Six Sigma Process Improvements

NERC - Educational Session Saturday, January 25, 2020 Clark University Presenter: Manish Israni Agenda

 Presenter Intro  Learning Objectives  Topics . Concept: overview, definition, calc. etc. . Uses/Application of Six Sigma . Six Sigma Workflow - DMAIC . Six Sigma tools o o Process Mapping/Value Stream Mapping o Pareto Principle (80-20 Rule) o FMEA (Failure Modes and Effects Analysis) o /Ishikawa/Fishbone (5 Whys) o 5 Ss o Other Tools

 Real Corporate Example  Q&A Today’s Presenter

Manish Israni, CMA, MBA Manager of Business Process Improvement/Finance Riverside Community Care, Inc. Email: [email protected] LinkedIn: www.linkedin.com/in/manishisrani-mba-cma Learning Objectives

 Understand Six Sigma methodology

 Know Six Sigma workflow

 Know and understand basic Six Sigma tools

 Understand how to use Six Sigma tools Concept Overview

Six Sigma is more than a concept. It is a metric, a methodology, and a management system. Bill Smith and Bob Galvin, both of Motorola, developed the Six Sigma quality improvement process in 1986.

Definition

As per Oxford dictionary: a set of management techniques intended to improve business processes by greatly reducing the probability that an error or defect will occur.*

As per ASQ (American Society for Quality): Six Sigma is a method that provides organizations tools to improve the capability of their business processes. This increase in performance and decrease in process variation helps lead to defect reduction and improvement in profits, employee morale, and quality of products or services.

In statistics: the standard deviation (SD or sigma σ) is a measure of the amount of variation or dispersion of a set of values.* Concept Overview

TERMINOLOGY AND CALCULATION

Defects: It is the failure of the process as per specification. It can be in a form of wrong information, wrong opening of call, no closing, etc. Denoted by d Unit (U): The number of parts, sub-assemblies, assemblies, or systems inspected or tested. Opportunity (O): A characteristic you inspect or test. It is the maximum nos. of defects possible in one unit. Defect (D): Anything that results in customer dissatisfaction. Anything that results in a non-conformance. Defects per opportunity: DPO= (D/(U*O)) Defects per million opportunity: DPMO= (DPO*1,000,000) STEPS: 1. Number of Units processed 2. Number of Opportunities for error per Unit 3. Total number of Defects 4. Solve for Defects Per Opportunity DPO = (D)/(U*O) 5. Convert DPO to DPMO DPMO = DPO*1,000,000 6. Look up Sigma in conversion table Concept Overview

Sigma Conversion Table Sigma DPMO Sigma DPMO Sigma DPMO 6.0 3.4 4.0 6210 2.0 308000 5.5 30 3.5 22700 1.5 500000 5.0 230 3.0 66800 1.0 690000 4.5 1350 2.5 158000 0.5 840000

*

Six Sigma is tiny 68.2% area towards end of bell curve where 95.4% probability of defect is almost zero 99.7%

99.99% Uses /Application

Six Sigma can be used and applied in practically any industry and sector

• Manufacturing*

• Technology

• Service industry

• Customer service

• Business Process Outsourcing

Example: Airlines and flights operate at 6 sigma level* Six Sigma Workflow DMAIC

D M A I C

DEFINE MEASURE ANALYSE IMPROVE CONTROL

Problems Process, What to Implement How to & Reasons, improve? changes sustain Objectives Factors Six Sigma Tools Charter

* Title Business : Project Type : Project # Problem : Name Role % Sign Off R E S O U R C Scope : E S Project Start Date Project End Date Measurable Goal : Completion Mth1 Mth2 Mth3 Mth4 Mth5 DMAIC Date Process Define Bench Mark : Measure Analyze Improve Data Source: Control

Details Year1 Year2 Defects - USD FTE’s USD FTE’s Opportunity - Benefits Financial Costs Sigma - Impact Net Six Sigma Tools Process Mapping

Value Stream Mapping helps you identify:

Value Enabling Activities: Identifying the activities which when enabled adds value to your processes.

Value Adding Activities: Identifying the activities that add value to your processes.

Non-value adding activities: Identifying and eliminating the activities that do not add any value to your processes. Six Sigma Tools SIPOC

SIPOC Model*

Supplier Input Process Output Customer

Example : Making a Photocopy Supplier Input Process Output Customer

Manufacturer Copier Records/Arch ive Office Paper/Toner Making a Duplicate Supplies Co photocopy copies You

Yourself External Power Electricity Parties

Process Steps

Remove Put original Adjust Press Close Lid originals on glass Settings START and copies Six Sigma Tools Pareto

Pareto Principle, aka as 80-20 rule: 80% of effects come from 20% of causes, i.e. if you are able to focus on fixing 20% of reasons, you will solve 80% of your problems.

This principle/tool helps you to identify specific problem area where you should focus your efforts. *

Reasons Total Reason # 1 807 Reason # 2 1901 Let us look at some Reason # 3 151 sample data with reasons and volume Reason # 4 284 Reason # 5 744 Reason # 6 474 Reason # 7 1989 Reason # 8 778 Grand Total 7128 Six Sigma Tools Pareto

Reasons Total CUM %AGE CUM% Reason # 7 1989 1989 27.90% 27.90% Reason # 2 1901 3890 26.67% 54.57% Putting the same Reason # 1 807 4697 11.32% 65.90% data using Pareto principle & Pareto Reason # 8 778 5475 10.91% 76.81% Chart Reason # 5 744 6219 10.44% 87.25% Reason # 6 474 6693 6.65% 93.90% Reason # 4 284 6977 3.98% 97.88% Reason # 3 151 7128 2.12% 100.00% Grand Total 7128

#7 #2 #1 #8 #5 #6 #4 #3 Six Sigma Tools FMEA

Failure Mode and Effect Analysis

• Severity (SEV): Determine how significant is the impact of the effect to the customer • Occurrence (OCC): Determine how likely is the cause of the failure mode to occur • Detection (DET): Determine how likely will the current system detect the cause or failure mode if it occurs

• Calculate RPN (Risk Priority Number): *RPN = SEV x OCC x DET

• Use RPN to prioritize your causes • Higher RPN’s require immediate focus * Six Sigma Tools Fishbone

Root Cause Analysis, Ishikawa Diagram, Fishbone analysis.

• Method to identify root cause of faults • Do Why Why Why Analysis for the significant causes. • For most problems, you will get to the real cause if you ask why 5 times

Unfavorable variance in Net Income

Why Lower than planned revenue

Why Multiple product returns Example Why Poor quality

Why No quality checks

Why No QC Team Six Sigma Tools Fishbone

At least ask Why People Process 3 Times 5th Why Measurement 4th Why 3rd Why 2nd Why 1st Why

Effect

Material Equipment Environment Six Sigma Tools 5Ss

The :

Sort - Leaving only necessary items, all extra items are removed from current production line.

Straighten/Set in order - Organize all items and label them according, for being clutter free.

Scrub/Shine - Keep your work area clean, and inspect everything in it regularly. Helps maintain work culture & motivation

Standardize – Operating procedures, processes. This helps to maintain consistent output

Sustain – Ensures standards are maintained throughout the time and organization. Involves control mechanisms, feedback loop. Six Sigma Tools Other

Kaizen – Continuous improvement: observing, identifying and implementing improvements in the process

Kanban – Ticket system, helps with JIT inventory

Brainstorming – Helps: • To Identify the problem • To find Solution • To identify Critical Causes • To prevent the problem Real Example AP Team

Problem: High TAT (turnaround time) in Accounts Payable Helpdesk Team, 9.47 days per case/ticket Goal: Reduce TAT by at least 20% Close more than 85% of cases within 7 days Impact: Increase customer (internal & external) satisfaction Data Source: Ticketing system Tools Used:  Process Analysis  SIPOC  Parteo  Fishbone  Brainstroming

Results: TAT reduced to 5.78 days. 88% cases closed in less than 7 days Leverage: This project helped other departments in the company to carry out similar projects to improve customer satisfaction Questions..