Mn3153B_Six_Sigma

SIX SIGMA REPORT QUALITY 2009/10 MN3153B 23 June 2010 Table of contents 1 INTRODUCTION 1 2 SCOPE 1 3 SIX SIGMA 1 3.1 Evolution of Six Sigma 1 3.2 Concept of Six Sigma 2 3.3 Implementation Roles 3 4 SIX SIGMA AND ISO 9000 4 4.1 ISO 9000 4 4.2 COMPARISON 5 5 SIX SIGMA AND TOTAL QUALITY MANAGEMENT (TQM) 5 5.1 TQM 5 5.2 COMPARISON 6 6 SIX SIGMA AND EUROPEAN FOUNDATION FOR QUALITY MANAGEMENT (EFQM) 6 6.1 EFQM 6 6.2 COMPARISON 7 7 CONCLUSION 7 8 RECOMMENDATIONS 8 9 REFERENCES 9 10 BIBLIOGRAPHY 10 appendix a – origin of the term six-sigma APPENDIX B – OVERLAP OF ISO 9000 AND SIX-SIGMA WORD COUNT – 2902 NOT INCLUDING TITLES OR APPENDICES INTRODUCTION Over the last ten years, the company has attempted to improve the quality of its products using various quality initiatives, with varying levels of success. With the current popularity of Six Sigma (6σ), the company is now firmly focused on utilising this business management tool strategy to bring about a permanent improvement in quality. SCOPE This report will analyse 6σ and compare it against the previous initiatives of ISO9000, Total Quality Management and the European Foundation for Quality Management Excellence Model. From the analysis and comparisons, recommendations will be made as to the suitability of 6σ as the company’s quality tool. SIX SIGMA Six Sigma is a business management tool strategy that seeks to “find and eliminate the cause of defects and errors in manufacturing and service processes by focusing on outputs that are critical to customers and a clear financial return for the organisation.” (p132, chap 3, The Management and Control of Quality, 7th Edition, Evans & Lindsay). Six –sigma tools include basic and advanced statistical tools, product design and reliability, measurement of results, process improvement and control, implementation and teamwork[i]. It can be applied to manufacturing, transactional, administrative and service businesses; due to the difference in the manufacturing and other industries, it can be difficult to identify projects in the non-manufacturing industries. It is known that failure of a six-sigma project is often due to a failure in the management of the project; effective project management and team processes are vital to the success of six-sigma activities. 1 Evolution of Six Sigma Motorola and General Electric are the widely accepted pioneers of 6σ, using it to measure the quality of services and products. It was initiated in the 1980s to deal with system failure rates that were higher than predicted using final product testing methods. The term “six-sigma” is based on the natural capability of a system representing a defect rate of 3.4 defects per million opportunities[ii]. The rationale behind this can be seen in Appendix A. The CEO at Motorola, Bob Galvin, was convinced by Bill Smith, a reliability engineer who worked for him. Smith suggested that the “causes for the high system failure rates was high system complexity that resulted in more opportunities for failure, and a fundamental flaw in traditional quality thinking”. (p133, chap 3, The Management and Control of Quality, 7th Edition, Evans & Lindsay). Smith convinced his CEO of the need of a higher level of internal quality and Motorola set the goal to “Improve product and services quality ten times by 1989, and at least one hundred fold by 1991. Achieve six-sigma capability by 1992. With a deep sense of urgency, spread dedication to quality to every facet of the corporation, and achieve a culture of continual improvement to assure total customer satisfaction. There is only one ultimate goal: zero defects – in everything we do.” General Electric (GE) is the recognised benchmark for 6σ activities, using it to generate $750 million in savings over a three year period.[iii] Since these beginnings, it has evolved beyond a statistical tool to reduce variance; it is now an all-encompassing business performance methodology[iv] 2 Concept of Six Sigma Six Sigma is a team based activity and employs a set methodology in order to complete projects. A project charter is issued to specify the following[v]: 1. Project Title 2. Project Leader 3. Business Case 4. Problem/Opportunity Statement 5. Project Scope/Constraints# 6. Team Members 7. Stakeholders 8. Deadlines for Completion of Stages A Tollgate review is carried out after each phase to assess compliance with the charter and if the project can continue. The team will then use DMAIC or DMADV; DMAIC is used for existing processes, DMADV is used for creating new products or process designs[vi]. This report will cover the DMAIC methodology. The DMAIC methodology has five phases: 1. DEFINE – define the problem, form a project team which given the responsibility and resources for solving it. 2. MEASURE – data is collected and analysed to produce a precise and accurate picture of what is happening now. This produces a baseline level of performance. 3. ANALYSE – generate theories as to the cause of the problem and testing them to identify the root cause of the problem. 4. IMPROVE – removal of root causes by designing and implementing changes to the relevant processes. 5. CONTROL – design and implement new control measures to prevent problem reoccurrence. 3 Implementation Roles Historically, quality management was a shop-floor and a separate quality department activity. The divide between management and these two areas resulted in quality not being fully understood by managers. With six-sigma linking profit to performance and quality, it bridges the gap and produces management friendly information in terms they can understand i.e. money. Six-sigma identifies the following important roles for implementation[vii]: 1. Executive Leadership – including the CEO and top level management. Responsible for setting up six-sigma implementation. They provide the team members with the power and resources required to complete a project successfully. 2. Champions – responsible for the implementation of six-sigma in an integrated manner across the organisation. They are responsible for mentoring Black Belts and are usually drawn from upper management. They will focus on identifying projects for six-sigma with the champions. 3. Master Black Belts – identified by the champions. They act as organic coaches for six-sigma as their main job. They ensure consistent application of six-sigma across all departments. They also support the champions and mentor Black Belts and Green Belts. 4. Black Belts – apply six-sigma to specific projects as a full-time job. 5. Green Belts – use six-sigma implementation and maintain their current job in the organisation under the guidance of the black belts. 6. Yellow Belts – trained in the basic application of six-sigma, generally drawn from the shop-floor. SIX SIGMA AND ISO 9000 1 ISO 9000 ISO 9000 was developed in from the US MIL standards, the NATO AQAP standards and the British DEF standards. This evolved into the BS 5750 standards and subsequently into the ISO 9000 series. It is an international series of standards that have set global requirements for quality management systems. The standards focus on developing, documenting and implementing processes to produce a consistent output, be it a product or service. Three documents are used, covering Fundamentals and vocabulary, Requirements and Guidelines for Performance Improvements[viii]. It provides a basis for a Quality Management System (QMS) which defines how an organisation manages quality. The QMS will cover all functions of an organisation, document the procedures and publish in the Quality Manual. It requires organisations to produce an organisation quality policy and process specific quality policies. From these, procedures and work instructions are produced covering all aspects of the organisation’s operation. These will form the basis of the Quality Manual. These processes are audited to assess the effectiveness of the QMS and identify areas for improvement. Three levels of audit are carried out; internal, external and independent. The independent audits are carried out for registration, certification and conformity checks. ISO9000:2000 is based on the following eight principles[ix] 1. Customer Focus – organisations depend on customers and must be able to understand current, and anticipate future requirements. The aim being to exceed customer expectations. 2. Leadership – Management should establish a unity of purpose and provide the direction for the organisation. They must create an internal environment that encourages all employees to become involved in achieving the aims of the organisation. 3. Involvement of People – The full involvement of employees allows their abilities to be for the best effect. 4. Process Approach – Activities and related resources should be managed as processes to achieve the desired result efficiently. 5. System Approach to Management – the identification and management of interrelated processes as a system increases effectiveness and efficiency. 6. Continual Improvement – a permanent objective of the organisation in its drive for quality. 7. Factual Approach to Decision Making – based on analysis of factual data and information. 8. Mutually Beneficial Supplier Relationships – although an organisation and its suppliers are interdependent, a mutually beneficial relationship allows both organisations to create value. 2 COMPARISON ISO 9000 is different to six-sigma in that it is quality management system whilst six-sigma is a methodology for business performance improvement, linking financial benefits to performance.[x] ISO 9000 provides guidelines for solving problems and decision making; it requires continuous improvement but does not give the improvement process required. Six-sigma gives the improvement process but at targeted activities in the short term and therefore does not allow for the assessment of the overall quality management of the organisation. ISO 9000 is a long term cultural change at all levels; six-sigma is a short-term high impact change on a targeted activity. Six-sigma can facilitate compliance with ISO9000 by preventing defects at all stages, providing statistical techniques and investigating the cause of defects. ISO 9000 provides documentary evidence of processes and maintaining process management. The overlap can be seen in Appendix B. Both systems require extensive, and expensive, training of staff for the initiatives to be successful. SIX SIGMA AND TOTAL QUALITY MANAGEMENT (TQM) 1 TQM TQM was first developed by Feigenbaum and popularised by Demming who used it extensively in Japan. It is based on the eight management principles described earlier in ISO 9000. It involves the mutual cooperation of everyone in an organisation in order to maintain existing quality standards and incremental improvements in quality, building the quality into products or services as opposed to an inspect-in quality approach.[xi] TQM involves a culture change, placing the responsibility for quality across various functional departments in an organisation. 2 COMPARISON TQM sees quality as conforming to standards set internally by an organisation, whereas 6σ improves quality by reducing the number of defects produced. Both may produce similar results, but cost cutting methods used in TQM may reduce value and quality. 6σ focuses on defect reduction, cycle time reduction and cost savings in order to reduce operational costs and removing costs that are of no benefit to the customer, for example costs incurred due to waste. TQM is aimed at improving separate operations within an organisation whereas 6σ focuses on all the operations within a business process. TQM initiatives are conducted by employees as a secondary task; 6σ requires full-time professionals to ensure success[xii]. SIX SIGMA AND EUROPEAN FOUNDATION FOR QUALITY MANAGEMENT (EFQM) 1 EFQM EFQM Excellence Model is used by the European Excellence Award and the UK Excellence Award to score companies against their strengths, weaknesses and areas for improvement. The Excellence Model is based on nine criteria, five enabling and four results. The enabling criteria are leadership, people, policy and strategy, partnerships and resources, and processes. The results criteria are people, customer, society and key performance results[xiii]. The model can be seen below: The EFQM Excellence Model Scoring is carried out using RADAR (results, approach, deployment, assessment and review) logic. A total of 1000 points are available evenly split between enablers and results. The EFQM Excellence Model is also used for self-assessment in order to identify areas for improvement. If it is used regularly as part of self-assessment to review results and activities, improvements can be planned and initiated. However, the organisation must be honest in its self-assessment to gain any benefit from it. 2 COMPARISON EFQM is a management system that helps organisations to continually improve, assess performance and allow results to be factored into strategic planning. It allows networking, education and implementation of best practice across a range of industries. “Excellence is not a theory; it relates to the tangible achievements of an organisation in what it does, how it does it, the results it gets and the confidence that these results will be sustained in the future.” (EFQM, The Fundamental Concepts of Excellence, 2002) It is similar to 6σ in that it requires the full support of management to work effectively. Where it differs is that it is a long term initiative, unlike the short and sharp 6σ. EFCM aims for excellence through improvement in all areas of the organisation, incorporating social responsibility, customer and employees results. 6σ is focused on the reduction of defects with tangible reduction in costs to boost profitability. EFQM is not based on financial rewards for its initiators, save for increasing the attractiveness of the business and increasing profits through excellence of service and products. 6σ rewards successful teams with financial incentives. Both methods are similar in that both require thorough training to be effective. CONCLUSION In conclusion, ISO 9000 provides a sound starting point for organisations seeking to start a quality initiative. TQM was developed on the basis of traditional quality methods, to produce good value products or services which as a minimum, should meet and if possible, exceed the expectations of the customer.[xiv] The EFQM relates to tangible results of an organisation in what it does, how it does it, results and if they can be sustained in the future.[xv] It is also a long term approach that requires full management backing in order to work. Six-sigma is a methodology that is short-term in that it identifies specific projects to target particular weaknesses or faults. It provides solutions to problems instead of just highlighting them. However, it does compliment other methods; it can be used to provide key measurements for ISO 9000, as seen in Appendix B. Six-sigma should not be used in isolation if previous initiatives have failed. A better approach would be to change cultural thought processes by initiating a long-term quality programme like ISO 9000 or TQM. Once in place, 6σ could then be implemented to back-up the programme by preventing defects at all stages, providing statistical techniques and investigating the cause of defects. ISO 9000 compliments this by providing documentary evidence of processes and maintaining process management. RECOMMENDATIONS The report makes the following recommendation. Due to the failure or limited success of previous quality initiatives, jumping straight into another one without full management support or understanding is a waste of time and effort. The company must embrace a cultural change in its attitude to quality. This can be done by seeking ISO 9000 accreditation; by achieving this, the company will be internationally recognised for its achievements with an expected increase in sales. Once this has been successfully implemented, six-sigma can be introduced to support the quality system and target areas of under-performance to produce sharp results in a short time period and reduce costs and waste. Whilst both systems can be used in isolation, the benefits of combining the two outweigh any possible advantages gained from using them in isolation. REFERENCES BIBLIOGRAPHY The Management and Control of Quality, 7th Edition, Evans & Lindsay. Juran Institute’s Six Sigma Breakthrough and Beyond-Quality Performance Breakthrough Methods, 2004, De Feo & Barnard. Six Sigma: The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations, 2006, Harry & Schroeder. R L Roome, 2009: Six Sigma. R L Roome, 2009: Total Quality Management. R L Roome, 2009: The EFQM Excellence Model. R L Roome, 2009: The Quality Awards. EFQM, The Fundamental Concepts of Excellence, 2002. www.businessballs.com/sixsigma www.learnsigma.com www.school-for-champions.com/tqm/principles.htm www.school-for–champions.com/iso9000/explanation.htm www.articlesbase.com/non-fiction-articles /six-sigma-vs-total-quality-management-56021.html www.isixsigma.com www.demming.org www.witiger.com www.poppendieck.com APPENDIX A – ORIGIN OF THE TERM SIX SIGMA SOURCE: R L ROOME, 2009, SIX SIGMA The inherent capability of a process is taken to be 6σ or six standard deviations. This is the interval containing 99.73% of the process output. The process capability index can therefore be defined as: [pic] The difference between the Upper Specification Limit (USL) and the Lower Specification Limit (LSL) is the tolerance allowed. If the tolerance is equal to 6σ, then [pic] and the process is just capable, although the value should be higher to allow for process drift. Six sigma represents a long term defect rate of 3.4 defects per million opportunities. If the process is centred, the defect rate 2 parts per billion. With a factored in 1.5σ process drift, the long term defect rate becomes 3.4 parts per million. This is illustrated in Fig 1. When[pic], the distance between the mean and the USL and LSL becomes 6σ. With normal distribution, values lying 6σ away from the mean are extremely unlikely. If the process drifts by 1.5σ a large safety cushion is still present; this is why six sigma aims to have the mean 6σ away from the specification limits. The 1.5σ drift is often used to build in the safety cushion so six sigma processes will often have a 4.5σ result. Cp = 2 Individual parts (σ) 99.73% Acceptable LSL USL Cp = 1 0.135% Defective 0.135% Defective Process Average 6σ Fig 1. Plot of Output of a Process. APPENDIX B – oVERLAP OF ISO 9000 AND SIX-SIGMA SOURCE: WWW.ISIXSIGMA.COM [pic] ----------------------- [i] Student Material, The Management and Control of Quality, 7th Edition, Evans & Lindsay. [ii] R L Roome, 2009: Six Sigma. [iii] The Management and Control of Quality, 7th Edition, Evans & Lindsay. [iv] hçXÒhC|ÏCJ^J[v]aJ%jB hzáhçXÒCJEHøÿU[pic]^J[vi]aJ2j‰ËÈO[pic]hzáhçXÒ HYPERLINK "http://www.businessballs.com/sixsigma" www.businessballs.com/sixsigma , accessed 15 June 2010. [vii] R L Roome, 2009: Six Sigma. [viii] Juran Institute’s Six Sigma Breakthrough and Beyond-Quality Performance Breakthrough Methods, 2004, De Feo & Barnard. [ix] Six Sigma: The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations, 2006, Harry & Schroeder. [x] The Management and Control of Quality, 7th Edition, Evans & Lindsay. [xi] The Management and Control of Quality, 7th Edition, Evans & Lindsay. [xii] www.school-for-champions.com [xiii] R L Roome, 2009: Total Quality Management. [xiv] www.articlesbase.com/non-fiction-articles /six-sigma-vs-total-quality-management-56021.html [xv] R L Roome, 2009: The Quality Awards. [xvi] R L Roome, 2009: Total Quality Management. [xvii] EFQM, The Fundamental Concepts of Excellence, 2002. ----------------------- People 90 Policy and Strategy 80 80 Partnerships and Resources 90 People Results 90 90 Customer Results 200 Society Results 60 Leadership 100 Processes 140 Key Performance Results 150