Process Improvement and Six Sigma - Summary of Key Points and Terminology
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Managing for Quality and Performance Excellence, 11thEdition Summary of Key Pointsand Terminology Chapter 9 – Process Improvement and Six Sigma Breakthroughis the accomplishment of any improvement that takes an organization to unprecedented levels of performance. Breakthrough attacks common causes of variation. Six Sigma projects often focus on breakthrough improvements that add value to the organization and its customers through systematic approaches to problem solving. Structured improvement methodologies typically consist of four steps: redefining and analyzing a problem, generating ideas, evaluating and selecting ideas, and implementing ideas.Common approaches are the Deming cycle, creative problem solving, Six Sigma DMAIC, TRIZ, custom improvement methodologies, and many others. TheDeming cycle, or PDSA cycle, consists of four steps: Plan, Do, Study, Act.Many organizations use the Deming cycle as the basis for their organizational performance improvement activities. Solving quality problems often involves a high amount of creativity.Creativityis seeing things in new or novel ways.The creative problem solving process consists of understanding the “mess,” finding facts, identifying specific problems, generating ideas, developing solutions, and implementing solutions The principal problem solving methodology used by Six Sigma is DMAIC—define,measure,analyze,improve, andcontrol.The Define stage identifies the problem. The Measure stage includes collecting good data, observation, and careful listening. The Analyze phase of DMAIC focuses on why defects, errors, or excessive variation occur, and focuses on root cause. The Improve
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stage focuses on idea generation,evaluation, and selection. Finally, the Control stage focuses on how to maintain the improvements. Six Sigmacan be described as a business improvement approach that seeks to find and eliminate causes of defects and errors in manufacturing and service processes by focusing on outputs that are critical to customers and a clear financial return for the organization.The term six sigma is based on a statistical measure that equates to 3.4 or fewer errors or defects per million opportunities. Some of the contrasting features between TQM and Six Sigma include: TQM is based largely on worker empowerment and teams; Six Sigma is owned by business leader champions. TQM activities generally occur within a function, process, or individual workplace; Six Sigma projects are truly cross-functional.TQM training is generally limited to simple improvement tools and concepts; Six Sigma focuses on a more rigorous and advanced set of statistical methods and DMAIC methodology. TQM is focused on improvement with little financial accountability; Six Sigma requires a verifiable return on investment and focus on the bottom line. Asix sigma quality levelcorresponds to a process variation equal to half of the design tolerance while allowing the mean to shift as much as 1.5 standard deviations from the target.A k- sigma quality level satisfies the equation:k × process standard deviation = tolerance range/2. The following Excel formula can be used to calculate dpmo corresponding to the sigma level: = (1 – NORM.DIST(sigma level, 1.5, 1, TRUE))*1000000The sigma level can be calculated on a spreadsheet using the Excel formula =NORM.S.INV(1 - dpmo/1,000,000) + 1.5.
Aproblemis a deviation between what should be happening and what actually is happening that is important enough to make someone think the deviation ought to be corrected.Quality related problems often fall into five categories: conformance problems, unstructured performance problems, efficiency problems, product design problems, and process design problems. Projects are the vehicles that are used to organize team efforts and to implement the DMAIC process.Being able to manage a large portfolio of projects, as would be found in Six Sigma environments, is vital to organizational success. Project teams are a vital part of Six Sigma efforts and are comprised of champions, master black belts, black belts, green belts, other team members, who each provide different levels of knowledge and expertise in solving problems. Factors that should be considered when selecting Six Sigma projects are: financial return, as measured by costs associated with quality and process performance, and impacts on revenues and market share, impacts on customers and organizational effectiveness, probability of success, impact on employees, and fit to strategy and competitive advantage. Most of the tools used in DMAIC have been around for a long time. They include elementary statistical tools, advanced statistical tools, product design and reliability, measurement, process control, process improvement, and implementation and teamwork. TheSeven QC Toolsfor quality improvement are flowcharts, run charts and control charts, check sheets, histograms, Pareto diagrams, cause-and-effect diagrams, and scatter diagrams. These tools support quality improvement processes and problem-solving efforts. Toyota created a unique tool, called theA3 Report, to succinctly consolidate and visualize information for identifying and solving
quality problems. They exploit simplicity and visualization to facilitate process improvement. The process of drilling down to a more specific problem statement is sometimes calledproject scoping. APareto distributionis one in which the characteristics observed are ordered from largest frequency to smallest.A Pareto diagramis a histogram of the data from the largest frequency to the smallest. Pareto diagrams help analysts to progressively focus in on the most appropriate problems. One type of high-level process map is called aSIPOC diagram. SIPOC stands for Suppliers-Inputs-Process-Outputs-Customers. SIPOC maps provide a broad overview of the key elements in the process and help to explain who is the process owner, how inputs are acquired, who the process serves, and how it adds value. In defining a problem, it is important to have a fundamental understanding of the process that drives the results. Aproject charterdefines the project, its objectives, and deliverables, and represents a contract between the project team and the sponsor.A project charter will typically define the problem in a simple fashion, the project objective, the project team and sponsor, the customers andCTQs(critical to quality attributes) on which the project focuses, existing measures and performance benchmarks, expected benefits and financial justification, a project timeline, and the resources needed to carry out the project. In the Measure stage, Six Sigma uses the notion of a function in mathematics to portray the relationship between process performance and customer value: Y = f(X), where Y is the set of CTQs and X represents the set of critical input variables that influence Y.ACTQ treestructure might be used “drill down” from Y to identify the critical X-factors. Understanding these
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relationships helps in defining the experiments that need to be conducted to confirm how input variables affect response variable and sets the stage for the Control phase by defining those factors that requiring monitoring and control. Data sheetsare simple columnar or tabular forms used to record data.Check sheetsare special types of data collection forms in which the results may be interpreted on the form directly without additional processing. They are often used to set up the measure phase of DMAIC. A special type of process map, typically used in the DMAIC analyze phase, is avalue stream map. The value stream refers to all activities involved in designing, producing, and delivering goods and services to customers.The value stream map allows one to measure the impact of value-added and non-value-added activities on the total lead time of the process, and compare this to thetakt time—which is the ratio of the available work time to the required production volume necessary to meet customer demand. If the value stream is faster than the takt time, it generally means that waste in the form of overproduction is occurring; when it is less, the firm cannot meet customer demand. Aroot causeis “that condition (or interrelated set of conditions) having allowed or caused a defect to occur, which once corrected properly, permanently prevents recurrence of the defect in the same, or subsequent, product or service generated by the process.” Root causes must be analyzed during the analysis phase for improvement to take place.Root cause analysisis an approach using statistical, quantitative, or qualitative tools to identify and understand the root cause. Acause-and-effect diagramis a simple, graphical method for presenting a chain of causes and effects and for sorting out causes and organizing relationships between variables.
Scatter diagramsare the graphical component of regression analysis. While they do not provide rigorous statistical analysis, they often point to important relationships between variables. Brainstorming, a useful group problem-solving procedure for generating ideas and has been described as useful “for the sole purpose of producing checklists of ideas” that can be used in developing a solution to a problem. Thus it is a valuable tool during the improve stage of the DMAIC process. Lean productionrefers to approaches that originated at the Ford Motor Company in the early 1900s, but which were refined and modernized by the Toyota Motor Corporation later in the century. Lean approaches focus on the elimination of waste in all forms, including defects requiring rework, unnecessary processing steps, unnecessary movement of materials or people, waiting time, excess inventory, and overproduction. A simple way of defining it is “getting more done with less.” Some of the key tools used in lean production are the 5S’s – seiri (sort), seiton (set in order), seiso (shine), seiketsu (standardize), and shitsuke (sustain); visual controls; efficient layout and standardized work; pull production; single minute exchange of dies (SMED); total productive maintenance; source inspection; and continuous improvement. In service contexts, lean production is often calledlean enterprise. The tools and approaches used in Six Sigma and lean production are different, yet complementary.Lean is focused on efficiency by reducing waste and improving process flow while Six Sigma is focused on effectiveness by reducing errors and defects.Lean Six Sigmacan be defined as an integrated improvement approach to improve goods and services and operations efficiency by reducing defects, variation and waste. Lean Six Sigma has
gained considerable favor among practitioners in many organizations. Although Six Sigma was developed in the manufacturing sector, it can easily be applied to a wide variety of transactional, administrative, and service areas. Services are generally driven by four key measures of performance: oAccuracy, as measured by correct financial figures, completeness of information, or freedom from data errors oCycle time, which is a measure of how long it takes to do something, such as pay an invoice oCost, that is, the internal cost of process activities (in many cases, cost is largely determined by the accuracy and/or cycle time of the process; the longer it takes, and the more mistakes that have to be fixed, the higher the cost) oCustomer satisfaction, which is typically the primary measure of success.Therefore, differences between services and manufacturing make opportunities in services more difficult to identify, and projects more difficult to define. Small organizations (including manufacturing and services) can use Six Sigma, although perhaps in a more informal fashion.