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Recommended: Six sigma what & how
ISix Sigma It is a Philosophy Anything less than ideal is an opportunity for improvement Defects costs money Understanding processes and improving them is the most efficient way to achieve lasting results It is a Process To achieve this level of performance you need to: D efine, M easure, A nalyse, I mprove and C ontrol It is Statistics 6 Sigma processes will produce less than 3.4 defects per million opportunities
13. Overview of Six Sigma PAIN, URGENCY, SURVIVAL COSTS OUT GROWTH TRANSFORM THE ORGANIZATION CHANGE THE WORLD 6 SIGMA AS A STATISTICAL TOOL 6 SIGMA AS A PHILOSOPHY 6 SIGMA AS A PROCESS
14. The Villain Cost of Poorly Performing Processes level DPMO CP 3 2 308,537 Not Applicable 3 66,807 25%-40% of sales 4 6,210 15%-25% of sales 5 233 5%-15% of sales 6 3.4 < 1% of sales Each sigma shift provides a 10% net income improvement Cost of Poorly Performing Processes (CP 3 ) Sigma ( ) is a measure of “perfection” relating to process performance capability … the “bigger the better.” A process operating at a “Six Sigma” level produces only 3.4 defects per million opportunities ( DPMO ) for a defect. Without dedication of significant and appropriate attention to a process, most processes in leading companies operate at a level between 3 and 4 sigma. Why is Six Sigma Important?
15. C ost of Poorly Performing Processes The cost to deliver a quality product can account for as much as 40% of the sales price. For example, a laser jet printer purchased for $1,000 may have cost the manufacturer $400 in rework just to make sure that you took home an average-quality product. For a company whose annual revenues are $100 million and whose operating income is $10 million, the cost of quality is roughly 25% of the operating revenue, or $25 ...
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...n - Warranty - Scrap - Rework - Rejects
30. COPQ v/s Sigma Level Cost of Quality % Sales Sigma Level
31. CTQ (Critical-To-Quality) CTQ characteristics for the process, service or process Measure of “What is important to Customer” 6 Sigma projects are designed to improve CTQ Examples: Waiting time in clinic Spelling mistakes in letter % of valves leaking in operation
32. Defect Opportunity Circumstances in which CTQ can fail to meet. Number of defect opportunities relate to complexity of unit. Complex units – Greater opportunities of defect than simple units Examples: A units has 5 parts, and in each part there are 3 opportunities of defects – Total defect opportunities are 5 x 3 = 15
33. DPO (Defect Per Opportunity) Number of defects divided by number of defect opportunities Examples: In previous case (15 defect opportunities), if 10 units have 2 defects. Defects per
According to what we have learned in class, six sigma, statistically, is interpreted as having no more than 3.4 defects per million. However, they dump 10-12 dough balls per week, while 5-6 is more reasonable, which illustrates the quality mismanagement. So, the food cost there is way higher when it accounts for 38%, while industry ideal is 30%. In order to streamline the entire process of making pizza, it is an imperative for Pizza My Heart to exhaustively put six sigma in action.
There are many people that benefit from Lean Six Sigma which include mainly customers, suppliers, employees, and also stockholders. Lean Six Sigma is a way for businesses to improve, to reduce waste and to become more successful. In the future, more and more organizations will adopt or practice some of the Lean, Six Sigma, or both in order to stay competitive in today’s market. In some cases, blending both Lean and Six Sigma can be costly and difficult; however the end result can create an organization that focuses on quality, accuracy, and speed to meet the goal which is profitability.
1) Six Sigma should not be viewed as a quality program that is commissioned to reduce defects but as a methodology that helps companies better meet the needs of their business. KM shares this goal.
"Using Cost of Quality to Demonstrate the Economic Value of Improvement, Organizational Excellence and Quality." Quality Texas. N.p., n.d. Web. 12 May 2014.
As you can see from the figure the lean six sigma is customer driven, targets variation, focuses
Barnard, W., De Feo, J. (2004). Juran Institute’s Six Sigma Breakthrough and Beyond. New York, NY: The McGraw-Hill Companies
Lean is best defined as “a systematic approach to identifying and eliminating waste (non-value added activities) through continuous improvement by flowing the product only when the customer needs it (called pull) in pursuit of perfection” (Sarkar, 2008, p. 1). Lean thinking along with Six Sigma have generated interest all industries. This can be seen by the countless studies and quality improvement efforts undertaken by many corporations, with training and building staff as certified Lean Six Sigma experts.
Sitnikov, C. (2012). Six sigma as a strategic tool for companies. Young Economists Journal / Revista Tinerilor Economisti, 94-102.
Lean Six Sigma is a methodology that creates processes within an organization to cut waste and improve the company’s performance. However, studies have shown that over the past decade applying Lean Manufacturing and Six Sigma can create problems for companies financially and potential problems for employees. Companies should take great care before implementing a Lean Six Sigma solution because in some instances, going lean can do more harm than good both financially for the organization as well as destroying employee loyalty and moral.
The Six Sigma approach was designed by Motorola in 1986. The primary objective of the concept was to develop a tool for tallying the process defects and, as the result, improving business operations. The foundations of the approach are the customer needs, statistical analysis of data and facts, and timely execution. The method promises numerous benefits such as increasing performance and profitability of an organization, improving product or service quality and employee morale, decreasing costs, the growth of market share, the higher level of satisfying customer needs, etc. (Meredith & Shafer, 2013). The primary advantage
Process costing is a way of breaking down cost that goes into each product manufactured. This allows for the correct pricing of the product as well as looking at possible inefficiencies in the production process. The following reasons explain the importance of correctly allocating cost to each product.
Customer value is analyzed by market segments and product line using tools and the collected data produces product line strategies (Cargill Corn Milling, 2008). On the other hand, Nestle Purina has several supporting processes, critical to their goal for achieving customer value and sustained financial success (Nestle Purina, 2010). For example, Nestle Purina Organizational Questionnaire (OCQ) process of taking the voice of the customer and deploying it to employees and their behavior has been refined and improved numerous times over the last several years (Nestle Purina, 2010). This and various other processes go through multiply cycles of improvement prior to the process is agreed upon by management and leadership. Lockheed Martin, has adopted 7 to 20 Lean Six Sigma (LSS) program teams to develop innovative solutions for customer value and cost control (Lockheed Martin, 2012). They also monitor and control program and product cost through Program Performance Measurement Process (PPMP) which consist of five key areas of program management to provide reporting data. This process is reviewed by various levels of management, customers and suppliers at least monthly to identify any potential issues that could impact their ability to meet cost projections (Lockheed
Product designing, in this stage for continuous quality improvement the parameters of the design gets changed and the level of tolerance gets altered. This is very difficult for the manufacturing companies in implementation stage.
Quality is a very important thing in an organization; therefore it is not possible to improve the quality of a product or service substantially without major changes in all aspects of the organization. Because quality is so important if changes aren’t made throughout the organization the output of the product will no be very successful. Everyone in the organization plays a major role in the out come of its products.
TQM is a system of continuous improvement of work processes to enhance the organization’s ability to deliver high-quality products or services in a cost-effective manner [2]. The focus of TQM is to improve customer satisfaction and reduce waste [3]. Customers include ...