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1 st Middle East Six Sigma Forum Six Sigma – A Strategy for Achieving World Class Performance 7 th to 9 th December, Dubai Sunil Thawani Manager – Business Process Improvement Union National Bank, Abu Dhabi [email protected] Purpose of Presentation.

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1st Middle East Six Sigma ForumSix Sigma – A Strategy for Achieving World Class Performance

7th to 9th December, Dubai

Sunil ThawaniManager – Business Process ImprovementUnion National Bank, Abu Dhabi

[email protected]

purpose of presentation
Purpose of Presentation
  • Share concepts and application of Six Sigma with a case study;
  • Deployment of Six Sigma as a strategy to achieve World Class Performance;
  • Integration of Six Sigma with EFQM framework;
  • Lessons Learnt
world class performance
World Class Performance

Source: The Six Sigma Way by Peter Pande and Others

what is six sigma
What is Six Sigma ?
  • Based on teachings of Dr. Walter Shewhart, Dr. W. E. Deming & Dr. J. Juran.
    • Process Control;
    • Plan Do Check Act;
    • Common and Special Causes;
    • Improvement can be done project by project
    • Statistical tools
    • Hawthorne Plant Experiences
  • Developed by Bill Smith at Motorola in 1980s
what is six sigma1
Degree of variation;

Level of performance in terms of defects;

Statistical measurement of process capability;

Benchmark for comparison;

Process improvement methodology;

It is a Goal;

Strategy for change;

A commitment to customers to achieve an acceptable level of performance

What Is Six Sigma?

Sigma is a letter

in the Greek Alphabet

six sigma definitions
Six Sigma Definitions
  • Business Definition
    • A break through strategy to significantly improve customer satisfaction and shareholder value by reducing variability in every aspect of business.
  • Technical Definition
    • A statistical term signifying 3.4 defects per million opportunities.
bank of america ss experience
Bank of America – SS Experience
  • Goals
    • # 1 in Customer Satisfaction
    • Worlds’ most admired company
    • Worlds’ largest bank
  • Strategy - “ Develop business process excellence by applying voice of the customer to identify and engineer critical few business processes using Six Sigma
  • Created Quality & Productivity Division

Source: Best Practices Report

bank of america ss experience1
Bank of America – SS Experience
  • Wanted results in 1 year;
  • Hired more than 225 MBB & BBs from GE, Motorola, Allied Signal for rapid deployment
  • Developed 2 week Green Belt training programs
  • Introduced computer simulation of processes
  • Trained 3767 Green Belts, certified 1230 - Minimum value target per GB project – $ 250K
  • Trained 305 Black Belts, certified 61 - Minimum value target per BB project – $ 1 million
  • Trained 43 MBB,
  • 1017 in DFSS
  • 80 % of Executive Team trained in GB and 50 % Certified
bank of america ss experience2
Bank of America – SS Experience

Results of first 2 years:

  • Reduced ATM withdrawal losses by 29.7 %
  • Reduced counterfeit losses in nationwide cash vaults by 54%
  • Customer delight up 20%;
  • Added 2.3 million customer households
  • 1.3 million fewer customer households experienced problems
  • Stock value up 52%
  • Y 2002 – BOA named Best Bank in US & Euro money\'s Worlds Most Improved Bank
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High Level Business Metrics

  • Revenue
  • Capital Utilization
  • Return on Assets
  • Profits
  • Quote Time
  • Defect Rate
  • Waste
  • On Time Delivery
  • Inventory;
  • Machine Utilization

Operating Level Metrics

Strategically:Used by Leadership as a vehicle to develop sustainable culture of Customer, Quality, Value and Continuous improvement.

Operationally:By Quality Managers to reduce cycle times, costs, errors, rework, inventory, equipment downtime.

Deployment across all types of processes and industries - worldwide

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Enablers

Results

Innovation and Learning

Six Sigma & EFQM/ DQA Framework

Recognizing

People

Competency

Productivity

People

Results

People

Key Perf

Results

Establishing

Process

management

System to be

used

Personally

actively

Involved in

improvement

Developing

Team skills

Aligning

Individual &

Organization

Goals

Satisfaction

Involvement

Gross margins

Net profit

Sales

Market Share

Recognition

Implementing

Process

Measures

Customer Results

Encouraging

& enabling people

To participate in

Improvement

Identifying &

designing

processes to deliver

strategy

Response

Time to

customers

Process cycle time

Process costs

Defect rates

Productivity

Delivery,

Value,

reliability

Repurchase

satisfaction

Time to

Market

Policy & Strategy

Cash flow

Maintenance cost

Return on assets

Improving

processes

to satisfy and

Generate value

For customers

Recognizing

Individual &

Team effort

Utility

consumption

Timeliness

Inventory

Society

Results

Partnerships

Resources

Leadership

Processes

who is implementing six sigma
Who is Implementing Six Sigma
  • At least 25% of the fortune 200 claim to have a serious six sigma program - Michael Hammer.
  • Financial - Bank of America, GE Capital, Electronics - Allied Signal, Samsung, Sony
  • Chemicals - Dupont, Dow Chemicals
  • Manufacturing - GE Plastics, Johnson and Johnson, Motorola, Nokia, Microsoft, Ford.
  • Airline - Singapore, Lufthansa, Bombardier
  • And hundreds of others in Americas, Europe, Sub Continent.
six sigma results
Six Sigma Results

Six Sigma Savings as % of revenue vary from 1.2 to 4.5 %

For $ 30 million/yr sales – Savings potential $ 360,000 to $ 1.35 million.

Investment: salary of in house experts, training, process redesign.

six sigma project methodology
Six Sigma Project Methodology

Project Phases

Control

Define

Measure

Analyze

Improve

  • Improvement strategy
  • Develop ideas to remove root causes
  • Design and carry out experiments,
  • Optimize the process.
  • Final solutions
  • Collect data on size of the selected problem,
  • identify key customer requirements,
  • Determine key product and process characteristic.
  • Analyze data, establish and confirm the “ vital few “ determinants of the performance.
  • Validate hypothesis
  • Establish standards to maintain process;
  • Design the controls, implement and monitor.
  • Evaluate financial impact of the project
  • Identify, evaluate and select projects for improvement
  • Set goals
  • Form teams.
six sigma case study service organisation
Six Sigma – Case Study Service Organisation

Background

  • M/s Alpha Inc. manages out bound cargo from a distribution centre to different stores.
  • Deliveries made on trucks - owned and hired.
  • Customers dissatisfied at delivery schedules.
  • Leadership decision to deploy Six Sigma;
  • Team of 1 Black Belt and 3 Green Belts formed
  • Sponsor of the project – Distribution Manager
define critical to quality ctq
Focus on customers generating annual revenue of USD 400,000/-. Define - Critical to Quality (CTQ)

Current process sigma level - 2.43 or 175889 DPMO

define goal statement
Define- Goal Statement
  • Reduce number of delayed deliveries by 50 % by 31st December Y 2002 to better meet customer requirement of timely delivery defined as within +/- 1 hour of scheduled delivery.
define sipoc diagram
Define- SIPOC Diagram
  • Detailed process maps drawn
measure and analyze
Measure and Analyze
  • Driver and Distance identified as key factors influencing delivery performance.
  • Driver selected for focus.
  • Potential root causes as to why Driver influenced the time:
    • Size of the vehicle
    • Type of engine
    • Type of tyres
    • Fuel capacity
improve
Improve
  • Experiments designed and conducted using truck type and tyre size.
  • Findings:
    • Larger tyres took longer time at certain routes where area was cramped and time lost in maneuvering.
    • High incidence of tyre failures since tight turns led to stress on tyres thus increasing number of flat tyres.
  • Team modified planning of dispatch process by routing smaller trucks at more restrictive areas.
control
Control
  • Test implementation.
  • Process sigma level up from 2.43 or 175889 DPMO to 3.94 or 7353 DPMO.
  • Performance still fell short of best in class 4.32 or 2400 DPMO.
  • Improvement led to significant customer satisfaction.
  • Process continually monitored and data on new cycle times, tyre failure collected as per defined methods and frequency, analysed and monitored.
  • Customer satisfaction measured and monitored.
key lessons learnt
Key Lessons Learnt
  • Define
    • Difficulty in identifying the right project and defining the scope;
    • Difficulty in applying statistical parameters to Voice of the Customers;
    • Trouble with setting the right goals;
  • Measure
    • Inefficient data gathering;
    • Lack of measures;
    • Lack of speed in execution;
key lessons learnt1
Key Lessons Learnt
  • Analyse
    • Challenge of identifying best practices
    • Overuse of statistical tools/ under use of practical knowledge
    • Challenge of developing hypotheses
  • Improve
    • Challenge of developing ideas to remove root causes
    • Difficulty of implementing solutions
  • Control
    • Lack of follow up by Managers/ Process Owners
    • Lack of continuous Voice of the Customer feedback
    • Failure to institutionalize continuous improvement.
key lessons learnt2
Key Lessons Learnt
  • “ Define “ ranked most important step but gets the lowest resource allocation
  • Project scoping and its definition is critical to its success/ failure;
  • “Measure” is considered most difficult step and also gets the highest resources

Source: Greenwich Associates Study Y 2002

what makes six sigma different
What Makes Six Sigma Different?
  • Versatile
  • Breakthrough improvements
  • Financial results focus
  • Process focus
  • Structured & disciplined problem solving methodology using scientific tools and techniques
  • Customer centered
  • Involvement of leadership is mandatory.
  • Training is mandatory;
  • Action learning (25% class room, 75 % application)
  • Creating a dedicated organisation for problem solving (85/50 Rule).
benefits of six sigma
Benefits of Six Sigma
  • Generates sustained success
  • Sets performance goal for everyone
  • Enhances value for customers;
  • Accelerates rate of improvement;
  • Promotes learning across boundaries;
  • Executes strategic change
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