Leading Six Sigma

Comparing Non-Numeric (Discrete)Data

Saturday, January 29th, 2011

In reality this is only non-numeric in the sense that it is data we collect about the presence or absence (nominal data) of some characteristic or attribute of an item. Usually we take this data and transform it into a count of the characteristic;  like the number of “naughty” or “nice” kids on Santa’s list. Or, more practical to some, the number of red cars going through an intersection; the number of order forms with mistakes in them, etc. These counts are all called nominal scale measurements.  This scale of measurement gives us the least amount of information of the four types of measurement scales (Nominal, Ordinal, Interval, Ratio).

The question I’d like to address here is once you have the data how can you compare it to a standard or another collection to determine if there is a significant difference between the two. An example of this is with order forms. Say you made, what you think is an improvement in the way you handle orders but you really want to know if there actually is an improvement. How do you do that? You can use what is called the Chi Square Test.

Chi Square Test

Chi Square Test is used to evaluate count data presented in 2-dimensional tables (rows and columns) to answers the question: “Do the groups differ with regard to the proportion of items in the categories?” In our order form example we might have these three categories: No Errors, Minor Errors, and Major Errors. We would collect data from these three categories, before and after the improvement.

Lets say before the improvement we had 60% error free, 30% minor errors and 10% major errors. After the improvement we looked at 136 orders and found that 93 were error free, 33 had minor errors, and 36 had major errors.

Our two dimensional table would look like this ( In this table Chi Squared is the value marked X2):

For those who want to calculate the Chi Square value the formula is below:

BUT !!! there is an easier way using Excel formulas. To do this we need to use the “CHITEST”formula in Excel.

  • The “CHITEST” performs the comparison for you and calculates the probability that the two are the same.

    So in our example I entered the formula: =CHITEST(Actual Range [new process], Expected Range[old process]) OR =CHITEST(B2:B4,D2:D4)


As you can see this gives us a formula result of 0.0000004152 or 0% [.00004152%]. This says the probability that the new and the old process  are the same is 0%. The two processes are different! Looking at the counts you can see the new process improved minor errors but increased major errors. Go back to old process!

Well there you have my thoughts on comparing non-numeric data. If, you have questions or comments please feel free to contact me by leaving a comment below, emailing me, calling me, or leaving a comment on my website.


Bersbach Consulting
Peter Bersbach
Six Sigma Master Black Belt
http://sixsigmatrainingconsulting.com
peter@bersbach.com
1.520.829.0090


Reviving Healthcare – An Article Review

Friday, August 6th, 2010

Reviving Healthcare[1]– Article Review

Artilce ReviewThis article[1] talks about Don Berwick M.D. who is being considered to lead the Centers for Medicare and Medicaid services. Through his work at the Institute for Healthcare Improvement he has advanced quality in healthcare.

His feelings is that clinicians simply do not think about the delivery of healthcare as happening with in a system. Doctors give great diagnosis. But that diagnosis is only as good as the system that brought him the data to review. There are labs and technicians that get sent materials to analysis. What if things get mixed up or not done well. Those are all part of the system that the clinician does not think about.

Berwick’s long time vision as a solution to Americans healthcare is a three pronged systems approach. These three prongs, called the Triple Aim, are:

  1. “Improve the individual experience of care.”
  2. “Improving the health of populations.”
  3. “Reducing the per capita costs of care for populations.”

The Barriers he sees to this success include:

  • “Supply-Driven Demand.”
  • “New technologies, including many with limited impact on outcomes.”
  • “Physician-centric care.”
  • Little or no Foreign competition to spur domestic change.”

If we agree that the current U.S. healthcare system is unsustainable and that the Triple Aim is the right approach there are three design components needed to reach success:

  1. “Recognition of a population as the unit of concern.”
  2. “Externally supplied policy constraints.”
  3. “An integrator to focus and coordinate services to help the population on all three dimensions at once.”

I really do feel that the US healthcare industry can not be sustained and needs major changes. This article make me feel that Berwick would be a great head for the Centers for Medicare and Medicaid Services and at last some one might start fixing this industry. I hope he succeeds.

As always if, you have questions or comments please feel free to contact me by leaving a comment below, emailing me, calling me, or leaving a comment on my website.


Bersbach Consulting
Peter Bersbach
Six Sigma Master Black Belt
http://sixsigmatrainingconsulting.com
peter@bersbach.com
1.520.829.0090



[1] Charles Kenney, “Reviving Healthcare,” Quality Progress, Vol. 43, No. 7, July 2010, pp. 30-35,
http://www.asq.org/quality-progress/2010/07/innovation/reviving-healthcare.html

Note: The website above is on the American Society for Quality website and to access it you need to be a member. But there are way to purchase the article from ASQ.

Elevate the Constraint

Monday, July 12th, 2010

elevate

To elevate a constraint is to make it the number one priority and work on increasing its capacity. Although we have talked bits and pieces of this step in several of the other steps, here we focus on just the constraint. So here are a few ways to elevate the constraint.

  • Add capacity to the constraint. This means adding people and/or equipment. The equipment you add does not have to be new or the same equipment you are currently using, it just has to do the same job even if it runs at a slower rate. This added equipment or personnel  increases capacity.
  • Adjust flow to match constraint. We have mentioned this before and restate it now. What this does is decrease inventory and confusion all over the area. It also makes everyone up and down stream from the constraint aware of the constraints rate (beat of process) and thus the importance of keeping it running.
  • Decouple operations if data verifies this can be done. Some things can be done on products that do not go through the constraint. Other things can be done at the same time (in parallel)  and later coupled up with items going through the constraint.
  • Implement a flexible work cell. A flexible work cell is an work area that can be easily changed or adapted to do several tasks. This goes along with the decoupling. While an operation is waiting on the constraint (one of the seven types of waste),  have it quickly change and do a different task that needs to be done that is not part of the constraints process flow line.
  • Eliminate any non-value added tasks being performed at the constraint. Create a process flow map of the steps that are performed just at the constraint and identify the value added steps and the non value added steps. Totally eliminate the non value added steps or at least remove those tasks from the person working the constraint. Think of the surgeon again, with all the help in the room the surgeon is doing all the value added task while all the help is doing what is considered non value added tasks. These task are now being done in parallel (Decoupled from the flow).
  • Reduce parts handling. Look at the constraint and try to do as much as you can at one holding of an item. Take an item, do what is needed without releasing it and pass it on. If you have to keep turning it over or reloading the item it just adds time and opportunities to create a defect in it.
  • Reduce waiting or storage. Here we want to insure that at the constraint is NEVER waiting for anything. Plus nothing is waiting at the constraint to be used. Now that is near impossible but we want to reduce both of those as much as possible.
  • Reduce or eliminate the process variation. One easy way to do this is by implementing error proofing. Error proofing is a way that when putting two things together there is only one way it can be done. On a form, check boxes are a way of error proofing.
  • Reduce setup at the constraint. Setup is a non value added task and if you can eliminate, reduce or decouple setup you should. Sometimes setup can be done at a step in the process while the step is working. Again look at a surgery room. While the doctor is removing the patients heart, we should be preparing the transplant heart (setup) to be ready for immediate installation. In the pit at the race track, the pit crew does not wait until the car comes in to get the materials that are needed. They have everything laid out ready for the car as soon as it comes in. All this setup is done done while the process (car) is running (still on the track).
  • Reduce Waste – There are seven basic types of wastes that I have talked about in another article. They are: Corrections, Overproduction, Movement of material or information, Motion of employees, Waiting, Inventory, and Processes.  One of the best tools to reducing these wastes is the 5S’s: Sort, Simplify, Sweep, Standardize, and Sustain. Reducing these can save you time and money.

Well there you have how to elevate a constraint in your process. The last of the five steps in constraint management is to go back to step one; Identify the constraint. The reason you start again at step one is that if you have improved the constraint it probably is no longer a constraint and some other step has become the constraint. You continue to do this until the process has no constraints. In other words until the rate of the process exceeds the demand placed on it. You may, in fact, have a slow step but if you still meet demands it is just that; a slow step and not the constraint. If, you have questions or comments please feel free to contact me by leaving a comment below, emailing me, calling me, or leaving a comment on my website.


Bersbach Consulting
Peter Bersbach
Six Sigma Master Black Belt
http://sixsigmatrainingconsulting.com
peter@bersbach.com
1.520.829.0090

3rd Step – Subordinate all other Tasks to the Constraint

Thursday, June 24th, 2010

surgeon

In constraint management after you have identified and exploited the constraint, you must subordinate all other tasks to the constraint. If you do not do this all you will have is people wasting time and materials creating parts of a completed product that no one wants. Then you have to spend money keeping track of all the excess inventory until you can use it. It is better to move those resources to helping the constraint task complete its works as quickly as possible. Think of your constraint as the surgeon of the process. All other tasks being performed in the operating room are subordinated to the surgeons work. Materials and tasks are brought in for use right when the surgeon needs them. Here are some helpful hint about subordination.

  1. You can decrease the output of all the rest of the tasks in the constraints process. Tasks before the constraint, will just build up inventory that cost you money. Money tied up in materials and labor to create the inventory that is sitting waiting for processing at the constraint. While it seats you have to keep track of it and store it until you use it. This also happens at tasks after the constraint. Here processes build inventory that sits waiting for the constraints task to be completed before they can complete their task.
  2. Since the capacity of the other tasks is larger than the constraint you can cut back on the utilization of the resources at those task and even move them to help the constraint. Sometimes these resources may not be as efficient as what is at the constraint but every little bit of output at the constraint helps.
  3. Increase the time that the constraint is being run. If the constraint task is only being done Monday through Friday from 8 – 5, then add the weekends or shifts for the constraint, This will increase the overall output of the process.
  4. Make sure that everyone know what the constraint is and what is needed at the constraint to keep it working. Put the information in every tasks written procedures. This way everyone will know the importance of keeping the constraint running and will make it their job to see it is working full time.
  5. Put in place a way to monitor the constraint so everyone know how it is doing at all times. Monitor Constraints throughput and/ or buffer sizes. Information is a great thing when everyone know what is happening and what is important.


Well there you have how to subordinate all the other tasks to the constraint in your processes. Next time I will address how we elevate a constraint. The forth of five steps in constraint management. As always if, you have questions or comments please feel free to contact me by leaving a comment below, emailing me, calling me, or leaving a comment on my website.


Bersbach Consulting
Peter Bersbach
Six Sigma Master Black Belt
http://sixsigmatrainingconsulting.com
peter@bersbach.com
1.520.829.0090


Exploiting the Process Constraint

Thursday, June 3rd, 2010

Exploit ConstraintOnce you have identified your constraints, the next step in constraint management is to exploit them. This mean to utilize them to their maximum extent. To exploit the constraint we have to take a look at a few things first.

  1. We need to look at the existing work in process (WIP) and throughput levels and compare them to the goals or proposed levels or TAKT time for the constraint.
  2. We need to look at the line flow requirements and compare it to the constraint capacity.

These two will give you a feel for how bad things are. Look closely at these comparisons and them do the following things:

  1. Develop a layout depicting buffer locations and sizes. Remember that buffers are one of the Seven Types of Wastes so try to maintain them as low as possible, but never let the constraint run out of raw materials to perform its tasks.
  2. Determine equipment needs. Here we look at if we can find other equipment to help the constraint move product faster. This may include buying more of the same equipment and creating another parallel operation to increase product flow to meet the demand.
  3. Once you have the first two done then adjust the process flow rate to match the capacity of the constraint. This will reduce materials from piling up at the constraint and making thing confusing.
  4. Rebalance operations. Not all products you produce require all operations in the process so something may bypass the constraint or can have other thing performed on it before it needs to go through the constraint. Ignore local efficiencies. Building more products at other operations just to keep people busy does not increase sales it only increases expenses.
  5. Ensure that an operator is always at the constraint working the product through it. Do this by staggering lunches and breaks, and cross training to ensure multiple people can work the constraint. Treat the person working the constraint like a heart surgeon. Everything is always there ready for them to do their job. They don’t have to go looking or wait for anything!!
  6. Establish procedures to ensure the constraint “NEVER RUNS DRY”. This includes material flow management, buffers, inventories, early deliveries, and expediting material so that they are always there at the constraint, ready for use.
  7. Every constraint needs to be a planned maintenance #1 priority so when maintenance is preformed it take the minimum amount of time away from running product on the operation. Notice I said a planned maintenance NOT no maintenance. I do not remember how many times I have heard that “we could not afford to stop for maintenance” but they ended up having to stop for repairs caused by no maintenance. Those repairs took, on average, 10 times longer to do. Maintenance is cheap and can be done off hours on constraint equipment.

Well there you have how to exploit a constraint in your processes. Next week I will address subordination of a constraint the third of five steps in constraint management. As always if, you have questions or comments please feel free to contact me by leaving a comment below, emailing me, calling me, or leaving a comment on my website.


Bersbach Consulting
Peter Bersbach
Six Sigma Master Black Belt
http://sixsigmatrainingconsulting.com
peter@bersbach.com
1.520.829.0090

Identifying your Process Constraints

Thursday, May 27th, 2010

constraint management

Some times the hardiest thing is to find your process constraint. Remember, a constraint is any resource with less throughput than the demand placed on it. They regulate the output of your whole process. First, you need to understand “demand”. Demand is not what the supervisor wants, although many times it feels like it if the supervisor does not understand constraint management. Demand is the rate at which you need to run the process to meet customer needs or demands. If you are not making it for a customer then it is not a demand you really need to meet.

Where do we look for possible candidates as possible constraints? We go walk the process and look for:

  • Areas where a lot of WIP (Work in Process) or material is waiting for processing. This is one of the Seven Types of Wastes.
  • Areas that work a lot of overtime. This is not just paid overtime but also unpaid. If your company is good, employees many times will work extra hours just to make things happen sooner, this counts as overtime also.

At those operations that you see the above happening review the following:

  • Spaghetti Charts (Physical Process Flow Chart) of these operations. Is there a lot of movement?
  • Line balance at these operations. Is the product balance uneven?
  • Constraint Capacity. Is capacity below the demand?
  • The demand on the operation. Are the demands real?

If the answer to any of these four questions is yes this step is a possible constraint.

To validate these steps as a constraint we need to use TAKT time to understand the constraint need. TAKT time is the time which should be taken to produce a product based on customer demand. With that said if every step or operation of a process is working at or above that rate then the whole process is meeting the customer demand. It only takes one step of the process to be below that TAKT time to make the whole process fail to meet the demand placed upon it. Once we have the TAKT time, we can compare it to the actual throughput and validate the step as a constraint or not. TAKT time is the total net operating time per shift or day, divided by the total customer(s) requirements needed per shift or day. Net operating time is the total time minus breaks and lunch (if things are not running during that time). For example lets say your customer demands are 1000 (parts, transactions, assemblies) per shift and a shift is 8 hours or 480 minutes. Now lets say that we have two 20 minute breaks during the shift and no lunch breaks (employees do take lunch but the operation is still running). That means our net operating time is 440 minutes (480- 20- 20= 440). So TAKT time is 440/1000 = .44 minutes or (.44min * 60 seconds) 26.4 seconds per item. That means that in this process every step has to complete their tasks in 26.4 seconds.

Once you have the TAKT time for each of the process step that you had identified above then you can list all those steps by TAKT time and actual time. Those that exceed the TAKT time are constraints; those that do not exceed the TAKT time are not constraints.

Well there you have how to identify a constraint in your processes. Next week I will address exploiting the constraint the second of five steps in constraint management. As always if, you have questions or comments please feel free to contact me by leaving a comment below, emailing me, calling me, or leaving a comment on my website.


Bersbach Consulting
Peter Bersbach
Six Sigma Master Black Belt
http://sixsigmatrainingconsulting.com
peter@bersbach.com
1.520.829.0090



Where Oh Where have my Profits Gone? A Discussion on Constraint Management

Monday, May 17th, 2010

In today’s world we are always looking for ways to improve what we do. But many time we have improved a step of one of our business processes to find no real gains. Yes that step is more efficient but over all we did not improve the bottom line. Why does this happen? Because we have been improving areas that are not the over all bottlenecks of your company. The bottleneck or constraint paces the whole process and if you are improving any other step but the constraint you will find not improvement in the overall process. You need to work the constraint. A constraint is any resource with less throughput than the demand placed on it. The constraint usually regulate the output of the process. It is the “Beat” of the process.

What we need to do is manage our constraints. If we manage them then we will be making improvements to the critical parts of our processes and thus we will see improvement in the output. Constraint Management helps recognize and manage constraints that are impacting our performance. It provides:

  • Increased capacity without needing to make capital investments.
  • Flexibility to changing customer demands
  • Reduce or eliminate need for buffers/ Work in process (WIP)
  • Reduces cost through increased output and improved global efficiency.
  • Reduces throughput variability
  • It creates global optimization , not local sub-optimization.

There are five basic steps to Constraint Management. They are:

  1. Identify the constraint – Look at every step of the process and evaluate it’s capacity and throughput in regards to the demand or Takt Time. Look around at the steps of your process, do you see  a lot of inventory or a large stack in an inbox, people charging a lot of over time, working late or long hours, taking work home to get it done. This usually indicate a constraint.
  2. Exploit  the constraint – Looking at the required throughput (Demand or Takt Time) adjust buffers (in baskets) and equipment at the constraint to allow maximum throughput. Then rebalance the process to feed just what the constraint needs no more no less.
  3. Subordinate the constraint – This means reduce production so that all operations only produce the quantity that the constraint can handle. This reduction many times frees up equipment and personnel that can help work the constraint step of the process. Make sure everyone know what the constraint is and what that step can handle.
  4. Elevate the constraint –  Here we do everything possible to keep the constraint step working.  This is like making sure the step is running 24 hours a day 7 days a week. Adjust employees breaks and lunch to insure this step is always running. Remove or have someone else do tasks that do not create value but need to be done at this step. Treat the employee at this step like a heart surgeon; everything is close by easy to get and ready for use.. No delays.
  5. Go back to 1. – You need to go back to step one because if you did you job right on the constraint then you now have a new one to work..

You keep doing this until you have no constraints in the process. How can that be? We can reach that point when the (customer) demand is less than the throughput. You will still have steps that are the slowest but as long as you meet the demand you are ok. By the way those steps still set the pace of the whole process. If you remember that you will help keep cost ( of storing inventory) down. One way to do that is with a “Pull System” which is a good topic for another article.


As always if you have questions or comments please feel free to contact me by leaving a comment below, emailing me, calling me, or leaving a comment on my website.


Bersbach Consulting
Peter Bersbach
Six Sigma Master Black Belt
http://sixsigmatrainingconsulting.com
peter@bersbach.com
1.520.829.0090

The Project Charter – A forgotten but an extremely important tool of Define

Wednesday, May 12th, 2010

Why create a charter it seems just like busy work? I mean the boss wants this done NOW why waste the time on creating a charter? Good questions, but I can guarantee you a charter is NOT a waste of your time, nor the bosses time either. Do you remember the school yard game where you would line up and tell the person next to you something and have them pass it on. What was said at the end of the line? Was it ever the same thing? I’d say NO. Why is that? Because as much as we think we state things clearly the receiver never gets it exactly like what we said. I see this all the time in training and working in teams. We are such a diverse group of people that our individual picture of what is said gets mixed with what we know and that changes the thought.

So we write a charter to capture the “true” reason we are doing the project. It is the best way to capture and pass on what you are doing. With out it your team may get lost very quickly as the direct at the beginning is slightly different in everyone’s mind.

The charter is more than a simple statement of the project objective. It hold a lot of information so everyone gets the same “picture” of what we are doing. Some things in a charter may seem redundant but they are not. They are stating the approach to the issue in a slightly different way so other will get the complete picture of what is happening. You will find that you will come back to the charter time and again to bring the team back on task for what they were brought together to accomplish. So lets look at what should be in your charter.

The Header Block

  • Project Name or Title
  • Who will be the project Lead and their phone number
  • Who will be the project Sponsor and their phone number

Note: A sponsor is ALWAYS needed. The Sponsor will be the manager that the project will impact and help the most . The Sponsor will also help remove road blocks as the team encounters them. Last the Sponsor will be the main conduit to top management that will need to support this project as well.

  • The Project Start and Target End Date. Management will not support a project that we do not have some time frame to complete.

The Problem Statement – Here we need to describe the problem as briefly as we can but with enough detail that everyone understands it. Plus here we need to include a business case statement. This statement is what ties this problem to the company goals and objective and defines why we need to do it NOW. In other words it is the “burning platform or need” to do it now.

A Vision Statement – Many call this the objective but I like to call this a vision of the future state of the process. Many times this makes it easier for others to “picture” what it will look like when the project is complete.

The Metrics – This may seem hard to define right now but believe me when I say management when they saw this problem it was not a touchy feely thing it had hard number associated to it. Numbers they want to see changes in. It could be dollars, volume, time, or number of customers but there are numbers that are the metrics YOU need to improve. Sometimes even management does not quite know what they are but it is your job to ask why they think they see this as an issue and find the metric!

The Benefits – Now we take the metrics and align them to stakeholder benefits. Stakeholders are Customers, Stockholders, and Employees. So here we take the metrics and show how they impact our stakeholders.

Deliverables – Here is one a lot of folks miss but don’t you be one of them. This will define when you know the project is done. These will be the results of the project. They can be minimum changes in the metrics with stretch goals included. But everyone needs to know not only the date the project will be complete but also what will result from it. Yes, it is hard to know the exact solution at the start of a project but you can set some reasonable goals to accomplish. It does seem scary but in the end you will find that you had been very conservative with these.

Scope of the Project – The best way I can describe this is when looking at the process you are trying to improve. What steps of that process will be looked at in this project. This will help you keep the project focus and not have what I call scope creep due to not know what areas of the company this project will cover. It also should be noted that you need to make sure the scope is not to big ( you can not solve world hungry, you may be able to only solve hungry in your neighborhood).

Project Team – list here the member of the project team, what roles they will play and how you can contact them (phone).

DMAIC Est. Completion Times – I know you have the project Start and estimated completion dates above, but you will need an estimated completion time for each of the five step of DMAIC. These will be milestones to you and management on how well the project is moving. It is better to make adjustment as you go then to find you are way behind and over budget near the end of the project.


Well there you have the basic components of a six sigma project charter. At least from my prospective. If you have questions or comments please feel free to leave them below or you can contact me on my website.


Bersbach Consulting
Peter Bersbach
Six Sigma Master Black Belt
http://sixsigmatrainingconsulting.com
peter@bersbach.com

1.520.829.0090


Is DMAIC needed in Lean Six Sigma

Tuesday, May 4th, 2010

In an earlier article I wrote about DMAIC as the roadmap to a successful Six Sigma projects[i]. I implied that DMAIC was “the” method for Six Sigma, but it is not and does not have to be. Over the years I have seen adaptation of the DMAIC process to fit a companies culture. But a good proven method or approach is needed to be successful. In “6 Sigma’s Five Key Elements to Success[ii] I talked about to have success you need an established method.

“An Established Method to improve. Many time people are told to go fix something and sometimes that works, but when the solution is not obvious you need a method to develop and implement a workable solution. In our case Six Sigma IS that method. A five step method (process) based on facts and data focused on your customer’s value to solve the need and grow your business. What happens if you don’t have a method?  You will have false starts. Put another way, have you ever been in a meeting where once again an issue comes up that was suppose to be solved last week, last month or last year? Those are fixes that were done with no method to the solution. When you see this during your project step back and look at your six sigma methodology and see if you have to refocus the team. An Example of this is trying to fix the problem from what was learned during or at the end of the Measure step. This leads to skipping analysis were we do a “Deep Dive” for the real root cause of what we see.”

Thomas Pyzdek said it this way, Six Sigma‘s …”focus is on doing. But how do we know what we are doing is correct?”[iii] He goes on to say that we know from gaining the knowledge through learning. DMAIC is one good method for learning and if you do not have one it is an excellent starting point. Remember that Six Sigma is focused on continuous process improvement. In a company I worked for they took the DMAIC process and expanded it to six steps instead of five. They did this to put more emphasis on some steps and less on others. Why change it? Because their culture understood how to do some of the steps of DMAIC very well but they felt that some steps needed extra attention to insure everyone did it right the first time.

By the way DMAIC was not the first learning approach used in the quality arena were Six Sigma roots are from. I believe Shewhart  came up with what is know as PDCA or Plan, Do, Check, Act. Deming refers to PDCA as the PDSA or Plan, Do, Study, Act. I believe that DMAIC’s root come from these. Can you see the progression?

DMAIC comparisonVCPCIA is another companies adaptation of DMAIC. In the Design arena we have DMADV or Define, Measure, Analyze, Design, and Verify.

Well there you have it. DMAIC is not cast in stone but it is a good starting point. Don’t leave anything out but adjust and clarify to make it work for you and then follow it! If you have comments or questions you can post them here or contact me.

Bersbach Consulting
Peter Bersbach
Six Sigma Master Black Belt
http://sixsigmatrainingconsulting.com
peter@bersbach.com

1.520.829.0090

________________________________________________________________


[i] The Roadmap to a Successful 6 Sigma Project, By Peter Bersbach, Oct. 8th 2009, http://www.sixsigmatrainingconsulting.com/uncategorized/the-roadmap-to-a-successful-six-sigma-project/

[ii] 6 Sigma Five Key elements to success, by Peter Bersbach, May 14th 2009, http://www.sixsigmatrainingconsulting.com/leading-six-sigma/6-sigma-five-key-elements-to-project-success/

[iii] Thomas Pyzdek, The Six Sigma Handbook (New York 2003), pg241

The Impact of Six Sigma

Tuesday, April 20th, 2010

There is a lot of talk about Six Sigma today, as there has always been, and many time companies fail in implementing Six Sigma because they just do not believe enough to make that commitment up front. They do not understand what “Six Sigma” means to their bottom line. Or even how to translate what they currently do into Six Sigma savings.

So lets talk about Six Sigma the metric. What does it really mean in terms of your business? The average company out there that has not embraced Six Sigma is running just below four sigma. If you took that average company and created a Six Sigma Culture in it you would see[i]:

  • 20% margin improvement
  • 12-18% capacity improvement
  • 10-30% capitol reduction

Can not believe these numbers? They are true, over an over I see these types of impact in companies that embrace a true Six Sigma culture. Lets look at some numbers, although they maybe not be what is really happening out there. Let’s look at four areas that most everyone has to deal with on a regular basis; the mail system, drinking water, electrical service and prescription drugs. If you were in the United States here is what these services would look like at a 3 sigma level:

A 3 Sigma World

 

Service

Defect Rate

Postal System

20,000 lost pieces per hour

Drinking Water System

Unsafe water for 15 minutes per day

Electrical Service

No electrical service available for 7 hours a month

Prescription Drug Services

8 wrong prescriptions per minute

Where you live maybe better or worse than what you see above. In the US I do believe it is better than this in all cases. How would these services look in a 6 Sigma World?

A 6 Sigma World

 

Service

Defect Rate

Postal System

2.5 lost pieces per week

Drinking Water System

Unsafe water for .2 seconds per year

Electrical Service

No electrical service available for 1.1 seconds every 5 years.

Prescription Drug Services

3 wrong prescriptions per year

I’d guess that in most everyone’s case most of these service would not be today at this level. So how bad are things out there. Well that depends on what you are talking about. Below is a chart[ii] that show how the average company in several areas are performing. These areas are:

  • In the US, getting tax advice from the Internal Revenue Service. – They are better in collecting taxes then giving you or I advice on doing our taxes.
  • Order write-ups – This is when you go into a store or even on-line an place an order.
  • Doctor Prescription Writing – This is the actual process of your doctor writing your prescriptions. We, in the US, are lucky that there are Nurses, Pharmacy techs, and Pharmacists that check these and correct them before you get them. But this is one reason medical cost are so high.
  • Restaurant Bills – Ever gone to a restaurant and got the bill only to find it was wrong. Hmmmmm!
  • Airline Baggage Handling – Ever traveled and found your luggage damaged or lost totally? Even if they find it later and return it this is what this level of Sigma feels like.
  • Domestic Airline Fatality Rate – This rate is lower than the rate of deaths due to mistakes made in hospitals. Hmmmm

Real World Sigma

How does this happen? It is due to variations that happen all the time in everything we do. A Six Sigma approach (culture) make you work at understanding and addressing the day to day variations in your processes that you now compensate for, which costs you money. It looks at the variations and looks for patterns to discover and interpret the errors (variations) seen.

Lets take a simple task (a step in a process) that almost everyone can understand because at one time you have tried this; shooting free throws (step)  in basketball (a process). Now to make a free throw there are a lot more factors or thing that can make one miss ( I know because I miss all the time). But for this example we will look at only five; Vision, Grip, Stance, Reflex, and Rotation. Lets say for everyone of these factors 95% of the time you do any one of them right. That means that 5% of the time you get any one of them wrong. BUT to make the shot you have to get them all right at the same time. So if making a shot only required these five factors and you feel you are at that “95%” level that means that you will make it, get all 5 factors right at the same time, only 77% of the time. By the way this is about a 2 sigma task or step (2 sigma would give each factor 95.45% and an overall result of 79.23%). If you were 99.73% (3 sigma) you would make the shot 98.66% of the times you tried. IF you were a 6 sigma shooter (99.99999998%) you would make it 99.99999990% of the time.

But this is for each time you step on the line to shot a free throw. In the NBA during an average game there are 26 free throw shots attempted. This means the total number of opportunities for nonconformance ( or missed shots) is 5factor X 26 shots = 130 opportunities to make it or not. That changes things a bit. This means that making every shot in the game is as follows for the sigma level you are shooting at:

  • 2 Sigma = .2%
  • 3 Sigma = 70.08%
  • 6 Sigma = 99.99997%

Now that puts me at about a 2 sigma level and a definitely not an NBA level player. Where are the best professionals? Where are the worst  professionals?

As you can see by these number failure rates increase at a very high rate as the number of products (shots) and factors (vision, grip, stance, reflex, and rotation) increase. This is why it is so important to use Six Sigma to keep the competitive edge in your company. Most companies processes have more than 1 step (just as basketball is more than just shooting free throws) and each step has several factors where you can make a mistake. All of these steps and factors drive the defect rate up. Just think every time you touch the thing you are working on you can do it right or wrong. For example picking up a glass, you can grip it firm or not and drop the glass. This is were those improvement come from.

Well there you have my short summary of the impact of Six Sigma on a company. If you have questions or comments please leave them or send me an Email.

Bersbach Consulting
Peter Bersbach
Six Sigma Master Black Belt
http://sixsigmatrainingconsulting.com
peter@bersbach.com

1.520.829.0090

______________________________________________________________________________________


[i] Tom Pyzdek Presentation Managing for Success; ASQ QMD 2000

[ii] Source: Milt Williams, Freudenberg Non-wovens, presentation to management May 6, 1999