Unit 1: Introduction to Six Sigma

Based on the Council for Six Sigma Certification Body of Knowledge

Six Sigma (6σ)

Both a methodology for process improvement and a statistical concept that seeks to define the variation inherent in any process. The overarching premise is that variation in a process leads to opportunities for error; opportunities for error then lead to risks for product defects.

Data Driven Processes and Decisions

Six Sigma implements strategies based on measurement and metrics. It provides a mathematical and statistical foundation for decision making, working alongside other skills, experience, and knowledge. Experience might say a process isn't working; statistics prove that to be true.

Beta Testing

The act of implementing a new idea, system, or product with a select group of people or processes in as controlled an environment as possible. After beta testers identify potential problems and those problems are corrected, the idea, system, or product can be rolled out to the entire population.

6σ Statistical Definition

At the most basic definition, 6σ is a statistical representation for what many experts call a "perfect" process. Technically, in a Six Sigma process, there are only 3.4 defects per million opportunities. In percentages, that means 99.99966 percent of the products from a Six Sigma process are without defect.

5σ Level

At just one sigma level below—5σ, or 99.97 percent accuracy—processes experience 233 errors per million opportunities.

Calculating Sigma Level

((Total opportunities - Defects) / Total opportunities) * 100 = Yield percentage. Then look up the yield in a Sigma table.

Customer-Focused Improvement

A primary principle of the Six Sigma methodology is a focus on the customer. By combining knowledge of what the customer wants with measurements, statistics, and process improvement methods, organizations increase customer satisfaction, ultimately bolstering profits, customer retention, and loyalty.

Value Stream

The sequence of all items, events, and people required to produce an end result.

Continuous Process Improvement

An inherent part of the Six Sigma method. An organization that completely adopts a Six Sigma methodology never stops improving. It identifies and prioritizes areas of opportunity on a continuous basis. Once one area is improved upon, the organization moves on to improving another area.

Variation (in Six Sigma)

One of the ways to continuously improve a process is to reduce the variation in the process. Every process contains inherent variation.

Removing Waste

Removing items, actions, or people that are unnecessary to the outcome of a process—reduces processing time, opportunities for errors, and overall costs. While waste is a major concern in the Six Sigma methodology, the concept of waste comes from Lean Process Management.

Equipping People

Implementing improved processes is a temporary measure unless organizations equip their employees working with processes to monitor and maintain improvements. Process improvement usually includes a two-pronged approach

Controlling the Process

Often, Six Sigma improvements address processes that are out of control. The goal of improvement is to bring a process back within a state of statistical control. After improvements are implemented, measurements, statistics, and other Six Sigma tools are used to ensure the process remains in control.

Challenges of Six Sigma

Lack of support, resources, or knowledge; poor execution of projects; inconsistent access to valid statistical data; and concerns about using the methodology in new industries.

Statistical Process Control

The roots of statistical process control began with the development of the normal curve by Carl Friedrich Gauss in the 19th century. Walter Shewhart was the first person to closely relate sigma level and quality. He defined a process in need of correction as one that is performing at three sigma. Shewhart is considered the father of control charts.

PDCA Cycle (Plan-Do-Check-Act)

An idea from W. Edwards Deming. Improvement comes when you recognize there is a need for change and make a plan to create improvement. Next, you do something by testing your ideas. Using the results of the test, you check or verify that your improvements are working. Then you act, bringing your improvements to a production environment or scaling improvements outside of the test environment. The fact that PDCA is a cycle means it never ends.

Lean Process Management

Lean principles often go hand-in-hand with Six Sigma principles. While Lean originally developed as a concept for reducing waste in a manufacturing environment, the ideas of Lean Process Management can be applied to any process that involves the movement or creation of goods or services. Lean is concerned with continuous improvements and provides waste-removal tools so daily control and improvements can be made to processes.

Kaizen

A Japanese word that translates loosely to "change for the better." The purpose of every change in a Kaizen environment is to eliminate waste and/or create more value for the customer on a continuous basis.

Total Quality Management (TQM)

A formal method enacted in business environments in the United States. TQM began to force organizations to see themselves as one entity rather than a number of loosely related entities or departments. Organizations using TQM often experienced benefits such as improved employee engagement and morale, a reduction in production or product costs, decreased cycle times, and more satisfied customers.

Business Process Reengineering (BPR)

Less concerned with incremental quality wins and more concerned with a radical change across an entire organization or process architecture. BPR is most often concerned with the technical processes that occur throughout an organization.

Rummler-Brache

A program that seeks to affect positive change in processes and organizations by using a set of practical tools to address business issues and process problems. One foundational component is the Nine Boxes Model, created by a matrix of three performance levels (performer, process, and organization) and three performance dimensions (management, design, and goal).

Scrum

A project development method specific to Agile programming endeavors in technical departments. Scrum is used when teams want to create new technical products or integrate new developments on existing products within a short time frame. Scrum projects typically last between two and four weeks and feature three main phases

Customer Experience Management Method (CEM)

Takes an outside-in approach to process improvement, focusing on what the customer wants or needs and how each process in an organization serves that need. The primary purpose of CEM is to align processes throughout an organization with customer satisfaction goals.

JumpStart

A fast-paced method for identifying problems and solutions in a single session. JumpStart can be used within almost all other methods as a way to spark discussion regarding processes or to identify possible solutions. Because JumpStart doesn't take time for rigorous verification or statistical analysis on its own, teams should not use this method to enact sweeping changes or attempt to improve processes that could seriously impact customer experience or the bottom line.

When to Use Six Sigma (Facing the Unknown)

Six Sigma is designed so you can begin a project even when you don't know the cause of the problem. In some cases, teams aren't even sure what the exact problem is - they only know some metric is not performing as desired.

When to Use Six Sigma (Widespread Problems)

Even when a problem is understood, if it is wide in scope and not well defined, improvement projects that are not tightly managed can escalate in scope to a point that they become unmanageable. Six Sigma includes controls for avoiding such scope creep so teams can make incremental improvements.

When to Use Six Sigma (Complex Problems)

If processes are complex and feature many variables, it is difficult to determine how to approach a solution. Knowledge of statistical analysis and process control lets teams approach problems that involve enormous amounts of data and many variables.

When to Use Six Sigma (Costs Closely Tied to Processes)

Because Six Sigma's statistical process control component lets teams make more accurate assumptions than almost any other method, it is very appropriate for situations that are closely tied to revenue or cost. When a single tiny change can result in millions of dollars in gains or losses, teams must validate assumptions with an extremely small margin of error.

Muda

A Japanese word that translates to waste. It describes a concept of being useless, unnecessary, or idle. Muda is a non-value-added task (NVA) within a process.

The Seven Muda

Overproduction, correction, inventory, motion, conveyance, overprocessing, and waiting. According to Taiicho Ohno, these are resources that are commonly misused and mismanaged.

Muda of Overproduction

A product, part, or service was produced too fast, at the wrong time, or in too much quantity for the process. The key to eliminating overproduction is planning.

Muda of Correction (Rework)

A form of waste that often plagues organizations that are keen on traditional quality programs. When rework occurs, it increases overall process time and uses additional labor and materials to create a smaller amount of products or outputs.

Muda of Inventory

Occurs when materials or inputs stack up before a step in the process; this phenomenon is also called a bottleneck. Inventory waste can occur when items are purchased or created before they are needed. Lean wisdom says to avoid batch processes because they increase inventory.

Muda of Motion

Has to do with how employees themselves move during a process. This type of waste is often relevant to people-powered processes, but waste of motion can even crop up in processes that are computerized.

Spaghetti Diagram

A common tool used in manufacturing and similar environments to track movement. Begin with a basic, bird's eye drawing of the workspace. Observe an actual process, tracking any and all movements with a line on the diagram. When drawn correctly, the diagram looks like a string of spaghetti.

Muda of Conveyance

Similar to muda of movement except conveyance involves the movement of outputs, products, or resources. It is sometimes also referred to as muda of transportation. Conveyance can relate to physical movement of items or digital movement of data or workflow.

Muda of Over-processing

Occurs when an employee or process inputs more resources into a product or service than is valued by the customer. This could occur because of ignorance, a desire for perfection, or even excitement. A goal of any process should be to do just enough useful and necessary work to ensure that customer or end-user expectations are met.

Muda of Waiting

Refers to any idle time in a process, whether that idle time is for machinery or people. Waiting occurs when steps in the process are not properly coordinated, when processes are unreliable, when work is batched too large, during rework, and during long changeovers.

Muda of Talent

Occurs when a process doesn't make the most use of the labor or staff available. Hiring the wrong person, putting staff in the wrong position, or ignoring a staff member's growth potential could all be instances of muda of talent.

Muda of Ideas

Occurs when the thoughts and ideas of people are discounted, not sought out, or misappropriated in a way that doesn't make sense. Leadership and project teams can often overlook subject matter experts who have detailed insight into a process.

Muda of Capital/Cash

Occurs when leadership decides not to invest in upgrades or improvements that would create additional cash flow. This type of waste is very similar to waiting, except the cash itself is waiting.

Type I Muda

Non-value-added tasks that might actually be essential or required by circumstances. Organizations can't remove that waste until it addresses the cause of the defects within the process. Instead of removing the muda completely, teams might look for ways to make essential muda as efficient and cost-effective as possible.

Type II Muda

Non-value-added tasks that are not essential and can be immediately removed from a process.

5S

A Japanese Lean approach to organizing a workspace, so that by making a process more effective and efficient, it will become easier to identify and expunge muda. 5S relies on visual cues and a clean work area. The method is based on five steps

Sort (5S)

All items or materials in a workspace are reviewed, removing unneeded items and keeping necessary resources.

Straighten (5S)

Every item, tool, or material is given a home. To facilitate ongoing organization, the location of resources should be labeled clearly. The idea is to create a workspace that anyone could use.

Shine (5S)

The goal is to shine the work space by cleaning it, maintaining equipment, and returning items to the proper place after use. In a computerized environment, the shine phase can be accomplished by naming files in a manner that makes them easy to locate.

Standardize (5S)

Used to maintain the progress achieved in all previous phases. By keeping high standards of orderliness in place, the benefits of the 5S methodology can be long-term.

Sustain (5S)

5S only works if everyone on the team or within the organization commits to the process. Employees must follow the rules that are set up for standardizing and sustaining the organization.

Just-in-Time Manufacturing (JIT)

A Lean concept that originated with Toyota. The goal of JIT manufacturing was to produce an output "just in time," or "as needed" by the customer. Today, JIT mentalities are less about the literal idea of providing the product just in time; rather, it has become a more general concept of Lean manufacturing that helps organizations eliminate waste.

Standard Deviation

The driving goal of Six Sigma is to reduce defects. One idea inherent in the Six Sigma methodology is that variance is the root of many defects. The statistical measure used by teams to understand variation in a process is known as standard deviation. Standard deviation is represented in math by the lower case Greek letter Sigma - the σ. Standard deviation measures the distance between data points and the mean of all data.

Population Standard Deviation Formula

σ = √(1/N ∑(xi - μ)²)

Sample Standard Deviation Formula

s = √(1/(N-1) ∑(xi - x̄)²)

Pareto Principle (80/20 Rule)

Says that 20 percent of the causes lead to 80 percent of the effects. This is also called the law of the vital few

Pareto Chart

A graphical representation of data elements - usually inputs or causes - in a ranked bar chart. Unlike a regular bar chart, the bars are arranged in order of height, with the highest on the left and the lowest on the right.

Voice of the Customer (VOC)

A foundational concept in many quality programs. The goal of quality is to make a better, more consistent product. One of the ways you know you've reached this goal is that your customers will be more consistently satisfied. The only way to reach this goal is to seek feedback from the customer.

Methods for Capturing VOC Feedback

Surveys via telephone, mail, email, or online; focus groups in person or online; interviews; beta or user testing; feedback forms; customer complaints; social media or site interaction; reviews; forums.

Likert Scale

A popular way to frame questions so they yield actual data points that can be analyzed using statistics. Using a Likert Scale, you would frame all questions so they are answered via a 5-point ranking. The answers are coded with numbers when data is entered into statistical software.

Defects per Million Opportunities (DPMO)

(number of defects in a sample / opportunities for a defect in the sample) * 1,000,000

Defects per Unit (DPU)

A measure of how many defects there are in relation to the number of units tested. DPU is concerned with total defects, and one unit could have more than one defect. Formula

First Time Yield (FTY)

The ratio of units produced to units attempted to produce. Formula

Rolled Throughput Yield (RTY)

Provides a probability that a unit will be generated by a process with no defects. One of the main differences between RTY and basic yield or first time yield is that RTY considers whether rework was needed to generate the number of final units. Formula

Problem Functions

y = f(x)

The 5 Whys

A brainstorming tool that asks increasingly granular why questions about a problem or process, seeking to understand the root cause or actual problem. The 5 Whys can be used to define a problem or to begin seeking causes. It's called the 5 Whys because it often leads to answers within five questions.

Problem Statement

A Six Sigma improvement project usually starts with a formal project statement. A strong problem statement is similar to a 30-second elevator pitch. Problem statements should include

Scope

The definition of what is included - and what is not included - in a process or improvement project. You begin defining scope with your problem statement.

Scope Creep

Occurs when teams look to make infinite perfections on a process, attempt to reach unrealistic goals, or begin to reach for processes or problems that are out of the original scope.