SIX SIGMA OVERVIEW
Six Sigma
Six Sigma refers to tools, processes and cultures made famous by Motorola and General Electric in the 1980s and are aimed at reducing variability and defects.
Six Sigma Origins
Motorola deployed Six Sigma Methodology in 80s In1981, Motorola set out to improve the quality of their products and services tenfold. In 1988, accepted Malcolm Baldrige National Quality Award, and began the Six Sigma Quality movement.
Motorola Experience
Between 1983-87: spent $70 Million on quality related education. Productivity increased average of 12.3%/yr. Cost of Quality reduced by more than 84%. 99.7% of in-process defects eliminated. $11 Billion in manufacturing costs saved. Average annual compounded growth rate of 17% in earnings, revenues and stock prices.
Six Sigma Applications
Manufacturing , Service, Chemical, Financial.. High or low volume. Thousands, Millions or Billions in Revenue. Even Non-Profit Organizations.
GE Experience
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GE Experience
Capacity improvements of 12-18%. Rise in operating margin to 16.7%. $750 millions in savings.
GE plastics
Reduced color variation in plastic products. Raised quality from 2 sigma to 4.9 sigma over 4 months. Saved $400,000 a year for one plant. (ref GE Way). In 1996, first year of Six Sigma deployment, GE Plastics achieved benefits of $20 million
GE Medical Systems
Developed a new Ultrasound technology which allows medical personnel to more Cleary diagnose risk factors contributing to stroke. Technology became available two years earlier than otherwise possible, due to GE's Design for Six Sigma deployment.
Other Six Sigma Industry Leaders
Boeing, IBM, Bombardier, Asea Brown Boveri, DuPont, Kodak, Compaq and Texas Instruments. GMAC Mortgage, Citibank, JP Morgan and Cendant Mortgage.
Integral MQS Achievements
Sample of Six Sigma Projects Implemented
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Project 1: Optimization of Calcium Addition
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Project 1: Optimization of Calcium Addition
Opportunity Statement: (Problem Definition)
EFS loss of 1,481,544 L.E per year due to the uses of the heated Calcium-wire after Calcium optimization. The process current sigma level is 2.15
Goal Statement:
Reduce defects percentage from 25% to 11% by July 2006. Reduce revenue losses by 740,772 L.E. Improve process Sigma level to 3.69 sigma.
Project 2: Reduce Casting Time
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Project 2: Reduce Casting Time
Opportunity Statement: (Problem
Currently the Variable operation process current sigma level is 2.49, if it increased to 3; So there will be 0.51 increase in sigma level.
Definition)
Goal Statement
Achieve the average process time Save annual revenue loss of LE 20,000,000. Increase productivity. Improve On-Time Delivery. Improve Employee Morale. Improve Flexibility & Reduce Production Interruption.
Project 3: Width Drop Defect
(Project Charter)
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Project 3: (Project Charter) Width Drop Defect
Business Case: The Width Drop defect beside causing an annual revenue loss of 6,704,422.50 L.E., it causes rework and production disturbance and it might cause a delay in finished product delivery. By reducing this defect, the company will improve its financial performance, increase productivity and deliver finished product on time.
Project Goal :
Reduce
Opportunity Statement: Currently, in EFS, there are 0.62% defective Coils due to width drop after the hot strip Mill process. This represents a revenue loss of 6,704,422.50 L.E. per year. The process current sigma level is 3.76
Project Scope:
HSM Operation Process: 1. HSM: Start with slabs and ends with Hot Rolled Coils (HRC). 2. The Project scope is to control the width drop which occurred in the Hot Strip Mill.
Team Selection:
To
the cost of width drop defect by 6,033,979 LE Improve process Sigma level from 3.76 to 4.54 sigma. Improve Delivery on time. Reduce production interruption. Improve employee morale. Increase Customer satisfaction.
Time Schedule & Project Plan:
Activity From
Define Phase Measure Phase Analyze Phase Improve Phase Control Phase
15/01/2006 15/02/2006 01/05/2006 15/05/2006 01/07/2006
15/02/2006 30/04/2006 15/05/2006 30/06/2006 10/07/2006
Dr.Gamal Megahed Nabil Douban Ahmed Nabil Usama Ahmed Mohammed Awad Mohammed Ibrahim Ahmed Attala Niraj Singh
Sponsor Black Belt Adhoc Member Member Member Member Member
TD Manager Financial Manager HSM Process Engineer HSM Production Eng. Quality Control Eng. Automation Engineer SKP in Charge
Improve Sales Order cycle and Scrap Products Due To Expiry
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1- Definition of key terms
Return Goods:
of its contents.
The Returned Products which is stayed on the customer shelf until expiration or any kind of defect.
Returns Invoices:
The invoices which are totally returned, the customer did not accept any
Partial R. Invoices: Contract :
The invoices which are partially returned, the customer accepted some of its contents and returned the others. Local or exportation tenders.
Sales : The Net sales (Total Sales Returns) Sale order cycle: From Salesman visits schedule, physical visit, order taking, order follow-up, order delivery to on shelf products follow-up Scrap : The Executed Finished Products Scrape due to expiry date: The scraped products due to exceeding the expiration date at the customer place. Rework: The needed work on returned products to reuse them Customers: Pharmacies, Distributors, and others like hospitals, Health insurance, Etc.
2- Project Selection
Work Break Down Structure Sales Net Sales Other Customer Distributors Pharmacies
Returns
Distributors Pharmacies Other customers
Invoice Returns
Return Goods
Scrape Rework
Due to Expiration Others At Pharmacy At Company
Returned Products
Returned products
Contract R. partially
Contract R. Invoice
Contract Returns
Invoice R. partially
Invoice Returns
Returned Goods
Why is this so important?
Sales Transaction % 2006
6.0% 2.0% Category Net Sales Samples Returns
92.0%
The Total returns represent 6 % from The Total Sales while the samples represent 2 %
Returned Goods (A Closer Look)
92%
Sales Samples Returns
6%
2%
100% 80% 60% 40% 20% 0%
18%
41% 7% 11% 21% 0.00%
Contract R. Contract R. Contract R Invoice R. partially Invoice Partially
Invoice R.
Return Goods
Facts
Pareto Chart of Customer Type ( Returned Goods Units 2004 - 2006)
100 2000000 80 1500000 60 1000000 40 20 0
500000
0 Customer Type Count Percent Cum %
Pharmacies 1221801 56.8 56.8
Distributers 910889 42.4 99.2
Other 16881 0.8 100.0
Almost 57% of Returned goods are from the pharmacies
Percent
Count
Business Case
The defect of returned products based on expiry date cause loss of about 3,000,000 LE per year. The current sale order form not adequate for sales man requirements.
Opportunity Statement
Currently ,the returned products represent 18% from all returned Products. But 82 % from them goes to scrap This represent loss of about 2.5 - 3 Million - L.E. per year.
Facts
The Company gives about 2 % form sales value as A Samples , so there is an opportunity to reuse the Returned products if we have control on the products in the market
Project Scope
The Sales Cycle From Getting the Customer Order until The Expired product Execution
Project Objectives
1- Reduce the Expired products by 1,000,000 L.E. per year. 2- Improve process sigma level from 0.6 to 1.6 Sigma. 3- Improve the return cycle. 4- Improve Sales order cycle 5- Increase the customer satisfaction.
Project Charter
Business Case The defect of returned products Based on expiry date cause loss of about 3,000,000 LE per year.
Project Goal 1- Reduce the cost of returned products by 1,000,000 L.E. per year. 2- Improve process sigma level from 0.6 to 1.6 Sigma. 3- Improve the return cycle. 4- Increase the customer satisfaction. Time Schedule Define 2 Weeks Measure 2 Weeks Analyze 2 Weeks Improve 1 Month Control 1 Month Opportunity Statement Currently ,the returned products due to expiry date represent 18% defect from all returned Products The Company Scrape about 82% from them. This represent loss of about 3 M L.E. per year. The current sigma level 0.6 Project Scope The Sales From Getting the Customer Order until The Expired product Execution.
Thank You
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