Six Sigma for System Innovation Dessign 1233779239181412 3

8/10/2019 Six Sigma for System Innovation Dessign 1233779239181412 3

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Client, Enterprise & Competitive Intelligence for Product, Process & Systems Innovation & DesignDr. Rick L. Edgeman, University of Idaho

IXCUSTOMER & COMPETITIVE INTELLIGENCE

FOR S YSTEMS INNOVATION & DESIGNS IGMAS

DEPARTMENT OF STATISTICS

DR. R ICK EDGEMAN, PROFESSOR & CHAIR SIX SIGMA BLACK [email protected] OFFICE: +1-208-885-4410


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IXS IGMASDEPARTMENT OF STATISTICS

Introduction to Six Sigma


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Often, problems are knots withmany strands, and looking at

those strands can make a problemseem different.

M r. Rogers


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a highly structured strategy for acquiring, assessing, and applyingcustomer, competitor, and enterprise intelligence for the purposes

of product, system or enterprise innovation and design.

Innovation Algorithm DMAIC (Define-Measure-Analyze-Improve-Control)

Design for Six Sigma Algorithm DMADV (Define-Measure-Analyze-Design-Verify)

Makes Integrative Use Of : Various strategies and tools from Statistics, Quality, Business,

Engineering and ???

is


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Six Sigma Organizations GE All 300,000+ GE employees must

be Six Sigma certified. All new GEproducts developed using the Design forSix Sigma (DFSS) approach .

3M New CEO (from GE) requires all3M employees to become Six Sigmacertified.

Dupont AlliedSignal Sun Microsystems Raytheon Motorola Boeing Lockheed-Martin Bank-of-America American Express HSBC SAS Institute

Rapidly Increasing Areas of Application.

Healthcare GE Heathcare - SLC Financial, Military NSWC, Pentagon, etc.

Fueled by: Strategic Contexts. Notorious bottom-line orientation & results. Adaptable to multiple bottom lines. Process orientation: rigorous and systematic

approaches to innovation and design. Focus on the customer. Successful track record elsewhere. Industry Buzz.

While Six Sigma is new at, for example, 3M its benefits at others ofthese organizations is measured in the multi-billions of US dollars.


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Quality is a state in which value entitlement is realized for thecustomer and provider in every aspect of the business relationship.

Business Quality is highest when the costs are at the absolutelowest for both the producer & consumer.

Six Sigma provides maximum value to companies in the formsof increased profits and maximum value to consumers with high-quality products and services at the lowest possible cost.


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The Villain

Cost of Poorly Performing Processes level DPMO CP3

2 308,537 Not Applicable3 66,807 25%-40% of sales4 6,210 15%-25% of sales5 233 5%-15% of sales6 3.4 < 1% of sales

Each sigma shift provides a 10% net income improvement

Cost of Poorly Performing Processes (CP 3)

Sigma ( s ) is a measure of perfection relating to process performance capability the bigger the better. A process operating at a Six Sigma level produces only 3.4 defects

per million opportunities ( DPMO ) for a defect. Withoutdedication of significant and appropriate attention to a

process, most processes in leading companies operate at alevel between 3 and 4 sigma.

Why is Six Sigma Important?


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C ost of Poorly Performing ProcessesThe cost to deliver a quality product can account for as much as40% of the sales price.For example, a laser jet printer purchased for $1,000 may havecost the manufacturer $400 in rework just to make sure that youtook home an average-quality product.For a company whose annual revenues are $100 million and whose operating income is $10 million, the cost of quality is

roughly 25% of the operating revenue, or $25 million.If this same company could reduce its cost of achieving quality by20%, it would increase its operating revenue by $5 million or50% of the current operating income.


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and the Hero We dont know what we dont know. We cant do what we dont know. We wont know until we measure. We dont measure what we dont value. We dont value what we dont measure.

Typical Results : companies that properlyimplement Six Sigma have seen profit margins grow20% year after year for each sigma shift (up to about4.8s to 5.0s. Since most companies start at about 3s, virtually each employee trained in Six Sigma will returnon average $230,000 per project to the bottom lineuntil the company reaches 4.7s. After that, the costsavings are not as dramatic.

However , improved profit margins allow companiesto create products & services with added features andfunctions that result in greater market share.

What Does Six Sigma Tell Us?


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Six Sigma Affects Six Areas Fundamentalto Improving a Companys Value:

1. Process Improvement2. Product & Service Improvement3. Investor Relations4. Design Methodology

5. Supplier Improvement6. Training & Recruitment


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Six Sigma vs. TQM TQM Terminology Six Sigma Improvement

TerminologyIdentify the ProjectEstablish the Cause

Define

Diagnose the Cause Measure Analyze

Remedy the Cause Improve

Hold the Gains Control

Replicate ResultsNominate New Projects

Replicate


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Values of Six Sigma OrganizationsIssue Classical Focus Six Sigma Focus Analytical Perspective point estimate variabilityManagement cost & time quality & timeManufacturability trial & error robust design

Variable Search one-factor-at-a-time design of experimentsProcess Adjustment tweaking process control chartsProblems fixing preventionProblem solving expert based system based

Analysis experience dataFocus product processBehavior reactive proactive

Suppliers cost relative capabilityReasoning experience based statistically basedOutlook short-term long-termDecision Making intuition probability

Approach symptomatic problematicDesign performance producibility


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Values of Six Sigma Organizations

Issue Classical Focus Six Sigma Focus

Aim company customerOrganization authority learningTraining luxury necessityChain-of-command hierarchy empowered teamsDirection seat-of-the-pants benchmarking/ metricsGoal setting realistic perception reach out & stretch

People cost assetControl centralized localizedImprovement automation optimization


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The SIPOC M odel

Suppliers Customers

Inputs OutputsProcess

Steps

Inform Loop


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Six Sigma COPIS M odel

C ustomers Suppliers

O utputs InputsP rocess

Steps

The Voice of the Customer (VOC) is aggressively sought and rigorouslyevaluated and used to determine needed outputs and hence the optimalprocess configuration needed to yield those outputs and their necessary

inputs for which the best suppliers are identified and allied with.

From Concept to Market: the Voice of the Customer

How does Six Sigma Work?


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The DMAIC odel

Define Control

Measure Improve Analyze

Voice of the Customer

Institutionalization


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K ano Customer N eed M odelDissatisfiers Those needs that are EXPECTED in a product or

service. These are generally not stated by customers but are assumed as given. If they are not present, thecustomer is dissatisfied.

Satisfiers Needs that customers SAY THEY WANT. Fulfillingthese needs creates satisfaction.

Exciters /Delighters

New or Innovative features that customers do notexpect. The presence of such unexpected features leadsto high perceptions of quality.


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Kano Customer Need ModelDelighted

Disgusted

AbsentFullyImplemented

Stakeholder Satisfaction

Degree ofExecution


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Dimensions of Quality - Garvins E ight Quality is usually a bundle of characteristics We need to disaggregate this composite notion This decomposition will help us to

make our notion of quality more precise make comparisons possible

facilitate measurement Only the customer determines the relative

importance of these dimensions


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G arvins E ight Dimensions Performance Features Conformance Aesthetics

Reliability Durability Serviceability Perceived Quality


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What the Terms Mean (1) PERFORMANCE

Primary operating characteristics of a product

FEATURES bells & whistles secondary characteristics that supplement the basic functioning

CONFORMANCE degree to which product meets pre-established standards(meeting specs)


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What the Terms Mean (2) R ELIABILITY

Probability of product remaining functional over a

specified period of time DURABILITY

amount of use one gets out of a product before itphysically deteriorates

SERVICEABILITY speed and ease of repairs (or resolution of problems)


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Competing on Quality It is not often feasible to pursue all 8 dimensions

Trade-offs are necessary Quality niches can be defined and defended A firm can define what quality means for its

product Must focus on the right quality measure: thoseone(s) that matter to the consumer


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Dimensions of S ervice Quality R ELIABILITY : consistency, error-free dependability R ESPONSIVENESS : willingness to help the customer T ANGIBLES : environment for the service presented

COMPETENCE : the right skills and knowledge required


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S ervice Quality (cont.) COURTESY : suppliers behavior

SECURITY : freedom from danger or risk A CCESS : ease of making contact COMMUNICATION : understandable to the customer EMPATHY : adopting the customers viewpoint


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Aggregation Often need to reduce the number of

dimensions. Reduced list is: Reliability Responsiveness Empathy

Tangibles Assurance


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Six Sigma Road Map: R DMAIC SI Breakthrough Stage Strategy Phase Objective

Identification Recognize Identify Key Business

Define Issues

Characterization Measure Understand Current

Analyze Performance Levels

Optimization Improve Achieve Breakthrough

Control Improvement

Institutionalization Standardize Transform How Day-to

Integrate Day Business isConducted

B r e a

k t h r o u g

h S t r a

t e g y


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Define

C ontrol

Improve Analyze

M easure

Six Sigma I nnovation & the DMAIC Algorithm

D efine the problem and customerrequirements.

M easure defect rates and documentthe process in its current incarnation.

A nalyze process data and determinethe capability of the process.

I mprove the process and removedefect causes.

Control process performance andensure that defects do not recur.

Common sense doesnt mean commonly done or when done, done well.

Six Sigma: How Do We Innovate?


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Six Sigma from the GE PerspectiveSix Sigma is a highly disciplined process that helps a company focus on developing

and delivering near- perfect products and services. Why sigma? The word is a statistical term that measures how far a given process deviates from perfection.

The central idea behind Six Sigma is that if you can measure how manydefects you have in a process, you can systematically determine how to

eliminate those and approach zero defects.

Six Sigma has changed the DNA at GE it is the way that GE works in

Everything that GE does and in every product GE designs.

What is Six Sigma? The Roadmap to Customer Improvement www.ge.com/sixsigma/makingcustomers.html


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Design for Six Sigma Applications of Six Sigma that focus on the design or significant

redesign of products and services and their enabling processes so thatfrom the beginning customer needs and expectations are fulfilled

are known as Design for Six Sigma or DFSS .

The focal aim of DFSS is to create designs that are resource efficient,capable of exceptionally high yields, and are robust to process

variations. This aim leads to the DFSS algorithm

D efine- M easure- A nalyze- D esign- V erify (DMADV).


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Define

Verify

Design Analyze

M easure

D esign for Six Sigma (DFSS) All new products at GE are designed using a DFSS algorithm.

D efine customer requirements andgoals for the process, product or service.

M easure and match performanceto customer requirements.

A nalyze and assess the design forthe process, product or service.

D esign and implement the array ofnew processes required for the newprocess, product or service.

V erify results and maintainperformance.

Six Sigma: How Do We Design?


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Design for Six Sigma at GE:DFSS is changing GE. With it GE can build on all of its capabilities and take

all of its product and process designs to a new level of world-classperformance and quality.

The essence of DFSS is predicting design quality up front and driving qualitymeasurement and predictability improvement during the early design phases-

a much more effective and less expensive way to get to Six Sigma qualitythan trying to fix problems further down the road.

What We Do . GE Corporate Research and DevelopmentFormerly posted at: www.crd.ge.com/whatwedo/sixsigma.html


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Another View of Design for Six Sigma:DFSS is the change in the product design organization from a deterministic to a

probabilistic culture. Our people were trained to incorporate statistical analysis offailure modes, both in products and processes. They began to incorporate design

changes that modify & eliminate design features with a probability of failure within apredefined range of operating environments and conditions. The design organizationchanged from a factor -of- safety mentality to one in which there was a quantitative

assessment of design risk. Four elements of design are most critical to the effort:

Design for producibility (design for manufacturing and assembly);Design for Reliability;

Design for Performance (technical requirements); andDesign for Maintainability.

Design for Six Sigma: 15 Lessons Learned,Quality Progress, Vol. 35, No. 1, pp. 33-42, January 2002.


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Improvement & Innovation Focuses on high priorityproblems in business processes. This uses the DMAIC methodology: Define, Measure, Analyze, Improve, and Control.

Design Design For Six Sigma (DFSS) addresses new or

fundamentally poor processes. The methodology is called the DMADV or DMAD O V model : Define, Measure, Analyze, Design, Optimize ,and Verify.

Business Process Management aids in definition andmanagement of operations and activities in terms of core and enablingprocesses. The resulting process management systems provide afoundation of process definition and baseline data for all process designand improvement activities.


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Six Sigma Strategy & Methods

Appendix 1: Corporate Leadership


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a highly structured strategy for acquiring, assessing, andapplying customer, competitor, and enterpriseintelligence for the purposes of product, system or

enterprise innovation and design.


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Six Sigma for System Innovation Dessign 1233779239181412 3