Statistical and Managerial Techniques for Six Sigma Methodology

Theory and Application

Stefano Barone, Eva Lo Franco

• Publisher: For Dummies
• Year: 2012
• Print ISBN: 9780470711835
• eBook ISBN: 9781119940241
• Edition: 1
• Topic: Technology & Engineering
• Subtopic: Automation in Engineering
• Index: Technology & Engineering

Six Sigma methodology is a business management strategy which seeks to improve the quality of process output by identifying and removing the causes of errors and minimizing variability in manufacturing and business processes. This book examines the Six Sigma methodology through illustrating the most widespread tools and techniques involved in Six Sigma application. Both managerial and statistical aspects are analysed allowing the reader to apply these tools in the field. Furthermore, the book offers insight on variation and risk management and focuses on the structure and organizational aspects of Six Sigma projects.

Key features:

• Presents both statistical and managerial aspects of Six Sigma, covering both basic and more advanced statistical techniques.

• Provides clear examples and case studies to illustrate the concepts and methodologies used in Six Sigma.

• Written by experienced authors in the field.

This textbook is ideal for graduates studying Six Sigma for Black Belt and Green Belt qualifications as well as for engineering and quality management courses. Business consultants and consultancy firms implementing Six Sigma will also benefit from this book.

Chapter 1
Six Sigma Methodology

1.1 Management by Process

The application of Six Sigma always involves the implementation of a path: that is, the development of a coherent set of activities that together help to achieve one or more planned results (see Section 1.3.2). On the other hand, Six Sigma projects always involve one or more business processes and related performance. Therefore, an understanding of the methodology cannot ignore the study of the concept of ‘process’ and the deepening of methods and tools for its management.

1.1.1 The Concept of ‘Process’

Any process in its simplest form can be illustrated as in Figure 1.1. A process is a logically consistent and repeatable sequence of activities that allow the transformation of specified inputs (or resources) into desired output (or results), and generating value. Some activities may also run in parallel.

Figure 1.1 A generic process.

Inputs, outputs and the value generated by the process must be measurable. Moreover, a process has a well-defined beginning and end, Finally, for each activity its manager is defined, that is the person who is responsible for its performance. Accordingly, defining a process is a way of answering the question: ‘who does what?’

1.1.2 Managing by Process

Managing by process is a principle of management of the organisation as a whole; it involves the design of the processes of the organisation, their realisation, their monitoring and evaluation, their improvement over time. It is an iterative method that can be synthesised by the four steps of the well-known Deming cycle (Figure 1.2): Plan, Do, Check, Act.

Figure 1.2 Deming cycle.

The first phase, ‘Plan’, provides for the establishment of the goals of the organisation and the planning of processes necessary to deliver results in line with the objectives. Phase ‘Do’ consists of implementing the processes. Next is the monitoring of the processes and the measurement of the results against the prefixed objectives: this is the ‘Check’ phase. The measurability of a process that is the object of a Six Sigma improvement project is a conditio sine qua non (i.e. a necessary condition) if you are looking to reduce the variation in the performance of the process. In the fourth phase, ‘Act’, it is time to take action to improve the process performance.

The Deming cycle is iterative and responds to the basic principle of continuous improvement.

1.1.3 The Process Performance Triangle

In general, any process performance has some unique factors that need to be considered for its evaluation. However, we may imagine three basic dimensions that characterise each process performance:

1. i. the variability of the performance with respect to a prefixed target (variation),
2. ii. the mean time needed to obtain one unit of output from the allocated resources (cycle time), and
3. iii. the return that the provision allows for in terms of the difference between costs and revenues, income and expenditure (yield).

In these basic dimensions we may trace a hierarchy of importance that arises from a cause–effect relationship: improving the cycle time rather than the yield may not affect the third dimension (variation). Conversely, an improvement in process variability will always reflect positively on both the cycle time (fewer minor alterations, less reworking, fewer controls, etc.) and the yield of the process (such as lower costs due to maintenance, reduced waiting times, etc. and/or increasing revenues through increased sales, etc.). The so-called process performance triangle (Figure 1.3) showing the three dimensions is a useful reference scheme for the analysis of a process along the temporal dimension and for the concomitant evaluation of different processes.

Figure 1.3 The triangle of process performance.

1.1.4 Customer Satisfaction

Inside the process performance triangle, the role of the customer is of fundamental importance. First, the tolerable variation of product characteristics, both in terms of target value and limits, is or should be agreed with the client. The organisation's inability to adapt to the customer will always, sooner or later, result in incurring costs (e.g. returns, rework, penalties, etc.) and/or non-achievement of income (e.g. poor sales, rebates off the expected price, etc.). Therefore, it is necessary to know thoroughly the customer's expectations. These expectations can be explicit, since they are made public through, for example contract terms or expressed through legislation, and can be implicit, because they are normally taken for granted, or unexpressed.

A useful methodology to identify customer requirements and translate them into product/service characteristics is the quality function deployment (QFD, see Section 4.4.3). Once the characteristics critical for the customer (CTQ = critical to quality) are known, it will be possible to prioritise potential projects to improve the processes related to the achievement of those characteristics. In Six Sigma projects it is expected that, based on the collection of customer expectations (VOC = voice of customer), the expected value of the characteristic and its allowed range of variation (its tolerance) can be given.

The wishes of the customer, through the dimension of variability, are reflected both on the average length of the product life cycle and on the financial results of the process.

1.1.5 The Success of Enterprise

The evaluation of the performances of individual processes of an organisation is part of the more general and complex evaluation of its success – this latter evaluation is intended to be the full realisation of the raison d'être of the organisation. This means assessing the organisation's ability to meet the needs of customers in a competitive environment, economically, enhancing and developing its resources, first of all the human ones. Therefore, the success of an organisation is measured on three dimensions: cost-effectiveness, competitiveness and the satisfaction of the participants: first, workers and owners (Figure 1.4). This theoretical approach, typical of the business-institutionalist school of thought, leads us to ponder some basic management principles underlying the process of an organisation along these three dimensions of success: the economy (i.e. the ability of management to pay from its revenues all the costs of the inputs it needs), the logic of service to customer, and the promotion and development of resources. These three management principles must be present together and united by a logic of continuous improvement that qualifies the organisation, in one word, as ‘innovative’. In summary, a successful organisation is always characterised by its innovativeness, that is the ability to continuously seek new opportunities for enhancement and development of resources to mainta...

Table of contents

• Cover
• Table of Contents
• Title
• Copyright
• Dedication
• Preface
• About the Authors
• Chapter 1: Six Sigma Methodology
• Chapter 2: Basic Managerial Techniques
• Chapter 3: Basic Statistical Techniques
• Chapter 4: Advanced Managerial Techniques
• Chapter 5: Advanced Statistical Techniques
• Chapter 6: Six Sigma Methodology in Action: Selected Black Belt Projects in Swedish Organisations
• Index
• End User License Agreement