EIN 6935 /4933 LEAN Six Sigma

1.2 INTRODUCTION TO SIX SIGMA

Instructor: Christos Nicolaou

Learning Objectives
The Deming P-D-C-A Cycle The Six Themes of Six Sigma Six Sigma History Jack Welch: Essential Traits of Leadership The Six Sigma Wave Six Sigma Beyond The Manufacturing Floor

The Deming P-D-C-A Cycle

1. Plan Identify problem Develop plan for improvement

4. Act Institutionalize improvement Continue cycle

2. Do Implement plan on test basis

3. Check / Study Is the plan working

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The Six Themes of Six Sigma

Genuine Focus on the Customer Data- and Fact-Driven Management Process Focus, (Proactive) Management and Improvement Boundary-less Collaboration Drive for Perfection Tolerance for Failure

According to The Six Sigma Way

flexible system for improved business leadership and performance (Pande. Nueman. Cavanagh., 2000). Six Sigma incorporates a variety of important management ideas and practices from the past century. The authors say that it is not so much about theory, but more about action. Six Sigma helps to build new structures and practices that enable a company to achieve sustained success.
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The SIX SIGMA WAY on Six Sigma and TQM

TQM Pitfall Six Sigma Solution

Lack of Integration

Links to the Business and Personal Bottom Line Leadership Apathy Leadership at the Vanguard A Fuzzy Concept A consistently Repeated, Simple Message An Unclear Goal Setting a No-Nonsense, Ambitious Goal Purist Attitudes and Adopting Tools and Degree of Technical Zealotry Rigor to the Circumstances Failure to Break Down Priority on Cross Functional Internal barriers Process Management Ineffective training Black Belts, Green Belts, Master Black Belts Focus on Product Quality Attention to All Business Processes

The Book points out that Six Sigma is TQM on steroids

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Six Sigma - Motorola

Before 1987, Six Sigma was solely a statistical term. Motorola in 1980s early 90s
Poor Quality Business future in jeopardy

When Bob Galvin became Motorola's CEO in 1981, he challenged his company to achieve a tenfold improvement in performance over a five-year period.
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Six Sigma - Motorola

In 1984, after Mikel Harry joined Motorola where he worked with Bill Smith, a veteran engineer who was in Harry's words, the father of Six Sigma. During 1985, Smith wrote an internal quality research report which caught the attention of Bob Galvin. With the concept of logic filter, one of Harry's papers at Arizona State University, together with Smith, Harry developed a fourstage problem-solving approach: Measure, Analyze, Improve, Control (MAIC).

Mikel Harry

Later, the MAIC discipline became the roadmap for achieving Six Sigma quality.

Bill Smith
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Six Sigma - Motorola

Motorola - the Benefiter (1987- 1997)
On January 15, 1987, Galvin launched a long term quality program, called The Six Sigma Quality Program. The program was a corporate program which established Six Sigma as the required capability level to approach the standard of 3.4 DPMO. After implementing Six Sigma, in 1988, Motorola was among the first recipients of the Malcolm Baldrige National Quality Award. Employment rose from 71,000 to >130, 000 Five-fold growth in sales Profits climbing almost 20% each year Cumulative savings based on Six Sigma efforts pegged at $14B Stock price gains compounded to an annual rate of 21.3%
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Six Sigma - Motorola

Motorola applied Six Sigma as a way to:
Transform the business process Drive communication, training, leadership, teamwork and measurement Focus on the customers

The Lack of Initial Emphasis in the Non-Manufacturing Areas Was a Mistake That Cost Motorola at Least $5 Billion Over a 4-year Period Bob Galvin - Former CEO
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Six Sigma Still Pays Off at Motorola

DECEMBER 4, 2006

. Consider the hot-selling, super-slim Razr phone. A creative, innovative design, sure. Yet "Six Sigma's stamp is all over the Razr," says Michael S. Potosky, Motorola's corporate director of Six Sigma. Engineers, for instance, applied the process to the phone's antenna, helping keep it hidden while maintaining call clarity. With hits like the Razr, the Schaumburg (Ill.) company has climbed from a 15.4% market share in mobile phones to 22.4% over the past two years.
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Betty Smith: The Woman Behind Six Sigma YouTube

Betty Smith: The Woman Behind Six Sigma

Betty Smith, wife of late Bill Smith, the inventor of Six Sigma, addressed about 150 participants at the Six Sigma Green Belt training hosted by Accelper Consulting, March 26-27, 2010.

http://www.youtube.com/watch?v=6ljSknR_6cg youtube.com Apr 9, 2010 - 10 min - Uploaded by Accelper

Six Sigma Unisys Corp.

In 1988, at Unisys Corp. Harry discussed with Cliff Ames, one of Unisys plant managers, about how to recognize the people who were equipped with Six Sigma tools.
Ames and Harry shared the same eastern martial arts philosophy. People in martial arts are incredibly skilled, have a precise command of tools, are very dedicated, and are very humble to learn.

Based on this insight, Harry decided to designate those with Six Sigma skills as Black Belt.

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Six Sigma - History

In 1989, Galvin invited Harry to head up Motorola's Six Sigma Research Institute and challenged him to do short cycle quality knowledge transfer and rapid dissemination of quality knowledge into a world-wide company. In 1993, at Asea Brown Boveri (ABB), Harry teamed with Richard Schroeder who later joined him to found Six Sigma Academy. To exploit the full power of Six Sigma by focusing on bottom-line results, Harry refined Six Sigma deployment tactics which included: Champion, Master Black Belt, Black Belt, and Green Belt.
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The Six Sigma belts

All Employees
Understand vision Apply concepts Process Owners 8-hours of training

Green Belts
Part-time 20-25% Help Black Belts Narrow-scope projects 40 hours of training

Black Belts
Devote 100% of time to BB activities Facilitate and practice problem solving Train and coach Green Belts and teams 160+ hours of training

Master Black Belts

Full time Train and coach all levels Statistical problem solving experts Champions, Black, Green & Yellow Belts

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Six Sigma - Honeywell

AlliedSignal / Honeywell
In 1993, Harry and Schroeder moved to Allied Signal and its CEO, Larry Bossidy, decided to adopt Six Sigma. Started in 1994 and by 1999 savings>$600M/yr. 1998 Results:
AS/ HII market value climbed to a compounded 27%/year 6% increase in productivity 13% increase in profit margins

Fastest Implementation of Six Sigma Yet!!

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Six Sigma - GE
General Electric
Thriving business, but needed to strengthen it Jack Welch, then Chairman and CEO of General Electric, influenced by Bossidy, began to get interested in Six Sigma. In January 1996, teaming with Six Sigma Academy, Welch announced the launch of Six Sigma at GE. Focused on
Customer Delight Process - outside looking Employee - Leadership commitment

3 years after investing >$1B, the financial returns were yielding $750M over the initial investment
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Six Sigma - GE
Two important contributions from GEs way of implementation to the evolution of Six Sigma:
Welch demonstrated the great paradigm of leadership Welch backed the Six Sigma program up with a strong rewards system to show his commitment to it. GE changed its incentive compensation plan for the entire company so that 60 percent of the bonus was based on financials and 40 percent on Six Sigma results.

Moreover, Six Sigma training had become a prerequisite for advancement up GEs corporate ladder.
Welch insisted that no one would be considered for a management job without at least a Green Belt training by the end of 1998.
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Jack Welch on Six Sigma

First, what it is not - It is not a secret society, a slogan or a clich.

Six Sigma is a highly disciplined process that helps GE employees focus on developing and delivering near-perfect products and services.

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Jack Welch: Essential Traits of Leadership

Successful leaders have tons of positive They have the ability to

ENERGY

ENERGIZE
others

They have EDGE, the courage to make tough yes-or-no decisions

EXECUTE
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They can

Jack Welch: Essential Traits of Leadership

If a candidate for a leadership role has the four Es, then you look for a final trait

PASSION
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http://www.youtube.com/watch?v=aNMULFcLuIM

Six Sigma Interview with Jack Welch

Six Sigma Interview with Jack Welch 2 min - Oct 15, 2007 - Uploaded by sbonacorsi Six Sigma Interview with Jack Welch youtube.com

Is the GE Way for everyone?

Jeffrey Immelt
2001 - Present: Chairman and CEO

Jim McNerney
2001 to 2005: Chairman and CEO of 3M 2005 - Present : Chairman and CEO of The Boeing Company

Robert Nardelli
2000 - 2007: CEO of The Home Depot 2007 - 2009: CEO of Chrysler

Lawrence Johnston
2001 to Present: Chairman and CEO of Albertsons

Management Is Not A Set Of Immutable Truths

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The Six Sigma Wave

Black & Decker Bombardier DuPont Dow Chemical Federal Express Johnson & Johnson Kodak Navistar Polaroid Raytheon Seagate Technologies Siebe Appliance Controls Sony Toshiba Many others

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R6 Evolution: How the Journey Began

5 year Stock Price comparison (4/96 - 4/01)
GE = General Electric, a leader in Six Sigma Dow Jones Industrial Average (index)

Raytheon Stock Price

Case for Action: Mergers and Acquisitions Geographically dispersed Multiple corporate cultures Financials

Competitive pressures Changing customer expectations and needs New Leadership Team Integrated vs. distributed business
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Raytheons Six Sigma

Dan Burnham

Bill Swanson

Daniel P. Burnham came from Raytheon Sigma is our disciplined, knowledge-based AlliedSignal in Six 1998, and served as approach designed to increase productivity, grow the chairman and CEOenhance customer satisfaction and build a business, for 5 years. customer Succeeded by Bill culture that embraces all of these goals. Swanson

http://www.raytheon.com/ourcompany/ourculture/r6s/process/index.html
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Six Sigma at Raytheon

Design for Six Sigma Cuts Costs, Boosts Customer Satisfaction
Challenge - Employ more robust design processes to increase customer satisfaction and improve financial performance
Solution - Apply Raytheon Six Sigma principles to: Reduce life-cycle costs of the AIM-9X Sidewinder missile Translate customer needs into manufacturing requirements for AMRAAM missile Improve producibility and maintainability at the manufacturing level Results $1.2 billion reduction in AIM 9-X life-cycle costs Twenty percent reduction in average unit production costs (AUPC) for AMRAAM missile Improved affordability for Navy and Air Force customers
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Six Sigma Beyond The Manufacturing Floor

Financial Institutions

Healthcare

Government Sector

Educational Sector
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Six Sigma at Bank of America

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Other results of Six Sigma Projects

$1.3 M Savings: Reduce Cost of Relocating New Hires $5 M Revenue: Improve Lockbox Deposit Availability $30 M Revenue/$1.5 M Savings: Measure Return on Sponsored Events $7.8 M Revenue: Retain Customers Who Move Within Footprint $950,000 Savings: Complete Federal Tax Return Faster $6.6 M Loss Reduction: Reduce ID Theft Through Account Takeover $2 M Revenue: Improve Results From New Sales Hires $10.7 M Revenue: Improve Customer Referrals From Tellers $3.6 M Revenue: Improve Credit Card Sales Increase Customer Satisfaction: Online Banking Customers View Intraday Activity
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Six Sigma and Healthcare

For large healthcare companies, Six Sigma is the 2nd most likely initiative to be pursued in 2005
Economist Intelligence Unit (EIU) in collaboration with Celerant Consulting, 2005

Morton Plant Mease Health Care is proud of our many accomplishments of 2005.

Six Sigma began with the selection of twelve team members to serve as Black Belts. Three of the team members were from Morton Plant Mease.
(Source: MPM website)

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Six Sigma and Healthcare

U.S. healthcare spending

$1.7 trillion = 15% of GNP

(Just the facts in Health Care H. James Harrington Quality Digest, March 2006)

The national numbers for waste in health care are between 30% and 40%, but the reality is closer to 60. [That's] waste of time, waste of money, waste of material resources Source: Industry Week, November 2003

For every dollar spent on healthcare

over 75 cents is spent on the non-patient care activities of communicating, scheduling, coordinating, supervising, and documenting care Source: HealthMEDX website
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Carle Clinic in Illinois

Objective: To increase capacity and raise patient satisfaction, Carle Clinic in Illinois needed to improve cycle time for CT exams. Solutions: Using Six Sigma and change management tools, Carle Clinic uncovered the most critical factors impacting the exam scheduling process and implemented these changes:

Results:

Administered contrast solution earlier so patient is prepared for exam on time Used MRI IV start room to prep CT patients Expanded tech availability with chart, requisition and file room improvements Increased CT capacity by six exams per day Achieved better predictability in the process Increased satisfaction Financial potential approximately $390,000 annually
Source: http://healthcare.isixsigma.com/library/content/
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Baptist Citizens Med Center

Objective: Baptist Citizens Medical Center in Alabama applied Six Sigma methods to reduce the cycle time from patient-out to next-patient-in to less than 15 minutes. Solutions:
Optimize capacity and labor utilization Improve service levels Develop marketing plan to improve market share Use radiology technician in CT to help transport Rotate CT technicians in X-ray Revisit protocols Extend US technicians hours twice/week Added 260 additional CT slots on annual basis Added 780 additional US slots on annual basis Financial potential $314,744 annually
Source: http://healthcare.isixsigma.com/library/content/
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Results:

QUESTIONS