA PROCEDURE

• For each failure mode, identify all the consequences on the system, related
systems, process, related processes, product, service, customer, or regulations.
• These are potential effects of failure. Ask, "What does the customer experience
because of this failure? What happens when this failure occurs?"
• Determine how serious each effect is. This is the severity rating, or S. Severity is
usually rated on a scale from 1 to 10, where 1 is insignificant and 10 is
catastrophic.
• If a failure mode has more than one effect, write on the FMEA table only the
highest severity rating for that failure mode.
 Failure Mode Effect Analysis (FMEA)
FMEA PROCEDURE
• For each failure mode, determine all the potential root causes. Use
tools classified as cause analysis tools as well as the best
knowledge and experience of the team. List all possible causes for
each failure mode on the FMEA form.
• For each cause, determine the occurrence rating, or O.
• This rating estimates the probability of failure occurring for that
reason during the lifetime of your scope.
• Occurrence is usually rated on a scale from 1 to 10, where 1 is
extremely unlikely and 10 is inevitable. On the FMEA table, list the
occurrence rating for each cause.
 Failure Mode Effect Analysis (FMEA)
FMEA PROCEDURE
• For each cause, identify current process controls. These are tests, procedures or
mechanisms that you now have in place to keep failures from reaching the customer.
• These controls might prevent the cause from happening, reduce the likelihood that it will
happen or detect failure after the cause has already happened but before the customer is
affected.
• For each control, determine the detection rating, or D.
• This rating estimates how well the controls can detect either the cause or its failure mode
after they have happened but before the customer is affected.
• Detection is usually rated on a scale from 1 to 10, where 1 means the control is absolutely
certain to detect the problem and 10 means the control is certain not to detect the problem
(or no control exists). On the FMEA table, list the detection rating for each cause.
 Failure Mode Effect Analysis (FMEA)
FMEA PROCEDURE
• Optional for most industries: Ask, "Is this failure mode associated with a
critical characteristic?" (Critical characteristics are measurements or
indicators that reflect safety or compliance with government regulations
and need special controls.)
• If so, a column labelled "Classification" receives a Y or N to show whether
special controls are needed. Usually, critical characteristics have a severity
of 9 or 10 and occurrence and detection ratings above 3.
• Calculate the risk priority number, or RPN, which equals S × O × D. Also
calculate Criticality by multiplying severity by occurrence, S × O. These
numbers provide guidance for ranking potential failures in the order they
should be addressed.
 Failure Mode Effect Analysis (FMEA)
• FMEA PROCEDURE
• Identify recommended actions.
• These actions may be design or process changes to lower severity
or occurrence.
• They may be additional controls to improve detection.
• Also note who is responsible for the actions and target completion
dates.
• As actions are completed, note results and the date on the FMEA
form.
• Also, note new S, O, or D ratings and new RPNs.
 Failure Mode Effect Analysis (FMEA)
FMEA EXAMPLE
• A bank performed a process FMEA on their ATM system. : the
function "dispense cash" and a few of the failure modes for
that function.
• The optional "Classification" column was not used. Only the
headings are shown for the rightmost (action) columns.
• Notice that RPN and criticality prioritize causes differently.
According to the RPN, "machine jams" and "heavy computer
network traffic" are the first and second highest risks.
 Failure Mode Effect Analysis (FMEA)
• FMEA EXAMPLE
• One high value for severity or occurrence times a detection
rating of 10 generates a high RPN.
• Criticality does not include the detection rating, so it rates
highest the only cause with medium to high values for both
severity and occurrence: "out of cash."
• The team should use their experience and judgment to
determine appropriate priorities for action.
Failure Mode Effect Analysis (FMEA)
Failure Mode Effect Analysis (FMEA)
 Failure Mode Effect Analysis (FMEA)
Articles
• Slove Your FMEA Frustrations (Lean & Six Sigma Review) The
concept of FMEA is rather simple and widely known, but in
practice, a huge variation in quality and competency exists.
Confusion and various opinions about how to handle details exist.
This article sheds some light on common confusion and disputes.
• Blue Print For Success (Six Sigma Forum Magazine) One area in
which FMEA has not been substantively deployed as a tool of risk
management is that of corporate real estate construction and
management. This article applies FMEA to capital projects in
architecture and construction.
FMEA Process
 FMEA Process
• Failure Modes and Effects Analysis (FMEA) or process is a
systematic, proactive method for evaluating a process to
identify where and how it might fail and to assess the relative
impact of different failures, in order to identify the parts of the
process that are most in need of change.
 Risk Priority Number (RPN)
• The Risk Priority Number, or RPN, is a numeric assessment of
risk assigned to a process, or steps in a process, as part of
Failure Modes and Effects Analysis (FMEA), in which a team
assigns each failure mode numeric values that quantify
likelihood of occurrence, likelihood of detection, and severity
of impact.
 Risk Priority Number (RPN)
How do you calculate risk priority number for RPN?
• If one or more detection actions are assigned to the failure
cause, the system chooses the highest probability of detection
D (lowest number of valuation points) from all the assigned
detection actions that have at least the status Confirmed.
• The risk priority number is calculated as follows: RPN = S * O *
D.
 Risk Priority Number (RPN)
• RPN may not play an important role in the choice of an action
against failure modes, but will help in indicating the threshold
values for determining the areas of greatest concentration.
• In other words, a failure mode with a high RPN number should
be given the highest priority in the analysis and corrective
action.
 Risk Priority Number (RPN)
• When performing a Process or Design FMEA , the Risk Priority
Number (RPN)is a calculation to sort the risks from highest to
lowest.
• The RPN is calculated by multiplying the three scoring columns:
Severity, Occurrence and Detection.
• RPN = Severity x Occurrence x Detection
 Risk Priority Number (RPN)
• This technique, commonly used in the automotive industry,
bases the risk priority number for an item failure mode on
three factors: probability of occurrence, the severity of the
failure's effects, and probability of failure detection.
• The probability of occurrence is the likelihood of failure, or
relative number of failures, expected during the item's useful
life.
 Six Sigma and Leadership, committed
• The leadership team (often called the Six Sigma Council) leads
the overall effort and has responsibility for approving the
projects undertaken by the BBs.
• In the case of a finance function, the leadership team might be
the chief financial officer (CFO) and selected members of his or
her staff.
 Six Sigma and Leadership, committed
Is commitment a Six Sigma?
• Six Sigma is a long-term commitment. Treating deployment as
a process allows objective analysis of all aspects of the process,
including project selection and scoping.
 Six Sigma and Leadership, committed
What are the 5 key roles in Six Sigma?
• Six Sigma Team Member Roles
– Team Leader: Responsible for getting the team to go.
– Facilitator: Usually a Black Belt or Master Black Belt.
– Scribe: Records the team activities.
– Sponsor: Business leader who sponsors the Six Sigma project.
– Champion: Executive who sponsors a specific Six Sigma project.
 Six Sigma and Leadership, committed
Why is it important for a leader to be committed?
• Commitment is essential for leaders because it ignites the fire
in their followers and in the organization as a whole.
• Without commitment, an organization won't be successful
because everyone will just do the bare minimum to get by
without putting in the extra effort necessary to succeed.
 Six Sigma and Leadership, committed
What are the 4 essential roles of leadership?
• The 4 Roles of Essential Roles of Leadership
– Inspire Trust. Be the credible leader others choose to follow—one
with both character and competence.
– Create Vision. Clearly define where your team is going and how they
are going to get there.
– Execute Strategy.
– Coach Potential.
Six Sigma and Leadership, committed
Six Sigma and Leadership, committed
 Six Sigma and Leadership, committed
• The role of a Lean 6 Sigma team leader is central to proper
implementation of a Lean 6 Sigma project.
• He or she guides the project team from start to finish, serving as
coach, mentor, leader, facilitator, mediator, and more.
• A good team leader can literally make or break a project.
• A project team without an exceptional leader is much like a ship
without a captain or a busy intersection without a traffic light.
• In other words, the team may appear to be doing a lot but they
have no direction, work in chaos, and are very likely to crash at
some point.
 Six Sigma and Leadership, committed
• Choosing a team leader for a Lean Six Sigma project requires
attention to a number of qualities in each candidate. A few of
these important qualities include:
Level of Lean 6 Sigma Training
• Leadership experience and skills
• Personal characteristics and integrity
• Business frame of mind
• Passion for their job
 Six Sigma and Leadership, committed
• Lean 6 Sigma experts may vary somewhat in the specific words and
labels they give to each quality, but they most often fit into one of
the following categories:
• Project Management
• Problem Solving
• Team Dynamics
• Customer Focus
• Business Expertise
• Technical Expertise
• Integrity
 Six Sigma and Leadership, committed
• In most cases, the Lean 6 Sigma team leader will be a Black Belt,
but sometimes a Green Belt will fill the position if the project is
smaller or less complex.
• Hands on training and experience are also important, so the team
leader will have been involved in other Lean Six Sigma projects in a
variety of capacities.
• The amount of training necessary for a Lean Six Sigma team leader
is a subject of some discussion in the Six Sigma community.
• While Black Belt qualification is still the “gold standard” for team
leaders, some people advocate for team leaders that are leaders
first and Lean Six Sigma Black Belt second.
 Six Sigma and Leadership, committed
• A Lean Six Sigma team leader fills many varying roles over the
course of a Lean six sigma project.
• From manager to facilitator, mediator to mentor, each of these
roles is important to the success of the team as well as the growth
and development of individual team members.
• The best team leaders have the right balance of leadership skills
and Lean 6 Sigma knowledge to help guide a team through all of
the project stages and ultimately to a successful result. Any
organization that is fully committed to Lean Six Sigma will make a
concerted effort to attract, develop, and support the right people
to ensure a steady flow of leaders well into the future.
Topic : SIX SIGMA IMPLEMENTATION AND
CHALLENGES
(UNIT IV)
Subject Code : MBA18GE36
Subject Name : Lean and Six SigmA Management
Delivered by : Dr.R.Suganthini Rekha BE,LL.B,ME,
PGDHRM, MBA, M.Sc(Psychology)
Ph.D(Engineering)
 Tools for implementation
What tool does Six Sigma use?
• Six Sigma team leaders also use project management tools,
such as Gantt charts, and team engagement tools, such as
brainstorming and nominal group technique.
 Tools for implementation
• Six Sigma tools are a critical component of the business
process and are designed to reduce manufacturing defects
down to as few as possible.
• Every business wants to identify flaws and vulnerabilities in its
manufacturing pipelines.
 Tools for implementation
8 Powerful Six Sigma Tools
• During Last few years Six Sigma has become a major powerful tool.
• Six Sigma tools are a vital element of any company process
development lead.
• Six Sigma tools detects the defects and gaps in the methods, they
enable to increase the performance of company significantly.
• Six Sigma tools can aid to reduce waste, improve employee fertility,
and push profits.
 Tools for implementation
Value-Stream Mapping
• The value-stream map represents the knowledge and materials
required to produce the assets for a client.
• This mechanism helps streamline the production method.
• The Value-stream map consists of three different elements: the
method map, the timeline, and the knowledge issue.
• It employs a different set of numbers to assist you in better
comprehend the manner.
 Tools for implementation
Cause-and-Effect Analysis
• A cause-and-effect analysis diagram is also named the fishbone diagram because it matches
a sketch of a fish.

• It’s one of the most popular Lean Six Sigma tools, as it enables you to brainstorm different
causes of a query.

• The first step in doing the review is to recognize the difficulty you want to work on. You have
to address who works on the process and when and where the process happens.

• The next step is to write the query in a case on the left-hand side of the document. Then
you form a straight line continuing to the opposite end of the paper.
 Tools for implementation
• Cause-and-Effect Analysis
• From there, you pick vertical columns extending off of the “spine”.
• Along these lines, you write the primary reasons following the
problem and think of any possible conditions.
• You can break these causes down into sub-causes.
• Once you build the diagram with all the possible causes of the
problem, you can explain your decisions.
• The issues may need additional testing and review.
 Tools for implementation
The 5 WHYs
• The 5 WHYs began in the 1930s with the Japanese industrial
change.
• The process is easy: when the difficulty starts again, you get to
the problem by asking “why” in five points.
• This process is most efficient when solving tricky issues.
• If you deal with more complicated issues, you may obtain
better outcomes by using a cause-and-effect diagram.
 Tools for implementation
• The 5 WHYs sound like a straightforward method but don’t
underrate it.
• Its integrity is what executes it so important. Besides, this tool
goes well in sequence with other Lean and Six Sigma tools.
• 5 WHYs could also be used to start own Business.
Tools for implementation
 Tools for implementation
Kanban System
• Kanban System is a supply chain power system that concentrates
on cost cuts by performing Just-in-Time (JIT) inventory control
schemes.
• It is also one of the famous Six Sigma tools, due to its efficiency of
use and possible advantages. “Kanban” is Japanese for “billboard.”
• The word was invented by Taichi Ohno, an industrial engineer at
Toyota.
• Ohno based his practice on how supermarkets manage their file
depending on the market.
 Tools for implementation
• Kanban policy sets deadlines for inventory-holding for all
modern business methods.
• This saves additional support and leaves them to use them
properly.
• The Kanban system operates on a single and straightforward
idea: only stimulate the supply chain when the demand needs
it.
• This system both takes more centre to the business rule itself
and improves its performance.
 Tools for implementation
Pareto Chart
• Pareto Chart is a noticeable symbol of the Pareto Principle: 20
percent of input provides 80 percent of output in any provided
condition.
• The plan connects a perpendicular strip graph and a line
graph.
• The bar graph depicts the metrics of different business process
elements, ordered from the highest to the least one.
• The line graph illustrates the combined total of these metrics.
 Tools for implementation
Pareto Chart
• Pareto Chart is a noticeable symbol of the Pareto Principle: 20
percent of input provides 80 percent of output in any provided
condition.
• The plan connects a perpendicular strip graph and a line graph.
• The bar graph depicts the metrics of different business process
elements, ordered from the highest to the least one.
• The line graph illustrates the combined total of these metrics.
 Tools for implementation
Project Charter
• Project Charter is a report that describes the design and scope of the
project.
• It serves both as the plan for the business method and as a legal sanction
of the project.
• The project charter includes the project overview and its range, details
about the organization and the resources, and the timeline typically.
• It gives you all the important information about the project and explains its
main features.
• The chief advantage of a project charter is that it holds things less
confused.
 Tools for implementation
RACI Matrix
• Responsibility Assignment Matrix, also recognized as a RACI model, is a
report that explains the duties of each team member on each job of the
business process.
• RACI stands for Responsible, Accountable, Consulted, and Informed – the
essential responsibilities most generally used in the matrix.
• “Responsible” refers to the person whose role it is to achieve the task.
“Accountable” is the person authorizing the tasks to others and observing
their growth.
• There is always only one liable person per task. Consulted are the experts
on the subject matter whose opinions guide those working on the task.
• Finally, “Informed” is the person you mark once you finish the task.
 Tools for implementation
Failure Modes and Effects Analysis (FMEA)
• The FMEA in Six Sigma acts both as a tool and as an analysis technique that
identifies, evaluates, and prioritizes processes that are found to be
deficient.
• It requires a team to identify where the process can go wrong and
breakdowns happen.
• FMEA is not a difficult tool to use, but when used properly, it clearly lays
out potential breakdown junctures by which it helps the team to create
proper solutions and proactively manage risks down the line.
• The application of FMEA tools is far and wide across industry verticals from
business processes, technology systems, military planning, and product
design.
 Tools for implementation
Two-Sample T-Test
• When you want to find out a statistical difference between the
means of two samples, then the Two-Sample T-Test is the best Six
Sigma tool out there.
• This is extensively used while comparing two levels of a continuous
variable and it was specifically designed when the variables are
independent of one another.
• The Two-Sample T-Test stands out when the variances are unequal
and hence used a lot in Six Sigma than any other statistical analysis
tool.
 Tools for implementation
Mood’s Median
• This is one of the most useful Six Sigma tools to compare medians
of two or more populations.
• It is a non-parametric test which is another way to test a
hypothesis while trying to compare data including various
processes.
• The Mood’s Median test determines whether the medians of two
or more data point samples are similar or not.
• Because Six Sigma uses a lot of data to make informed decisions,
Mood’s Median is one such way to make sure your data is
impeccable enough to arrive at those business-critical decisions.
 Tools for implementation
Simple Linear Regression
• When there is a need for modelling the quantitative
relationship between two variables in a Six Sigma project, then
a Simple linear regression tool is used.
• The analysis provides how a variable changes when there is a
change in another variable which allows continuous analysis of
changes in a Six Sigma project.
• With a simple equation, this tool helps Six Sigma professionals
to make improvements to the processes.
 Tools for implementation
Control Plan
• The control plan is one of the management planning tools that
identifies and monitors process performance metrics which is in
line with customer requirements.
• This tool helps the project team to monitor improvements on a
long-term basis.
• If you want your project to last the ride then this tool is of utmost
importance to provide your project the stability it needs.
• But, many enterprises overlook this control plan tool for their Six
Sigma project and by doing this you are not giving your project the
probability of a successful finish.
 Tools for implementation
IMR Control Chart
• There are many control chart tools to use, but the Individual
and Moving Range control chart (IMR Chart) is one of the
easiest, flexible and versatile control charts to use.
• Because it is widely used during the identification of process
stability, the tool is applicable to continuous data inflow and to
understand non-normality.
• Hence, the IMR control chart is one of the most commonly
applied control charts in Six Sigma projects.
 Tools for implementation
• While there is no doubt that these tools are highly effective,
they can only perform at their best when deployed and used
properly.
• Hence, professionals who work in the manufacturing industry
and other sectors can take advantage of widely popular quality
management certification courses and projects also needs to
be completed to gain a proper understanding of Lean and Six
Sigma tools and use them in an efficient manner.
 Supplier Input Process Output Customer (SIPOC)
• A SIPOC (suppliers, inputs, process, outputs, customers)
diagram is a visual tool for documenting a business process
from beginning to end prior to implementation.
• SIPOC (pronounced sigh-pock) diagrams are also referred to as
high level process maps because they do not contain much
detail.
Supplier Input Process Output Customer (SIPOC)
 Supplier Input Process Output Customer (SIPOC)
• Inputs: The “ingredients” needed for the process, including
products, services, and information.
• Process: Five to seven simple steps on how to get from the
inputs to the end product.
• Outputs: Anything created as an end result of the process
Supplier Input Process Output Customer (SIPOC)
Supplier Input Process Output Customer (SIPOC)
Supplier Input Process Output Customer (SIPOC)
 Quality Function Deployment or House of Quality
(QFD) , alternative approach
• Quality function deployment (QFD) Also called: matrix product planning,
decision matrices, customer-driven engineering.
• QFD was developed in Japan by Yoji Akao in about 1966 while working for
Mitsubishi. Toyota and other auto manufacturers started using the approach
later on.
• Akao described QFD as a “method to transform qualitative user demands
into quantitative parameters, to deploy the functions forming quality, and to
deploy methods for achieving the design quality…”
 Quality Function Deployment or House of Quality
(QFD) , alternative approach
• QFD is a powerful tool to support product definition and aims
to link customer requirements to technical or engineering
characteristics.
• The tool provides a conceptual map for communication across
functions and provides a focus for design priorities.
• QFD promotes cross functional teamwork and negotiation and
focuses the mind on 'what you don't know'.
 Quality Function Deployment or House of Quality
(QFD) , alternative approach
• QFD originated in Japan in the late 1960's and is used extensively in the far
east to support product development in a range of industries including
automotive, consumer electronics, clothing, construction and shipbuilding.
• Since the 1970's, it has become increasingly adopted in the west and has
been credited with supporting the revival of the US automotive industry.

• QFD is a tool to help structure product planning and design and aims to
ensure that customer needs are focused on throughout a project from
concept design through to manufacture.
• At the heart of QFD is the House of Quality which links predetermined
customer attributes to specific technical characteristics.
 Quality Function Deployment or House of Quality
(QFD) , alternative approach
• The House of Quality of built from 6 interrelated matrices:

The customer attributes

Describing what the product must do, a structured list of needs and wants,
determined by market research. Represents the Voice of the Customer

The engineering characteristics

Describing how the product may achieve its required performance in general
terms which are not solution specific. Represents the Voice of the Designer.
 Quality Function Deployment or House of Quality
(QFD) , alternative approach
• Relationships
Between the customer attributes and the engineering characteristics, indicating where there are strong, moderate
or weak relationships.

• Technical matrix
Indicating the technical priorities based on the relationships between customer requirements and engineering
characteristics. Also providing quantitative design targets for each of the engineering characteristics, based on the
technical priorities and competitive benchmarking.

• Technical Correlations
Recording how the engineering characteristics may be wither mutually supporting or contradictory.

• Planning Matrix
Providing quantitative market data for each of the customer attributes. Values can be based on user research,
competitive analysis or team assessment
Quality Function Deployment or House of Quality
(QFD) , alternative approach
 Quality Function Deployment or House of Quality
(QFD) , alternative approach
• A house of quality (HOQ) involves collecting and analyzing the
“voice of the customer” and a key component of the Quality
Functional Deployment technique.
• It is used to define the relationship between customer desires
and the product or company capabilities.
 Quality Function Deployment or House of Quality
(QFD) , alternative approach
• Quality Function Deployment is usually used by
Quality function deployment is a LEAN technique that is a little
out of scope for Six Sigma Green Belt practitioners and more
useful for Black Belt practitioners. Yet, it is a powerful tool to
design processes or products according to customer
requirements
 Leadership training
• A Lean Six Sigma leader needs to foster a transformation to usher in a
thriving culture of Continuous Improvement in the organization.
• This requires more than lean tool deployment, but also includes key
leadership and management frameworks, principles and behaviours
– Building a culture that empowers staff and promotes continuous improvement
– Understanding the breadth of impact a leader has and the leaders roles &
responsibilities in transformation
– Identifying projects that align with the organization’s mission
– Deploying Leader Standard Work (successful leader habits) that drive
improvement activity and success
– Mentoring and coaching staff to become better problem solvers
 Leadership training
• Seven leadership principles to follow
– Belief in the purpose.
– Taking full responsibility.
– The ability to move on and forgive.
– Humility.
– Optimistic and realistic.
– Value others' opinions, confidence in your own.
– Self-acceptance.
 Close communication system
• Closed-loop communication is a communication technique used to
avoid misunderstandings.
• When the sender gives a message, the receiver repeats this back.
The sender then confirms the message; thereby common is using
the word “yes”.

The 3 types of communication system

When communication occurs, it typically happens in one of
three ways: verbal, nonverbal and visual.
 Close communication system
3 Main Types of Communication
– Verbal Communication.
– Nonverbal Cues Speak Volumes.
– Visual Communication.

• An example of closed loop communication

– Closed-loop communication allows the sender to know that their requests
have been heard and understood. Example: 'James, I want you to insert a
large-bore IV, please. ' 'You want me to insert a 16-gauge IV?
 Champion training
• Champion training
• Lean Six Sigma Champion training focuses on providing you
with the managerial and technical knowledge to facilitate the
leadership and deployment of the Six Sigma strategy.
Champions are upper-level managers who lead the execution
of the Lean Six Sigma deployment plans for the company.
 Champion training
The role of a lean champion
• They act as teachers, educating the entire organization on the
importance of lean. They are also facilitators, helping to
address organizational issues and keep lean initiatives on
schedule. An important element of being a lean champion is
the ability to motivate others.
 Six Sigma Project Champion

• Six Sigma Project Champion

Project Champions (Sponsors) are the managers of the
business, function, or value stream which has been identified as
high priority for a Six Sigma team. They play a pivotal role in that
they own the processes of the business and, therefore, must
ensure process improvements are captured and sustained.
 Customer quality index

Customer quality index

• The customer satisfaction index (CSI) is a metric that reflects

the overall customer satisfaction with a company in terms of
product quality, customer service, price, etc. It allows brand
owners to determine the reasons for consumers' satisfaction
and dissatisfaction
•
 Measuring Customer Service/Satisfaction

• 3 Metrics for Measuring Customer Service/Satisfaction

1. Customer Satisfaction Score (CSAT) The CSAT score is one of
the oldest and most trusted metrics to gauge customer
sentiment.
2. Net Promoter Score (NPS) .
3. Customer Effort Score (CES)
 Six Sigma Deployment
• Successful Six Sigma Deployment
• D: Define the strategic direction of the organization
M: Set measures for the strategic objectives of the organization
A: On a continual basis collect data on the measures set and
analyse using Six Sigma tools and techniques
I: Identify the opportunities for improvement and convert
them to Six Sigma projects for improvement
C: Set up a management control action of continuous reviews
on the improvements made on Six Sigma process
 Culture Change
Cultural challenge
• Culture is defined by the norms and values – both formal and informal –
that an organization lives by.
• Understanding the cultural readiness for a change initiative
will facilitate decision-making around the topics of Black Belt selection,
retention and repatriation.
• This cultural readiness knowledge will help shape all aspects of a successful
deployment.
Six Sigma culture
• Lean Six Sigma methodology involves creating an organizational culture of
searching for ways to improve processes, reduce waste and respond to the
voice of the customer.
 Customer/internal metrics
• Customer metrics refer to measuring factors or tracking them
about your customers.
• These factors are metrics that affect the company's growth and
revenue through customers.
• Customer metrics can be measured with customer satisfaction,
loyalty rates, retention rates and much more.
 Key Metrics
• The 4 Key Metrics for Customer Service
1. The Customer Feedback metric.
2. The Service Efficiency Metric.
3. Quality, Consistency and Compliance.
4. Employee Engagement.
 Internal metrics
Internal metrics
✓Measures of corporate performance available to those inside
the company.
✓They can be used at the corporate, Strategic Business Unit or
product line level.
 Lesson-5

Evaluation and continuous improvement methods

 Contents
• Evaluation Strategy
• The Economics Of Six Sigma
• ROI
• Poor Project Estimates – Continuous Improvement
• Lean Manufacturing – Value
• Customer Focus
• Focus On Waste
• Overproduction – Waiting
• Inventory In Process (IIP)
• Processing Waste
• Kaizen
• 5s
Evaluation strategy
Strategy evaluation is the process by which the management assesses how well a chosen
strategy has been implemented and how successful or otherwise the strategy is. To simply put,
strategy evaluation entails reviewing and appraising the strategy implementation process and
measuring organizational performance.

In the instance, the implementation of the strategy is not taking place as planned, say due to the
limitations in the strategy that are blocking the achievement of organizational goals, necessary
corrective actions should be identified and applied.
 The economics of six sigma
Now that the manufacturing industry has accepted lean Six Sigma methodology to increase efficiency, the healthcare
industry is pursuing a similar route. Numerous cases demonstrate where healthcare facilities, instead of turning to
automation, have used lean Six Sigma to find similar results by decreasing costs and reducing variation.

The origins of lean Six Sigma

To understand lean Six Sigma in this context, it is best to analyze its effect and implementation at Motorola, one of
the first organizations to successfully implement Six Sigma.

At Motorola, Six Sigma quality level means 3.4 defects per million opportunities. Furthermore, Motorola assumed
that a process might shift 1.5 sigma from its target. Six Sigma achieves process improvement through DMAIC, which
stands for the five phases of a project cycle: define, measure, analyze, improve and control. This model helps reduce
process variation, improve quality and decrease costs. Motorola followed this model to success.

The define phase is the beginning of any project. During this phase, the problem statement and project goals are
defined and documented. In the measure phase, data is collected to describe the current state. This data is used during
the analyze phase, when data evaluation leads to improvement recommendations. The team uses the improve phase to
test possible solutions and select the best one. The final phase, control, is to select the best solution. This phase
ensures the problem remains fixed. Whereas Motorola takes advantage of Six Sigma, Toyota capitalizes on lean
methodology. Lean, derived from the Toyota Production System, has helped Toyota become a global giant and stay
consistently profitable. The primary objective of lean implementation is to eliminate waste or nonvalue-added
activities. Nonvalue-added activities include anything the customer is not willing to pay for or activities that don't
produce final products. Eliminating them helps any organization reduce costs while maintaining a competitive market
edge.
 ROI (Return on Investment)
Return on Investment is a time-tested measurement to determine if the company’s assets are being used
in a prudent manner. The general textbook definition of ROI is:

ROI=Earnings After Taxes/Total Assets=EAT/Sales X Sales/Total Assets=Net Margins X Total

Asset Turnover

How do you determine the ROI of Lean Six Sigma? And what hard and soft returns can you expect?

Lean Six Sigma Implementations and ROI

All implementations of Lean Six Sigma center around project work so ROI can be determined using the
methodology above. Projects can be focused on increasing Net Margins through improved revenue
generation or decreasing costs (or both). They can also be focused on increasing asset turnover through
reducing assets (typically inventory or accounts receivable). Generally, projects are assessed on an
individual basis by simply looking at the improved financials and subtracting the costs associated with
the project.

A simple time value of money calculation is used to evaluate the ROI of the project for a period agreed to
within the company. Using these techniques, the financial ROI of a program can be evaluated. Research
indicates that typical ROI values for a Black Belt project run between $200k and $500k annually for
larger companies (>$1 Billion) and slightly less than this for smaller companies.
 Poor project estimates – continuous improvement
Project estimation can even make the best project management experts pull their hair out. The challenge with
Project estimation in software development, unlike other industries, is that it’s often done with partial data and
sometimes with incorrect data, too.

1. Poor design: While no one wants to admit it, poor design is time and again the root-cause that plays spoilsport
even when the best efforts are taken.

2. Not splitting the tasks enough: Most projects have a WBS (Work breakdown structure), but sometimes they
are not broken enough to be conceptualized with clarity.

3. Not factoring the dependencies right: Often, an external dependency or a decision point is missed out
causing the project to suffer, this is termed as “coordination neglect”.

4. How much buffer is the right amount? What is the right buffer to pad once you arrived at an estimate? This
is a common challenge for Project Managers and there is no simple formula here.

5. Top to bottom scheduling: This is a practical problem one needs to deal with. Instead of doing bottoms-up
estimation, most projects start with – “I need this done in 6 months” and then a work breakdown is done where
the task estimates are retrofitted inside these 6 months.

6. The risk of analogous estimation: Often, project estimates are done based on an expert judgment or from past
projects’ experience.

7. Ignoring team capacity: There is a lot of debate about what unit, estimates need to be provided in – should we
measure complexity, time or effort? Irrespective of what unit is followed, many Project Managers tend to
ignore considering their team’s capacity
lean manufacturing – value
Lean management is a philosophy that has gained massive popularity in various industries
because of its positive impact on any company’s overall performance.

It supports organizations in many aspects like reducing costs, optimizing processes, improving
quality, etc. However, what really makes Lean effective is the focus on value.

What Is Value in Lean?

• In terms of Lean, the value should always be considered from a customer perspective. At the
end of the day, it doesn’t matter whether you came up with a great idea if the customer doesn’t
see any value, and therefore she is not ready to pay for it.

• It is important to remember that customers enjoy value in its entirety but not delivered piece
by piece. It is tricky, but you may end up with a bunch of unhappy customers and low brand
equity if you ignore this.

• Here is an example. Imagine that you buy a laptop. You had your laptop delivered, and when
you try to run it, you realize that the machine is without an operating system. So now you need
to buy the operating system and install it.

• Let’s assume you don’t have the knowledge to do this. It means you have to find a specialist
who can make your laptop actually run.
Customer Focus
Customer focus is a strategy that puts customers at the center of business decision-
making. Customer-focused businesses make decisions based on how those decisions
impact customers — as opposed to focusing on profits above all else. It’s a long-term
strategy that develops loyalty and builds trust.

Why is customer focus important?

The rewards of customer focus are two-fold:

➢ Engaging for your customers : Your customers want to be listened to. According to
research by Salesforce, 62% of customers expect companies to adapt based on their
actions, feedback, and behaviors. If you aren’t listening, your customers will find
someone who will.

➢ Good for your business : Because of the numerous benefits that customer focus
brings to your business, you’ll be more successful overall. In fact, customer-centric
companies are 60% more profitable than companies that do not make decisions with
a customer focus.
 Waste Management
Waiting is one of the seven wastes of lean manufacturing (or 7 mudas), it is the act of doing nothing or
working slowly whilst waiting for a previous step in the process. How many times have you seen
operators stood waiting for a previous operation, a delivery of products to arrive or just slowly working
so as not to highlight that they have run out of materials.

The Costs of the waste of Waiting

You pay for the time spent by all of your employees, time that they do not spend adding value while
they are waiting. Waiting is not something that your customer is going to want to pay for, the cost of the
time spent waiting will come direct from your profit, for every penny you can save it is a penny put
straight back into your profit.
Often the time spent waiting is made up later during overtime at a premium rate, good for your
employees but not so good for your profit.
 Overproduction – waiting
Overproduction occurs when manufacturing a product or an element of the product before it is being asked for or required. It may be
tempting to produce as many products as possible when there is idle worker or equipment time. However, rather than producing products
just when they are needed under the ‘Just In Time’ philosophy, the ‘Just In Case’ way of working leads a host of problems including
preventing smooth flow of work, higher storage costs, hiding defects inside the WIP, requiring more capital expenditure to fund the
production process, and excessive lead-time. Additionally, over-producing a product also leads to an increase in likelihood that the
product or quantities of products produced are beyond the customer’s requirements.

In an office environment, overproduction could include making extra copies, creating reports no one reads, providing more information
than needed, and providing a service before the customer is ready. Manufacturing overproduction involves producing more products than
demanded through a ‘push production system’ or producing products in higher batch sizes than needed.

There are three countermeasures for overproduction. Firstly, using a ‘Takt Time’ ensures that the rate of manufacturing between stations
are even. Secondly, reducing setup times enables manufacturing small batches or single-piece flow. Thirdly, using a pull or ‘Kanban’
system can control the amount of WIP.
Inventory In Process (IIP)
In-process inventory is work that has begun production in a manufacturing company but that has not
yet been completed. It is an important concept for accounting departments because they have to
account for the value of in-process inventory in the same way they do for raw materials and finished
goods.

Production Process
In general, manufacturing processes involve three basic phases. Raw materials are purchased from
suppliers and received into inventory by the company's warehouse or logistics team.

Costs
Companies must track work-in-process separately from raw materials and finished goods because
they are responsible for disclosing in-process costs on financial statements, points out Harold
Averkamp of "AccountingCoach." In-process inventory costs are generally calculated based on the
value of the materials and the costs of production to the point of progress.

Valuation Approach
Companies must determine what commonly accepting inventory valuation method to use when
accounting for inventory at various stages. The two most common methods are FIFO and LIFO.
FIFO is first-in, first-out and LIFO is last-in, first-out.

In-Process to Completion
One of the more challenging elements of the inventory valuation process is accounting for the
changes that take place from the work-in-process stage to the finished goods stage.
 Processing Waste
Waste is defined as anything that consumes resources
(time, money, energy etc) but does not add value for the
customer. It is something that the customer is not willing to
pay for.

There are seven types of waste:

1. Waiting
2. Overproduction
3. Rejects
4. Excess Motion
5. Over Processing
6. Inventory
7. Transportation

Overproduction is considered the worst of the seven

wastes because it can create all of the other wastes as
well! Overproduction can lead to waiting. As an example,
consider an assembly line that produces more units than
required. Eventually a bottleneck of work in process (WIP)
will form somewhere and soon the line will have to stop to
allow the constraint to be relieved. Then the operators on
the line will be waiting for the bottleneck to clear.
 Kaizen
Essentially meaning "continuous improvement", kaizen targets human resources and processes so as to anchor
an industry for long-term and successful operation. Kaizen is a Japanese term coined in the period after World
War II when businesses were trying to cope with the effects of the war. "Kai" translates to the word "change",
and "zen" means "good". Kaizen produced significant results for companies like Toyota and has become a
popular production philosophy all over the world.

In Lean manufacturing, Kaizen is the practice of continually making small, incremental improvements for a
safer, more productive, and efficient workplace. This foundational Lean manufacturing method stitches
continuous improvement into the fabric of your company's culture, which means managers, team leaders, and
workers alike will be constantly searching for ways to improve processes and tighten standards. Kaizen
reviews and training teaches new employees how to apply Kaizen principles to their work, which means
Kaizen stays sustainable for years to come.

Without Kaizen
No structure to the improvement process; few set procedures
Goals are not defined or are vague/difficult to measure
Changes are made to processes infrequently; little reflection on their effectiveness
No plan exists for improvement; improvement is haphazard

With Kaizen
Consistent, ongoing process of improvement takes place
Improvement process has clearly defined, measurable goals
Constant review of successes occurs, and the improvement process itself is evaluated
Consistency of the process leads to new, higher goals
 Kaizen - 5S
Kaizen is built on a 5S framework with elimination of waste and standardization at
the forefront. 5S lays down a strong foundation for future Kaizen activities. 5S
establishes an organization system in which everyone in the workplace participates to
remove clutter and set spaces efficiently. While a space is cleaned and organized with
5S, managers should encourage operators and frontline workers to make improvement
suggestions. This kind of system makes it much easier for people to spot improvement
opportunities hiding in plain sight while promoting teamwork and self-discipline.
Thanks