STATISTICAL PROCESS Six Sigma

SIX SIGMA

The term six sigma (6σ) originated as a performance measure or a measure of quality. Using six sigma, process goals are set in parts per million (PPM) in all areas of the production process. Since its origin, six sigma has now evolved into a methodology for improving business efficiency and effectiveness by focusing on productivity, cost reduction, and enhanced quality.
Six Sigma has its roots back with the efforts of Joseph Juran and W. Edwards Deming. Their programs for Zero Defects and Total Quality Management in Japan, lead to the adoption of the six sigma philosophy by Motorola. Motorola was able to achieve a 200-fold improvement in production quality and saved a reported $2.2 billion using this tool. General Electric has also become the strong proponent of six sigma where it claims extensive successes. GE used six sigma during the reign of Jack Welch, where he made it the biggest corporate initiative in GE's history and received global recognition. Other users include Texas Instruments and Allied Signal. Allied took six sigma to an even higher level by incorporating it not just in production but by making it a system of leadership. Other current users include JP Morgan Chase, Sun Microsystems, American Express, and Lloyds TSB. Today, six sigma is branded as a management methodology that utilizes measures as a foundational tool for business process reengineering.
The name six sigma comes from the statistical use of the sigma (σ) symbol, which denotes standard deviations. The six identifies the number of standard deviations around the mean. Hence, six sigma says that you have to go out beyond six standard deviations around the mean before you find failure. With a high enough number of sigmas (beyond six), you would approach the point of "zero defects." For example, a move from 3σ to 4σ represents an 11-fold improvement; a move from 4σ to 5σ represents another 27-fold improvement; and a move from 5σ to 6σ represents an additional 69-fold improvement. Thus the overall improvement from 3σ to 6σ is more than 20,000-fold.
At the 3σ level, the number of defects per million totals 66,807 (or 93.3 percent accuracy). At the 4σ level the number of defects drops to 6,210 (or 99.4 percent accuracy). At the 5σ level the number of defects drops still further to 233 (or 99.97 percent accuracy). At the 6σ level the number of defects would be 3.4 per million. This equates to a 99.9997 percent accuracy. In today's world, where 98 percent or 99 percent accuracy is considered excellent, 6σ is now becoming the universally recognized standard of quality.

Six sigma concentrates on measuring and improving those outputs that are critical to the customer. The tools to accomplish this include a range of statistical methodologies that are focused on continuous improvement using a statistical thinking paradigm. This paradigm includes the following principles:

• Everything is a process.
• All processes have variations that are inherent within them.
• Data analysis is a key tool in understanding the variations in the process and in identifying improvement opportunities.

It is in the management methodology where the key, underlying benefits of six sigma can be found, which includes a problem solving and process optimization methodology. Six sigma creates a leadership vision utilizing a set of metrics and goals to improve business results by using a systematic five-phased problem solving methodology. There are two common problem solving project management methodologies that are commonly associated with six sigma.

The first is DMAIC:
Define, Measure, Analyze, Improve, Control
the second is DMADV:

Define, Measure, Analyze, Design, Verify
How Lean and Six Sigma work together as the ultimate in management tools.
Six Sigma:
-Emphasizes the need to recognize opportunities and eliminate defects as defined by customers
-Recognizes that variation hinders our ability to reliably deliver high quality services
-Requires data driven decisions and incorporates a comprehensive set of quality tools under a powerful framework for effective problem solving
-Provides a highly prescriptive cultural infrastructure effective in obtaining sustainable results
-When implemented correctly, promises and delivers $500,000+ of improved operating profit per Black Belt per year (a hard dollar figure many companies consistently achieve)
Lean:
-Focuses on maximizing process velocity
-Provides tools for analyzing process flow and delay times at each activity in a process
-Centers on the separation of “value-added” from “non-value-added” work with tools to eliminate the root causes of non-valued activities and their cost
-The 8 types of waste / non-value added work
1. Wasted human talent -Damage to people
2. Defects – “Stuff” that’s not right & needs fixing
3. Inventory - “Stuff” waiting to be worked
4. Overproduction – “Stuff” too much/too early
5. Waiting Time – People waiting for “Stuff” to arrive
6. Motion – Unnecessary human movement
7. Transportation – Moving people & “Stuff”
8. Processing Waste – “Stuff” we have to do that doesn’t add value to the product or service we are supposed to be producing.
-Provides a means for quantifying and eliminating the cost of complexity

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Statistical Process Control and Six Sigma - strategy, organization, system, school, model, company, business, system
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