Introduction to Six Sigma

Upendra Kachru

SIX SIGMA

Whats in a name?
Sigma is the Greek letter representing the standard deviation of a
population of data.
Sigma is a measure
of variation (the data spread)

variation

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What does variation mean?

20

15

Variation means that a

process does not produce
the same result (the Y)
every time.

10

-5

-10

Variation exists in everything. Even the best machine cannot make

every unit exactly the same. Some variation will exist.
Variation directly affects customer experiences.

Customers do not feel averages!

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SIX SIGMA

Reduce Variation to Improve

Performance
30 min. or less

How many standard

deviations can you
fit within customer
expectations?

x
30
40
50
Put another way, Sigma level measures how often we meet (or fail
to meet) the requirement(s) of our customer(s).
0

Upendra Kachru

10

20

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Process Performance: Example

The pizza delivery example. . .
Customers want their pizza
delivered fast!
Guarantee = 30 minutes or less

What if we measured performance and found an average

delivery time of 23.5 minutes?
On-time performance is great, right?
Our customers must be happy with us, right?

Upendra Kachru

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How often are we delivering on time?

30 min. or less

Answer: Look at
the variation!
s

10

20

30

40

50

Managing by the average doesnt tell the whole story. The average and
the variation together show whats happening.
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Improve Process Variation & Defect Rates

Improved capability to reduce process

variation and defects, becomes a
necessity, due to the need of :

Improved designs
Lower costs
Better performance

All of this leads to the ability to operate

to a tight tolerance, without producing
defects and becomes a major advantage
to the organization.

Upendra Kachru

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What is Six Sigma

Six Sigma is a highly disciplined approach, which
relies heavily on statistical tools, used to reduce
process variations to such a great extent that the level
of defects is reduced to less than 3.4 per million
process, product, or service opportunities.

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What is Six Sigma - Example?

The wait time is 7.5 minutes. The standard deviation of the
process is 1 min. Then six sigma from the centerline is 1.5
minutes (in the negative direction and 13.5 minutes (in the
positive direction). The customer wait time should not
exceed 13.5 minutes 2 times in a billion opportunities.
Centerline

1.5
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7.5
xx

13.5
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Six Sigma is not

In the example, we said the customer wait time should not
exceed 13.5 minutes 2 times in a billion opportunities. But
the accepted error rate in Six Sigma is 3.4 defects in a
million opportunities. Why the difference?
s
1.5 Sigma

Upendra Kachru

In Six Sigma, the long term

mean is shifted by 1.5 Sigma.
This is because external failure
rates seem to be consistently
higher than expected when
measured by internal estimates.

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Six Sigma is.

In other words, 4.5 standard deviations is used as an

acceptable measure of performance and this comes to 3.4
defects in a million opportunities. Though the derivation is
arbitrary, it is the accepted norm.

Upendra Kachru

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Six-Sigma Metrics
Defect any mistake or error that is passed on to a customer
Defects per unit (DPU) = number of defects discovered
number of units produced
Defects per million opportunities (DPMO) = DPU
1,000,000 opportunities for error

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Comparing on a Sigma Scale

In a world at 3 sigma. . .

In a world at 6 sigma. . .

There are 964 flight cancellations

per day in India.
The police make 7 false arrests
every 4 minutes.
In Calcutta Hospital, 5,390
newborns die each year.
In one hour, 47,283 international
long distance calls are
accidentally disconnected.

1 is cancelled every 3 weeks in

India.
There are fewer than 4 false
arrests per month.
1 newborn dies every 4 years
in Calcutta Hospital.
It would take more than
2 years to see the same number
of dropped international calls.

Upendra Kachru

SIX SIGMA

Example of a Six Sigma Scale

Say, Indian Railways runs 14,444 trains everyday.
Passengers expect the trains to be on time. For the trains to
be time everyday the number of opportunities are:
14,444 x 365 = 5,272,060
At Six Sigma level (3.4 defects per million opportunities)
Indian Railways will have to meet the standard:
(5,272,060/100,000) x 3.4 = 18
Therefore, no more than 18 trains can be late during annually
for Indian Railways to meet Six Sigma standards.
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Calculating on Sigma Scale

At Yes Bank customers expect that they should get a
complete set of documents within 3 days of their
submitting their application to open an account.
Management considers that if a customer gets his/her
documents after 3 days, it is a defect.
At the main branch of the bank, a total of 5000 accounts
were opened in the last three months. Data shows that in
the case of 125 accounts the target was missed. What is
the quality level?

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The Sigma Scale

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Calculating on Sigma Scale

The level of defects per million can be calculated as follows:
DPMO = (125/5000) = 25000
Sigma Calculator

The level of defects corresponds to a sigma level of 3.46.

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Up the Sigma Scale

Sigma

% Good

% Bad

DPMO

1
2
3
4
5
6

30.9%
69.1%
93.3%
99.38%
99.977%
99.9997%

69.1%
30.9%
6.7%
0.62%
0.023%
0.00034%

691,462
308,538
66,807
6,210
233
3.4

Minimum
Acceptable
Quality
Level

World-class

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SIX SIGMA

DPMO to Sigma Relationship

1,000,000

66807 *

100,000
d
p
m
o

6210

10,000
1,000

233

100
10 *6 Sigma is not twice as good as 3 Sigma, it is almost
20,000 times better
3.4*
1

Sigma
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Sigma Ranges

The y axis, representing DPMO is logarithmically scaled. As the

sigma level is increased, the defects per million level decrease
exponentially. For example, moving from 3 Sigma to 4 Sigma DPMO
drops from 67,000 to 6500, then to just over 200 at 5 Sigma.
Upendra Kachru

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Cost of Quality at Different Sigma Levels

The cost of quality can be measured for any organization using
established criteria and categories of cost. In the figure the y axis
represents the cost of quality as a percentage of sale. For a 2 Sigma
organization, nearly 50% of sales is spent on non-value adding
activities.

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SIX SIGMA

Cost of Quality at Different Sigma Levels

At 3 or 4 Sigma, where most organizations operate, it spends 15 to
25% on quality related activities. Some of the costs are: quality
departments, customer complaint departments, returns, and warranty
repairs etc. Rule of thumb: An error that costs Re.1 will require Rs. 10
to detect in-house and Rs. 100 if the customer detects it.

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SIX SIGMA

Cost of Quality at Different Sigma

Levels
As the organization moves to 5 Sigma, its quality
costs drop to about 5%. And at Six Sigma it drops
to 1 2 % and customer satisfaction increases.

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The Six Sigma Evolutionary Timeline

1798: Eli Whitney
introduces the concept
of interchangeable parts
and Go gauges.

1818: Gauss uses the normal curve

to explore the mathematics of error
analysis for measurement, probability
analysis, and hypothesis testing.

1736: French
mathematician
Abraham de
Moivre publishes
an article
introducing the
normal curve.

1924: Walter A. Shewhart introduces

the control chart and the distinction of
special vs. common cause variation as
contributors to process problems.

1896: Italian sociologist Vilfredo

Alfredo Pareto introduces the 80/20
rule and the Pareto distribution in
Cours dEconomie Politique.

1949: U. S. DOD issues Military

Procedure MIL-P-1629, Procedures

for Performing a Failure Mode Effects

and Criticality Analysis.

1960: Kaoru Ishikawa

introduces his now famous
cause-and-effect diagram.

1941: Alex Osborn, head of

BBDO Advertising, fathers a
widely-adopted set of rules for
brainstorming.

1970s: Dr. Noriaki Kano

introduces his two-dimensional
quality model and the three
types of quality.

1986: Bill Smith, a senior

engineer and scientist introduces
the concept of Six Sigma at
Motorola

1995: Jack Welch

launches Six Sigma at GE.
1994: Larry Bossidy launches
Six Sigma at Allied Signal.

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Major Contributions to Six Sigma

Demings 14 Points
1.

2.
3.
4.
5.
6.
7.

Create Constancy of Purpose for Improvement of Product and

Service
Adopt the New Philosophy
Cease Dependence on Mass Inspection for Quality Control
End the Practice of Awarding Business on Price Tag Alone
Constantly and Forever Improve the System of Production and
Service
Institute More Thorough, Better Job-Related Training
Institute Leadership

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Major Contributions to Six Sigma

Demings 14 Points (contd.)
8.
9.
10.
11.
12.
13.
14.

Drive Out Fear

Break Down Barriers Between Departments
Eliminate Slogans, Exhortations, and Targets of the Work Force
Eliminate Work Standards on the Factory Floor
Remove Barriers that Rob People of Pride of Workmanship
Institute a Vigorous Program of Education and Self-Improvement
Put Everybody in the Organization to Work to Accomplish the
Transformation

Upendra Kachru

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Major Contributions to Six Sigma

Phillip Crosby
FOUR ABSOLUTES OF QUALITY MANAGEMENT
Definition of Quality:

System:
Performance Standard:
Measurement:
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Conformance to
Requirements
Prevention
Zero Defects
Cost of Quality
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Major Contributions to Six Sigma

Crosbys 14 Steps
1.
2.
3.
4.
5.
6.
7.

Management Commitment
Quality Improvement Team
Quality Measurement
Cost of Quality Evaluation
Quality Awareness
Corrective Action
Zero Defects Planning

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8.
9.
10.
11.
12.
13.
14.

Quality Education
Zero Defects Day
Goal Setting
Error Cause Removal
Recognition
Quality Councils
Do It All Over Again

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Major Contributions to Six Sigma

Genichi Taguchi
Four-time winner of the Deming Award
Joined ECL in 1949 with the charge to improve efficiency of
R & D activities. Cultivated the application of designed
experiments.
Advocates a three-stage process design model:
1. System Design
2. Parameter Design
3. Tolerance Design
Quality Loss Function
Signal-to-Noise Ratio
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Major Contributions to Six Sigma

Joseph Juran

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Definition of Quality:Fitness for Use

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Other Major Contributions to Six Sigma

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Motorola and Six Sigma

Motorola was greatly impacted by the quality improvements
in foreign products. Under the leadership and support of Bob
Galvin, the companys zeal for quality improvement
flourished.
Stealing the best practices from the best companies (known
as the bandit project) was Motorolas attempt at turning
around the pocket pager business in the early 1980s.

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SIX SIGMA

Process Variation & Defect Rates

Off-Target

Too Much Variation

Centered
On-Target

Center
Process

Reduce
Spread

Bill Smith, leading the Motorola team, realized that there are
two things that can occur as a result of variation:

The process is "off-center." This means that the output from the
process is missing the target.
The process has too much spread. This means that there is a wide
variance in the output from the process.

Upendra Kachru

SIX SIGMA

Process Capability

As the objective was to understand customer

requirements and reduce process variation and defects,
Bill Smith and other Motorola executives combined
the concepts of process capability and
product specifications
to arrive at the Six Sigma Framework.

Upendra Kachru

SIX SIGMA

Six Sigma - Process Capability and

Product Specifications
Six Sigma marries the concepts of process capability and
product specifications.
Process capability (Cp) is a technique to find out the measurable
property of a process to a specification.

Process capability index (Cpk) is the measure of process

capability. It shows how closely a process is able to produce the
output to its overall specifications.

Upendra Kachru

SIX SIGMA

Motorola and Six Sigma

3 Sigma ( Process capability of 1 CPK ) - if the process
(lorry) slightly varies then the scrap or damage will occur
6 Sigma ( Process capability of 2 CPK ) - if the process
(lorry) varies, there will be no scrap or damage

Curbs
= required
process tolerances

CPK of 1
(3 sigma)

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CPK of 2
(6 sigma)
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Example
Food served at a restaurant should be between 38C and 49C when it
is delivered to the customer. The process used to keep the food at the
correct temperature has a process standard deviation of 2C and the
mean value for these temperature is 23. What is the process capability
of the process?
Given:
USL (Upper Specification Limit) =49C
LSL (Lower Specification Limit) =39C
Standard Deviation =2C
Mean = 23
To Find:
Process Capability & Process Capability Index

Upendra Kachru

SIX SIGMA

Solution
Process Capability :
Process Capability

= (49 - 39) / (6 * 2)
= 10 / 12
= 0.833
Process Capability Index :

Solution 1

(USL-mean/ 3*std.Dev)

= (49 - 23) / (3 * 2)
= 4.33

Solution 2
(mean-LSL/3*std.Dev)

= (23 - 39) / (3 * 2)
= 2.66

Now, find the minimum value.

Process Capability Index

= min (Solution 1, Solution 2)

= min (4.33 , 2.66)

= 2.66

Upendra Kachru

SIX SIGMA

Motorola and Six Sigma

Cp and Cpk measurements were used to measure
process performance. The calculation for capability was
defects per million opportunities (DPMO).
Traditionally, processes aimed for process capability of
3 to 4 sigma (Cpk=1.0 to 1.33 or 93% to 99.3%
acceptable).
The customer received 6200 defective product per
million at best. The process was failing the customer
expectations

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SIX SIGMA

Motorola and Six Sigma

Long-Term Yield

3 Sigma Process Capability

93.32%

Historical Standard

4 Sigma Process Capability

99.38%

Current Standard

6 Sigma Process Capability

99.99966%

World-Class

The companys approach was based on a comparison of process

performance and product specification, and aggressive efforts to drive
down defects.
Processes now aimed for 6 sigma (Cpk=2).
The customer would receive 3.4 defective product per million.
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Motorola and Six Sigma

To ensure widespread acceptance, the challenge was to make their
people understand that significant opportunities could be identified in
the DPMO formula, and customers ever changing expectations must
be considered.
It was also important to understand that a companywide mindset of
continuous improvement was as important as targeting a specific
quality level, such as 3.4 DPMO.
In 1991 Motorola certified its first 'Black Belt' Six Sigma experts,
which indicates the beginnings of the formalisation of the accredited
training of Six Sigma methods.

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Motorola and Six Sigma

As a result of winning the Baldrige Award in 1988, Motorola was
compelled to share its quality practices with others. AlliedSignal was
one of the first companies to adopt and use the methodology in 1991.
IBM and other companies adopted the concepts of Six Sigma and
shared the new methodology and philosophy with their suppliers,
engineers and managers.
There have been many modifications to the original measures. Some
add an additional I emphasizing implementation of the identified
solutions; or a trailing L to emphasize the need to leverage the
results across the organization.

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Others Follow
In 1995, Larry Bossidy, AlliedSignals CEO,
introduced the concept of Six Sigma to Jack
Welch, CEO of General Electric. Welch took the
methodology, made it a corporate requirement and
firmly deployed it throughout his organization
with great intensity and significant success. His
results are well documented, and the rest is history.

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Six Sigma Companies

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Some Six Sigma Indian Companies

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Historical Developments

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Six Sigma is
Six-Sigma is a philosophy:

........Of breakthrough improvement

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Six Sigma is
Management mandated and directed improvement
program focused on breakthroughs in financial
performance and customer satisfaction
A systematic project based method for process and
product improvement
A statistical measure indicating the number of standard
deviations within customer expectations.
A performance goal, representing 3.4 defects for every
million opportunities to make one.

Upendra Kachru

SIX SIGMA

Six Sigma is. . .

A Greek symbol for measuring performance variation
A approach using series of tools and methods used to
improve or design products, processes, and/or services.
Uses Champions, Black Belts and Green Belts to facilitate
change
A disciplined, fact-based approach to managing a business
and its processes.
A metric for evaluating performance quality
A standard of excellence

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Six-Sigma Quality
Ensuring that process variation is half the design tolerance (Cp =
2.0) while allowing the mean to shift as much as 1.5 standard
deviations, resulting in at most 3.4 DPMO.

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SIX SIGMA

Six Sigma & Other Approaches

There are many approaches to excellence in addition to Six
Sigma :

Total Quality Management

Kaizen
Toyota Production System
Total Productive Maintenance
Theory of Constraints
Lean Production

Six Sigma has some overlap with all these approaches. It is

particularly close to TQM and sometimes considered as a
specific approach of TQM.
Upendra Kachru

SIX SIGMA

Six Sigma & TQM

In some aspects of quality improvement, TQM and Six Sigma share the
same philosophy of how to assist organizations to accomplish Total
Quality. They both emphasize the importance of top-management
support and leadership. Both approaches make it clear that continuous
quality improvement is critical to long-term business success.
However, why has the popularity of TQM waned while Six Sigma's
popularity continues to grow in the past decade?

Upendra Kachru

SIX SIGMA

Six Sigma & TQM

The differences between TQM and Six Sigma are summarized below:
TQM

Six Sigma

A functional specialty within the

organization.

An infrastructure of dedicated change agents. Focuses on

cross-functional value delivery streams rather than
functional division of labour.

Focuses on quality.

Focuses on strategic goals and applies them to cost,

schedule and other key business metrics.

Motivated by quality idealism.

Driven by tangible benefit far a major stockholder group

(customers, shareholders, and employees).

Loosely monitors progress toward goals.

Ensures that the investment produces the expected return.

People are engaged in routine duties

(Planning, improvement, and control).

Slack resources are created to change key business

processes and the organization itself.

Emphasizes problem solving.

Emphasizes breakthrough rates of

improvement.

Focuses on standard performance, e.g.

ISO 9000.

Focuses on world class performance, e.g., 3.4 PPM error

rate.

Upendra Kachru

SIX SIGMA

Six Sigma & TQM

The differences between TQM and Six Sigma are summarized below:
TQM

Six Sigma

Quality is a permanent, full-time job. Career Six Sigma job is temporary. Six Sigma is a
path is in the quality profession.
stepping-stone; career path leads elsewhere.
Provides a vast set of tools and techniques
with no clear framework for using them
effectively.

Provides a selected subset of tools and techniques

and a clearly defined framework for using them to
achieve results (DMAIC).

Goals are developed by quality department

based on quality criteria and the assumption
that what is good for quality is good for the
organization.

Goals flow down from customers and senior

leadership's strategic objectives. Goals and metrics
are reviewed at the enterprise level to assure that
local sub-optimization does not occur.

Developed by technical personnel.

Developed by CEOs.

Focuses on long-term results. Expected

payoff is not well-defined.

Six Sigma looks for a mix of short-term and longterm results, as dictated by business demands.

Upendra Kachru

SIX SIGMA

Six Sigma & TQM

The differences between TQM and Six Sigma are summarized below:
TQM

Six Sigma

A functional specialty within the

organization.

An infrastructure of dedicated change agents. Focuses on

cross-functional value delivery streams rather than
functional division of labour.

Focuses on quality.

Focuses on strategic goals and applies them to cost,

schedule and other key business metrics.

Motivated by quality idealism.

Driven by tangible benefit far a major stockholder group

(customers, shareholders, and employees).

Loosely monitors progress toward goals.

Ensures that the investment produces the expected return.

People are engaged in routine duties

(Planning, improvement, and control).

Slack resources are created to change key business

processes and the organization itself.

Emphasizes problem solving.

Emphasizes breakthrough rates of

improvement.

Focuses on standard performance, e.g.

ISO 9000.

Focuses on world class performance, e.g., 3.4 PPM error

rate.

Upendra Kachru

SIX SIGMA

Six Sigma & TQM

The differences between TQM and Six Sigma are summarized below:
TQM

Six Sigma

Quality is a permanent, full-time job. Career Six Sigma job is temporary. Six Sigma is a
path is in the quality profession.
stepping-stone; career path leads elsewhere.
Provides a vast set of tools and techniques
with no clear framework for using them
effectively.

Provides a selected subset of tools and techniques

and a clearly defined framework for using them to
achieve results (DMAIC).

Goals are developed by quality department

based on quality criteria and the assumption
that what is good for quality is good for the
organization.

Goals flow down from customers and senior

leadership's strategic objectives. Goals and metrics
are reviewed at the enterprise level to assure that
local sub-optimization does not occur.

Developed by technical personnel.

Developed by CEOs.

Focuses on long-term results. Expected

payoff is not well-defined.

Six Sigma looks for a mix of short-term and longterm results, as dictated by business demands.

Upendra Kachru

SIX SIGMA

Six Sigma & TQM

Key differences between TQM and Six Sigma can be summarized as:
Project Focus and Duration: Six Sigma deployment revolves around Six Sigma
projects that concentrate on one or more key areas: cost, schedule and quality.
The duration is specified, normally three to six months time frame.
Organizational Support and Infrastructure: The deployment is led by
executive staff, who use Six Sigma to further strategic goals and objectives. It is
championed by mid and upper level leaders and the project is led by a black belt
Clear and Consistent Methodology: Standard methodology has been developed
for Six Sigma projects, i.e. DMAIC.
Top down Training: Deployment starts at the top with training of key
management personnel.

Upendra Kachru

SIX SIGMA

Summary
The major differences in Six Sigma as compared to other
approaches:

Project based improvement approach

Clear and direct linkage of projects to financial benefits
Projects sponsored by Senior Management
Careful selection of the best people to learn and implement Six
Sigma
Uses statistical tools to identify problems and find their solutions
Comprehensive training in Six Sigma (statistical) tools.

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