CHAPTER 3: •Lean Six Sigma

Lean Six Sigma

Lean
Six
Lean +
Sigma
= Six
Sigma

Lean and six sigma are two different business

philosophy and management tools to optimize
processes.
 Lean + Six Sigma = Lean Six Sigma

Lean + Six
Sigma

Lean is about creating most • Six Sigma is about the quality

value for the customers with of what you deliver. Six Sigma
improves the process by
the lowest possible effort. Lean reducing variations
improves the process flow by • Purpose: To make customer
elimination waste happier and increase profits
What is Lean Manufacturing?
• Lean Manufacturing evolved out of lean
thinking, the antidote to waste. Waste
means any activity that absorbs resources
but create no value. It is derived from
Toyota Production System (TPS)
• “A systematic approach to identifying and
eliminating waste(non-value-added activities)
through continuous improvement by flowing
the product at the pull of the customer in
pursuit of perfection.”
 Toyota Production System (TPS)
Ohno (1988) made three key statements in his book
The Toyota Production System, Beyond Large Scale
Production which collectively defines TPS.

 “The basis of the Toyota production system is the absolute

elimination of waste.”
 “Cost reduction is the goal.”
 “After World War II, our main concern was how to
produce high quality goods. After 1955, however, the
question became how to make the exact quantity needed.”
 l
Value Added and Non-Value-Added
u
e
Activities
Focus for eliminating both
a
incidental and pure waste which d
are almost two-third of the total Non-value-
d
activities added
eactivities
d (Pure
waste)
a
Non-value
c added-
t activities
i (Incidental
v waste)
i
 What is Lean Manufacturing?
Value Added Activities
• An activity that changes the size, shape, fit, form or function of the material or
information
• Customers wants it
• Done wright the first time
Non-Value-Added Activities (Incidental waste)
• No value created but required by current thinking
• No value created but required by process limitations
• No value created but required by current technology
• No value created but required by business/government regulations
Non-Value-Added Activities (Pure waste)
• Consumes resources but create no value for the customer
 8 Wastes of Manufacturing/Lean (Muda)
• Optimizing process, eliminate D : Defects
waste is crucial for the success of O : Overproduction
your company. W: Waiting
N : Non utilized talents
• Having wasteful activities can T : Transportation
lower profitability, increase I : Inventory
customer costs, decrease quality, M : Motion
and even employee satisfaction. E : Excess processing
• For this reason, you need to
identify the non-value adding
activities and eliminate them to DOWNTIME
improve the process.
 TABLE 8.1 | THE EIGHT TYPES OF WASTE OR MUDA

Waste Definition

1. Overproduction Manufacturing an item before it is needed.

2. Inappropriate Using expensive high precision equipment when simpler

Processing machines would suffice.

3. Waiting Wasteful time incurred when product is not being moved or

processed.

4. Transportation Excessive movement and material handling of product between

Eight Wastes 5. Motion

processes.

Unnecessary effort related to the ergonomics of bending,

stretching, reaching, lifting, and walking.

6. Inventory Excess inventory hides problems on the shop floor, consumes

space, increases lead times, and inhibits communication.

7. Defects Quality defects result in rework and scrap, and add wasteful
costs to the system in the form of lost capacity, rescheduling
effort, increased inspection, and loss of customer good will.

8. Underutilization of Failure of the firm to learn from and capitalize on its employees’
Employees knowledge and creativity impedes long term efforts to eliminate
waste.
Lean
Manufacturing
goals
 Why Lean Manufacturing
LEAN MANUFACTURING
“……is “lean” because it uses less of everything --
half the human effort in the factory, half the
manufacturing space, half the investment in tools,
half the engineering hours to develop a new product
in half the time. Also, it requires keeping far less than
half the needed inventory on site, results in many
fewer defects, and produces a greater and ever-
growing variety of product” (J. P. Womack, Jones, &
Lean Manufacturing Tools
 5S
 Value Stream Mapping
 Standardized Work
 Load Leveling
 Kaizen
 Kanban
 Visual Workplace
 Quick Changeover
 Andon
 Poka-yoke
 One-piece flow
 Cellular Manufacturing

Intro-To-Lean
 TABLE 8.2 | 5S DEFINED

5S Term 5S Defined

1. Sort (Seiri) Separate needed from unneeded items (including tools, parts,
materials, and paperwork), and discard the unneeded.

2. Set in 0rder Neatly arrange what is left, with a place for everything and everything
in its place. Organize the work area so that it is easy to find what is
(Seiton) needed.

Five S Method 3. Shine (Seiso)

Clean and wash the work area and make it shine.

4. Standardize Establish schedules and methods of performing the cleaning and

sorting. Formalize the cleanliness that results from regularly doing
(Seiketsu) the first three S practices so that perpetual cleanliness and a state of
readiness are maintained.

5. Sustain Create discipline to perform the first four S practices, whereby

everyone understands, obeys, and practices the rules when in the
(Shitsuke) plant. Implement mechanisms to sustain the gains by involving
people and recognizing them via a performance measurement
system.
 • Six Sigma is a method that provides
organizations tools to improve the capability of
their business processes.
• This increase in performance and decrease in
WHAT IS process variation lead to defect reduction and
SIX SIGMA? improvement in profits, employee morale, and
quality of products or services.
• Six Sigma quality is a term generally used to
indicate a process is well controlled (within
process limits ±3σ from the centre line in
a control chart, and requirements/tolerance
limits ±6 σ from the centre line).
Six Sigma
What is Six Sigma (6σ)?
• Sigma (σ) is a statistical concept that represents how much variation
there is in a process relative to customer specifications.
• Sigma Value is based on “defects per million opportunities” (DPMO).
• Six Sigma (6σ) is equivalent to 3.4 DPMO. The variation in the
process is so small that the resulting products and services are
99.99966% defect free.

Amount of Variation Effect Sigma Value

Too much Hard to produce output within Low (0 – 2)
customer specifications

Moderate Most output meets customer Middle (3 – 5)

specifications

Very little Virtually all output meets customer High (6)

specifications

16
 6σ Principles

• Reducing variation
• Reducing defects
• 3.4 DPMO
• 6σ between mean
and LSL/USL
 Purpose of Six Sigma
• How we increase profits?
Purpose of Six We do that by making customer happy

Sigma • How do we make customer happy?

• To make customer That is done by reducing variations and
happier and increase providing consistently good products or
profits service and by reducing defects and
reworks.
  The Six Sigma methodologies were formulated by Bill
Smith at Motorola in order to arrest the quality downslide
of the company in 1986.
 Six Sigma tools are developed by taking inspiration from
History of Six traditional Quality Control, TQM, and TPM etc.
 Six Sigma was initially targeted to quantify the defects
Sigma occurred during manufacturing processes, and to reduce
those defects to a very small level.
 Another very popular successful user was GE.
 Today Six Sigma is delivering business excellence, higher
customer satisfaction, and superior profits by dramatically
improving every process in an enterprise, whether
financial, operational or production.
 Six Sigma has become a darling of a wide spectrum of
industries, from health care to insurance to
telecommunications to software.
Six Sigma Pioneered at Motorola & GE in
the mid-1980s
 History of Six Sigma?
Bill Smith After implementing 6σ

Dr. M. J. Harry First Motorola was the first General Johnson &
Founder of implemented recipient of Malcom Electric (GE) Johnson
SSMI 6σ in
Motorola
Baldridge National
quality award Ford

1985 1987 1988 1992 1995 2002

Wrote a paper on Dr. M. J. Allied Achieved Honeywell,

early failures to Harry Signal remarkable Nissan
quality results
What Six Sigma can do?
• 5-fold growth in sales
• Profit climbing by 20% PA
Motorola • Cumulative saving of $20 billion
over 11 years

General Electric • S2 billion savings I just 3 years

Bechtel • $200 million savings with

Corporation investment of 30 million

Why is Six Sigma called Six Sigma, and not
Four or Five Sigma or Eight Alpha?
• Look at the figure.
• A normally distributed process if mean plus minus
3σ range of output is between USL and LSL then around
99.997% (or almost all) of the output will be non-
defective or the process is of 6σ level.
• Now, if the USL and LSL of a process are such that the
difference between USL and LSL is less than 6σ value of
the process, then it won’t be a Six Sigma process.
• To make this process a Six Sigma process you have to
reduce the values of σ.
• The Six Sigma methodology broadly tells about how to
reduce the value of σ and make it a six-sigma process.
• DPMO (Defect Per Million Opportunities) is used for
counting defects in statistical processes. A Six Sigma
process will have 99.997% accuracy or 3.4 DPMO which
is extremely accurate.
 • Six Sigma is a systematic and data driven
approach to improve process capability.
• Accuracy level of a six sigma process is 3.4
DPMO or 99.997% which is fairly accurate.
• Most of the pioneer organizations of Six
SIX Sigma users found that up to the sigma
level of six is right trade off between cost
SIGMA and quality.
• However, running a process in five sigma
or seven sigma is individual organizations
personal call on the basis of required
accuracy and cost.
What’s Wrong With 99% Quality?
3.8
3.8 Sigma
Sigma Six
Six Sigma
Sigma
99%
99% Good
Good 99.99966%
99.99966% Good
Good
 20,000 articles of mail lost per hour  7 articles of mail lost per hour

 Unsafe drinking water for almost 15  Unsafe drinking water for 1 minute
minutes each day every 7 months

 5,000 incorrect surgical operations  1.7 incorrect surgical operations

per week per week

 2 short or long landings at most major  1 short or long landing at most

airports each day major airports every 5 years

 200,000 wrong drug prescriptions  68 wrong drug prescriptions

dispensed each year dispensed each year
25
 Example of six sigma
The pilot is using half of the allowable margin
Six Sigma Concept
Parking Your Car in the Garage
Has Variability...

Customer Customer
Specification Target Specification

defects defects

27
 Six Sigma Methodology
Improving existing process Creating/Designing new process
Use DMAIC approach Go for DFSS/Use DMADV
approach
Define Define

Control Measure Verify Measure

DMADV/
DMAIC
DFSS

Improve Analyze Design Analyze

 Six Sigma (6σ) Methodologies

DMAIC: This method is used to improve the

current capabilities of an existing process. This is
Control Define
by far the most commonly used methodology of
Improve Measure
sigma improvement teams.
Analyze

DMADV: This method is used when you

need to create or completely redesign a
Verify Define
process, product, or service to meet
Design Measure
customer requirements. DMADV teams
Analyze
are usually staffed by senior managers
and Six Sigma experts.

29
DMAIC
 Cost of Poor Quality (COPQ)
•

DAF
Detect
Analyze
and Fix
 Cost of Poor Quality (COPQ)
• We verify the item to
ensure that it received
entitled value (100% )
• If we repair it, we must
verify it again
• Every defective part
verified twice. It takes two
times the NVA resources.
• Scrap means all the value
we added to the product is
lost.
• So, why we don’t do it right
the first time
 Cost of Poor Quality (COPQ)
COPQ
against
Sigma Level
 Breakthrough Goals
• Breakthrough is a
sudden change in
historical
continuum.
• I want 78% pa
improvement at the
rate of 6 sigma.
• 4σ is Average
company/5σ is
world class and 6σ
is beyond world
class
 Process Yield
• What is process
yield?
 Process Yield
• First Time Yield
• Final Yield
 Process Yield
• Rolled
Throughput
Yields
 Process Yield
• Rolled Throughput
Yields
• WIP Inventory
• Number of units
enter the process
 Process Yield
• Idea of Defect
Opportunities
 DMPO/Process Sigma Level Calculation
• Calculate defects
per unit
• Calculate defect per
opportunity
• Finally, calculate
defect per million
opportunities
(DMPO)
• Finally find out
process sigma level
 DMPO/6σ Conversion
• DMPO/6σ
Conversion
 6σ Project Ideas
• Breakthrough is a
sudden change in
historical
continuum.
• I want 78% pa
improvement at the
rate of 6 sigma.
• 4σ is Average
company/5σ is
world class and 6σ
is beyond world
class